I would have thought the same thing.  But given they are going to get SLAMMED by Sony in June NPD, they may be hoping to win July, which would then tie in with an impression of "winning" E3.

I really don't care if Sony loses money or not =p. And I think the other 99.9999999999995543 % thinks the same.

I have long thought Sony might do a small price cut at the end of the year, but anyone who thinks they can afford a $100 cut this financial or calender year is not paying attention to reality.

Sony's games division is LIMPING!

Remember that $50 a console on 60k units a week is $3 million dollars a week in price cuts. And way more than that at peak time (holiday). They need to move a lot of consoles on this cut and pair that with Live/games/accessories/downloads to make that money back. If they would've moved 3.5 million consoles in North America the rest of the year without a cut, that's $175 million to recoup in terms of increased sales of merchandise/services.

$50 is a signifcant cut in terms of the bottom line.

 20k units a week

So that means probably an average of $6 per year profit per extra unit per year from Xboxlive gold

they would also expect to sell 10 games for these machines lifetime. $70 per machine @ $7 royalty per game.

So if it cost $4 million per week, 

Live will give them $18 per extra machine averaged over the lifetime of the machine and the extra numbers sold.

The extra games sales - 10 of them @ $7 each over 3 years will earn them $70 over the lifetime of every extra machine.

The recouped costs 20,000*(18+70) = 1.7million returned to their coffers, being extremely conservative.

If you increase the number of game sales to 15 - (5 per year) it makes it (18+105) *20,000 =2.46million per week of the cost will be offset by extra profit oportunities. (Being extremely conservative on game profit by excluding 1st party software such as Halo 3 and Banjo and Xboxlive gold revenue.

If I had more information I would say that they'd break even on this price cut and they will maintain the same average profitiability.

[conspiracytheory]

They're clearing out 20gb Premiums to make way for the 60gb Pros they'll be announcing at E3 for $349. :P

[/conspiracytheory]

But in all seriousness, this should help them quite a bit in the US. At first I didn't think Sony would drop the ps3's price this year unless 360 sales spiked astronomically come a price cut (which I also didn't think would happen until October or so), but that I know the price cut is coming early, and that the RSX has a die shrink on the way, I think we'll see the ps3 drop $50 across the board come October, to counter the 360's price drop.

 lol, what are you trying to say?

Has it escaped you that all electronics drop in price.

bigger price cut than 50$ without a production cost reduction (chip shrink...) at same time would have probably pushed them back to making losses on hardware.

price cuts on the accessories would probably be more easy to do for them (the harddisk kits could probably easy be cut down to half price).

i don't think sony will counter immediatly with a drop, they will probably wait a bit and see how much effect that drop has (in europe it did not do much more than a peak and a very small continous effect). instead i guess they will try to counter it witht he 80gb bundles at start, and i guess we might see a ps3 price drop later this year once they swap to the shrinked cell & rsx (but also probably only 50$ but maybe with a bigger harddisk and Backward Compatibility in the base version).

I just bought a PS3 so I'm not in the market for a 360. But I'd wait on buying one if I was looking. They should have their 2 game bundle w/ a pro for $299 for Christmas in a few months which will be a better deal.

sony can still play the 'online gaming, bluray movie player, wireless network all for $100" card if they wanted to. I cant see them responding with a price drop unless 360 sales do more than spike for a few weeks, which I dont think they will.

The price of the 360 is cheap enough as it is, no matter how cheap they make it, it needs to appeal to more people before sales see a permanent increase.