Firstly I did say "potentialy" as I'm not certain this would be the case this thread is a speculative one . We can't assume the consumer knows alot about the PS3 and the 360 except things that are heavily advertised by the respective companies , Blu-Ray , XBOX Live , with the exception of things like that it would be better to assume the average person doesn't have a great deal of knowledge about either .

A £100 hd console which used to be £300 vs a £280 HD console which used to be unnafordable for most people, the low price point in combination with the huge shift in price point does send a message to potential buyers . Consoles historicaly only drop fast in price point when they aren't performing well which is exactly why the Wii hasn't budged in price point since launch (i'm suprise nintendo didn't increase it).

The OP does have a point, it's basic marketing theory.

People will look at the shelves and go "Oh, £130 for an X-box 360", then they may think "hang on, why is it so cheap?" especially if they compare it to the PS2 which is at the same price (more or less) and they may think both products are compariable due to the price similarity.

The thought pattern may go "Bargin!" and they rush off to the tills or they may think "something's wrong here, I'm not going to buy it".

If the above holds true, expect a spike in sales as the impulse buyers rush to the tills not believing what they see with the low price, followed by a significant slow down as people begin to get suspicious as to why the machine is so much cheaper than the PS3.

The Wii is in another league as it captured the public imagination and started off a low price.

Customer perceived value is great, but if no one can afford the more expensive product...what good does it do? If anything, Microsoft is increasing the perceived value of its premium and elite SKUs.

Toyota Corollas sell better than lamborginis

The OP has a point, as stated above. The price difference will cause the buyer to think about the difference, which will win many buyers over to the PS3, since it always has had, in many critic and consumer opinions, greater value for the money.

When the excitement of the price cut is over, the PS3 will return to the top of the HD weekly sales, and the HD marketshare will have increased in both percentage and future potential thanks to it -- not hugely, but any strides the HD consoles can make forward, at this stage, is a good thing.

While some people may wonder why is 360 so cheap, most people will wonder why PS3 is so expensive. They have very similar gaming libraries and have similar features.

There is a term in economics: substitution effect. When one product can be substituted for another (they dont even have to be very similar, like watching a movie instead of reading a book etc. ) then decrease in price of one product will result in decrease in demand of another product.

What you are going through is wishful thinking, plain and simple. Majority of people when presented with two choices will go for the cheaper one because they can get a similar experience for a lower cost.

I agree with the OP. Most people in Europe thinks PS3 is much more powerful than 360.

360 will soon be seen as a dead console due to the cheap price. Just like what happened with Gamecube.

"The 360 drops its price ! Quick let's buy a PS3 !"

That's what you are saying

That would be true if 200$ was the starting price of the 360 or if the potential buyer does not know anything about consoles and wakes up today seeing this price. It could be a good point too if the price is reaally low (cheaper than a PS2). Also the 200$ price tag is the cheapest of the SKU, there are still "hardcore / HD / Elite / whatever / full price" 360 out there.

Sorry, that logic is dead, there are people that think the wii has the best visuals of the 3 consoles, and im serious.

with 3 years of warrenty no one will care about the reliability