If I was MS I wouldn't cut the price right now, there's no real threat in terms of games.

However, I would definitely ensure a price cut was posted before the release of GTAIV, to sway GTAIV fans to go with the 360 rather than the PS3

I think MS has to swallow the cost and match the reduction. Everyone is expecting them to drop the price. So, those that planning to buy one soon will wait for the drop.

I think they have to do it quick too before it hurts their sales for too long.

As for the Wii, I doubt they'd drop the price at all. It's stupid to cut the price when you still sell out every piece you put on the market.

I think they have to cut price. I don't think they'll do it right away so they don't look like Sony is forcing their hand, but once they've realized that they've fallen behind the PS3 in worldwide weekly sales they will have to. Right now the 360 can't afford not to sell better. The PS3 is all about the future--2008, 2009 and beyond. Microsoft can't bank on logevity the same way with the 360. They need the continued press of the 360 selling better than the PS3, and if for even just one month that changes it can have a ripple effect that eventually leads to a third place finish.

Sure, why not?

It's not like MS has done anything else fiscally responsible with the Xbox brand: 6.5 BILLION in the red and counting...

The $1.1 billion estimate won't weigh into whether they cut the price or not. They wrote it off as a 2007 expense and by all reports, are planning to get into the black in 2008 fiscal year (yeah, we've heard that before).

As it stands now, I don't see how they could afford to NOT cut the price on the system at least before GTA hits shelves. The 360 is nearing two years old now; what console has ever sat for two years without a price reduction?

With the transition to 65nm in the rumored Falcon console, the decrease in RRoD, and the decrease in general parts costs, there's no way in hell that MS isn't making money on the 360 right now. They were rumored to be losing around $150 per console over 18 months ago. They have to be turning a profit on the system by now.

Yes -- to make this more clear for others: Microsoft is trying to hide several years of repair cost into their 2007 bottom line so they can claim "profitability" in 2008 even if they lose a ton of money with the xbox division due to repairs.  In my opinion, the entertainment division is profitable when they've overcome all of the debt accumulated with the Xbox and 360.

Microsoft's sales have been slowly decreasing. They're pretty bad right now. Microsoft *needs* to match this Sony price cut. Microsoft may have just set aside $1.1 billion for repairs, but that's irrelevant to the 360's price. That's money they need to simply write off as a loss and they need to continue competing as if that never happened.

Neither cut will affect the Wii significantly simply because Nintendo has some big hitters coming out this year that millions want and are willing to pay $250 for. So even if Nintendo can manage to get some stock on shelves this year before the holidays, it *will* be hard to find Wiis during Christmas.

MS will announce a $100 price cut at E3. They must be already manufacturing Falcon consoles, so they are currently saving a big chunk of change on each unit -- so the price cut is negated for their bottom line.

MS will lose some money in the short term as they must continue to sell off current stock, but they will recoup their money when Falcon is released. Additionally, a price cut will put them at $299 for a premium, which I think will lure over a lot of fence-sitters. The increase in software sales will also help compensate.

The Wii, on the other hand, has absolutely no reason to cut their price. They are barely even able to meet demand for their console -- why slash the price on something that the consumer is clearly willing to pay full price for? Nintendo is not here to be altruistic -- they're here to make a profit.

Don't forget, Microsoft is more concerned with using the Xbox brand to block Sony from taking over digital distribution in the living rooms of the world (and introducing linux/PS3s at some point) than they are with realizing a profit in the games division. A corresponding price cut will occur, it's only a matter of when it'll happen. Now, or just before GTAIV/Halo3 to really grab headlines before the holiday season.

Get ready to scratch off another prediction on your list because the 360 price cut is being announced tomorrow at E3. Months before Halo 3 even comes out...

I think MS will cut the Price by 50 $ end of September / Begin of Oktober (With Halo3, GTA 4) or with the 65 nm processor.

And sony cuts the price of the 80 gig to 479$ at end of Oktober (With GTA4 or something after it, just in time for X-Mas)