People still prefer the lower entry price rather than a good bundle.

Unfortunately, it's not something Sony is willing to do until productions costs drop enough, and a good bundle/added perceived value is about all consumers are going to get.

A $350 price point would only be to prevent cannibalization of sales due to a lower 360 if the current price drops consistently succeed in doing this.

Otherwise, Sony would do well enough to hold off on price cuts until next year, dropping to $299, lower production costs permitting.

I think the price they should move to is 329.99 and 399.99

ps3 has shown constantly that it can outsell the 360 even with a higher price, so with a price cut i'd say 3 with a little doubt, but 2 with confidence.