if a sony fanboy has nothing to talk about will he make something up yes, also the 360 has more then one price point which means the 199$ is the base platform. If you haven't notice the economy is in the s*** so value matters.

@Staude: I said expanded audience, not casual. Hardcorez like to pretend is the same but is not.

@loy310: to the new audience, yes it failed.

On the contrary, what you are describing goes against basic economic theory, i.e. that comparable products will sell based on price.

Lets take a jar of peanut butter. It costs $1. Next to it is another jar that costs $2. Which will sell more? Barring no significant differences, the cheaper one will sell more since it offers a similar experience for half the price.

There aren't many exceptions for this (although brands can be a factor). The problem that Sony has here is that they have failed to successfully marke the PS3 as a luxury product, one that sells regardless of the price of the competition. A person buying a Ferrari doesn't buy it for utilitarian purposes, which is why it doesn't matter to them that a Honda Civic is a fraction of the price and still serves the same general purpose (getting you from point A to point B).

Sony tried to sell the PS3 this way initially, and they were smart to. A $600 console will need to be seen as a luxury product that people aspire to own to succeed (though they sucked at getting this message across, what with the "People will get two jobs to afford our system" BS). They failed in this however, and the severe price cuts in the first year have undercut that message. By trying to get competitive with the 360 in terms of price, Sony has "cheapened" the image of the PS3, to the point where it is largely seen as a similar product to the 360. Another point undercutting that initial message by Sony is, ironically enough, the success of Blu-ray and the resulting drop in price for stand alone players. What was initially used as a justification for the higher price has now become a liability since it prohibits dramatic reduction in price. Finally, it really, really doesn't help Sony that the vast majority of games (and the majority of the really popular ones at that) are multiplatform. Sony NEEDED to keep the exclusives to reinforce the idea that the PS3 was the luxury winner. It needed to keeps games like FFXIII, Devil May Cry 4, Ace Combat 6, and GTA 4 (among many others) at least timed-exclusive, if not outright exclusive. Then the only thing MS could've done is come up with similar but less marketable "clones"(which they were doing, with Blue Dragon, Lost Oddyssey and to a lesser extent Crackdown) to compete, which would've reinforced Sonys assertion that the PS3 is where you find the creme de la creme of games, but if one just wanted a burger or a kiddie meal, ppl could go get a 360 or Wii.

May I remind people that microsoft haven't rushed into price-drops. The 360's had some price-cuts this year because it needed it to maintain momentum, they've been on the market longest, surprise surprise its the cheapest!