Well, that's not the point, at least in my country, Spain. I'll try to explain the situation here a bit. Consoles are called playstations or Plays here, that could sum up what's happening. General public doesn't even know what xbox is. Price cuts and some ads like Gears of war or Gta IV have helped, but the consumers of 360 are gamers or pirates till the last price cut at least. In general, people worship Sony and the Playstation because of Pro evolution, Buzz and Singstar. Of course, there's a lot of people who also loves Final Fantasy, MGS, God of War or GT.

The principal reason to buy a PS3 is the Playstation name, most people won't be able to tell the differences between PS3 or 360, if you are lucky they'll talk about blu ray (although movies are dowloaded massively with P2P) or chip cell and they'll consider 360 an inferior product, not only because the price is lower but also because it's not called Playstation. Most people won't know what games are on 360 or how the graphics or online are. It's strange how people worship brands here, but rest assured that if you get a foothold with your brand, people will stick to it no matter what. It's not a surprise that Sony treats us like shit, they do what they want and they continue selling. If PS3 is pirated in the future, expect massive sales without needing to lower the price.

Even the most hardcore gamers will buy a PS3, although lots of them say they have it collecting dust, they buy very very few games and only play 360. RROD has only increased the feeling of inferior product between gamers. Lately there have been lots of reports of PS3s stopping reading blu ray discs and people having to wait between 1-3 monts to get their consoles back. Sony technical service is infamous here, but I don't think the problem is enough widespread to affect the Playstation brand image. Sony zealots are so common here that in this forum I feel like at home :)

With that situation in mind, you can understand that the 360 price cut will have limited effects here.

@Gotcha

I see. Well as a generalization that kinda makes sense...Europians are more likely to buy one console and they usually go with the brand name they reckognize. My girlfriends cousin came for a visit from poland last month and we argued about xbox 360 vs ps3 for days. He doesn't understand how xbox 360 can be better when its cheaper...as simple as that.

There is only one reason why companies lower prices--to stimulate demand. Be it to compete more effectively with a competitor, to reach a pricepoint more acceptable to consumers, to clear out a model that is becoming obsolete etc. the result they wish to attain is greater sales. It applies to MS, Sony, Nintendo and even paperclip companies. If the quantity demanded for the Wii were to drop, Nintendo would drop their prices as well.

Essentially Millions statements are roughly grounded in Economic reality.

If you consider the Xbox 360 and the PS3 to be rough substitutes, and in this relationship the PS3 is considered the better alternative, whilst the Xbox 360 is the inferior good. Essentially most people like butter more than margarine and the PS3 is the butter. (In general)

Now in this relationship Microsoft can:

A. Increase the value of their offering - Games, features, percieved quality, reliability, freebies, advertising etc.

B. Decrease the cost of their offering and hope to draw new people into the market and steal a few sales directly from the competition as they substitute PS3s for Xbox 360s.

C. Hope for positive word of mouth or essentially the "Xbox 360 is the same as the PS3 only you're not paying for Blu Ray" or the "Margarine actually tastes about as good as butter mmmm here did you notice that toast I gave you had margarine on it?" effect.

Now they can do nothing about reliability perception until next year when the slim model comes in. It took that long before some people got the PS2 due to reliability perceptions and many waited for the slim model to do so. If it looks physically different then people will percieve it differently because the Xbox 360 still looks like the one that had those 'issues'.

They are using A and B to positively effect the install base but the main impact on everything they do is actually in the C column. Advertisements are not going to win overall public perception, they have to give their advocates - people who own Xbox 360s and recomend them to their friends ammunition. If they lose the install base race then it doesn't matter what they do if they lose the battle on the ground in the minds of their consumers.

You do realize the Arcade is a Core, right? It's the same thing, there is no essential difference between the 2 products. Outside of the fact that the Arcade comes with a few freebies that the initial core did not. Therefore the price comparison is 100% valid. And why are you arguing that the Arcade needed to be launched at the same time as the 40GB? The X360 wasn't introduced the same year the PS3 was, so I fail to see your logic.

The whole point of the 40GB comparison is the fact that the 40GB PS3 is Sony's obvious attempt at cutting off functionality to give a cheaper price, which I think the comparison is still somewhat valid. If you want to argue price reductions, you can do it 1 of 2 ways:

1) Compare similar products, and the reduction of prices (Premium 2005 pricing > Premium 2008 pricing, PS3 60GB>PS3 60GB pricing)

2) Compare baseline products from the 2 systems (Core 2005 pricing > Arcade 2008 pricing, PS3 60GB > PS3 40GB pricing)

The problem of your argument is that the 40GB PS3 model was the price cut. For some reason, you can't get that through your mind. It was a reduced functionality device meant at decreasing the initial price point of the PS3. Kind of like the iPod shuffle and the various derivatives that are cheaper than the $300 normal iPods.

Unfortunately, in Europe, making a valid argument for the PS3 in most any case is kind of hard: There was no base line product that you could really compare to, since the 20GB model never launched in Europe, and that's the issue. Sony never debuted the product in PAL territories, which was the "true" baseline product. So we're roughly comparing the Xbox 360 Premium's price drop to the Xbox 360 Arcade's price drop, which is most likely an invalid comparison. But at any rate, it was Sony's decision to do what they did in PAL territories, which shows how drastically they've reduced the price by switching from the premium 60GB model w/ software emulation to the non-BC 40GB model.

How so, and what argument are you even trying to make with functionality? The cheapest PS3 had it's BC compatability hacked away and totally null and void (the Arcade still has it's BC), less USB ports, flash card readers, and SCAD support all taken away when Sony went to the 40GB PS3......The Arcade has what inferior to the Premium? Just HDD functionality, which you can spend $40 to upgrade. The Playstation 3 SKUs have had entirely different functionality subsets: Backwards Compatability, Flash Card reading, and Wi-Fi have been different between each unit. The X360 has always been far more streamlined: You can still take a 2005 core, and only have the HDMI port, and black matte finish being the primary differences between that, and a 2008 Elite console.