According to Kotaku, they did just that: http://kotaku.com/gaming/the-thinking-is-wishful/microsoft-sticking-to-2008-profit-forecasts-275429.php

Wrote it off into last year's losses, therefore still shooting for profitability of the 360 in 08 ... 

Well the price drop is both good and bad. Good in that now more people can justify paying for one, or who were just on the borderline of buying one anyway to get out there when the price drops and save themselves a few bucks now. Bad, that it might 'not be enough' and yet still, it seems like they might be trying to push it because they know they are behind. Your system can only last for ten years if it's got plenty of support.

And although I'd agree with the whole MS not being in a good position to match the price drop game at this point, it is Microsoft, and they've proven time and time again that money doesn't really seem to matter much to their small nation of Cashola that occupies a bank the size of Rhode Island. If manufacturing prices for the PS3's stuff is coming down, I'm sure the 360's is as well.

This was a good time for Sony to make a move, and they've made a very safe one here. MS can't afford to respond, and they really shouldn't since the price isn't in direct competition with theirs. I'd buy the idea that a $400 playstation 3 would outsell a $300 360, but not this really. It's going to clear Sony's stock of old systems that cost them too much to make. Chances are that they'll release a new model in the fall (once the old stock is clear) that costs them less to produce.

While I agree with ssj12 that they will proably want to be agressive with their price cuts, I don't see another coming this year. A new model to replace the older, sure, but another price cut can't possibly come until next spring unless this is noticably less effective than the PSP price cut (which was about the same %). They made this price point because they don't want MS to respond, after all.

I just wish Sony was a little more agressive. They really should have undercut the 360 Elite. That would have been a much bolder statement, especially if they matched it with a European cut of similar measures to crush the launch of the Elite.

It seems E3 time is still a semi-big deal, what with both Sony and MS tossing out a billion dollars here and there to clean up the blemishes on their reputations.

There still remains 2 big questions: isl 100$ pricecut enough to gain momentum for PS3 and is pricecut too late to get PS3 to compete in sales.

About competitors pricecuts, M$ is a question mark, they propably cut the price before christmas. Wii on the other hand, will not see a pricecut until supply has met demand. And that wont happen this (financial) year. And when thinking Nintendos strategy, it's meaningful in pricecuts, that will they aim just to meet their goals or will they try to compete for the all times highest sales. Problem with the later is bigger financial risks, which Nintendo have tried to avoid so far.

CNN claims this rumour is a big lie... but Sony is known for denying things like this...

Sony won't slash PS3 prices

Electronics maker says it has no plans to lower game console's price in effort to spur sales; Nintendo's Wii units soar at half the price.
July 6 2007: 7:27 AM EDT

TOKYO (Reuters) -- Sony Corp. has no plans to cut the price of its PlayStation 3 (PS3) at present to increase demand and counter surging sales of Nintendo's rival game console Wii, Sony's president said Friday.

Sony (Charts) President Ryoji Chubachi told Reuters that operating profit margin at its mainstay electronics unit, which makes hot-selling Bravia LCD televisions and Cyber-shot digital cameras, was likely to exceed its 4 percent target for the current year to March 2008.

"At present we have no plans," to cut the PS3 price, Chubachi said in an interview.

Sony has packed cutting-edge technology such as a Blu-ray high-definition optical disc player into the PS3, driving up production costs and making its retail price more than twice as expensive as the Wii.
In Japan, it's Wii 6, PS3 1

The higher price tag and lack of attractive software titles have been cited as main reasons the PS3 has been trailing the Wii in sales, and analysts have been widely expecting Sony to soon slash the price to spur demand.

In a Reuters poll of four game analysts this week, three expected Sony to cut PS3 prices by $100 before the end of the year, while one analyst said a cut of $150 is more likely.

The PS3 with a 60-gigabyte hard disk drive carries a price tag of $599 in the United States, while the Wii sells for about $250.

"If you take a look at how PlayStation and PlayStation 2 have taken off, this is not such an unusual start," Chubachi said.

When the PS2 made its debut in 2000, Sony was initially criticized for lack of strong titles, and some software publishers said the machine was too complex.

Sony eventually overcame those difficulties and has sold more than 120 million PS2 units, making it the top-selling video game console ever.

Chubachi said the company was on track to hit its target of a 5 percent operating profit margin for the year to March 2008, and its electronics division will likely exceed the 4 percent target.
For the game industry, E3 becomes EWii

The margin targets, set in 2005, have been considered as the most visible indicator of success for turnaround efforts by Chief Executive Howard Stringer and Chubachi.

"We set the targets when the electronics division was not doing so well. But we saw some recovery in the unit, and it now can make a bigger contribution for Sony's effort to hit a 5 percent margin," Chubachi said.

Sony was late in shifting its resources to flat televisions, but an alliance with South Korea's Samsung Electronics Co. Ltd. (Charts) in liquid crystal display (LCD) panel production and massive marketing campaigns helped the company become one of top suppliers of LCD televisions.

Ahead of Chubachi's comments, shares in Sony closed up 1.2 percent at ¥6,540 ($53.25), outperforming the Tokyo stock market's electrical machinery index IELEC, which fell 0.79 percent

http://money.cnn.com/2007/07/06/news/international/bc.sony.reut/?postversion=2007070607

It was clear that Sony ,as producer of their consoles and most of its components ,could lower the manufacturing costs faster that MS .Now the PS3 will be about the same as the Elite and with the BR drive ,retrocompatibility with PS1 and PS2 ,Linux ,free online etc .Good value sure .

If Sony was really agressive they should lower the price even more .450 and especially 400 are the sweet spots to touch way greater demographics that the current ones .

Quick question regarding how pricecuts work. Would this mean Sony is going to pay retailers $100 per Playstation 3 they currently have in stock? An earlier report indicated Sony had something like 1.5 million excess PS3s "in the channel," does that mean they'd fork over $150 million right away?

@MrPennybags: I'm interested in that too. Does Sony piss off retailers. I think they compensate it somehow, i don't think that they pay them, Sony propably sells retailers something more cheaper, worth of 100$.

 This is exactly the kind of denial you can expect. The info leaked out too early because of a Circuit City flyer and now they said no 'iminent' price drop which is a very loose term. They were going to announce it at E3 but it came out a week early. Notice how he doesn't say no price cut in the near future, but says no 'iminent' price cut.