The PS3 urgently needs a price cut. If the economy was doing okay, Sony could've toughed it out for six months and noone would've cared, but we're in the middle of the worst economic crisis in 80 years.

Ironically, the real threat to the PS3 is not the 360, which remains uncompetitive for other, self-inflicted reasons - lack of BluRay, lack of wireless, overpriced online, lack of first-party studios, etc. (Microsoft will sell plenty of units, but they have no chance of dominating the field.) The real threat is the Nintendo Wii. Because all the evidence suggests Nintendo is doing something very smart - switching from 10-year console cycles to 5-year cycles - meaning, expect an HD-version, BluRay compatible version of the Wii in autumn 2011, a mere three years away. It will play all existing Wii and GC games, but will have far more power under the hood, and feature vast amounts of DS interactivity and new forms of motion control. Once that arrives, the PS3 loses a big chunk of the "fat tail", the final six years of a console's life, when manufacturing costs are low and profits are high.

I'm not sure why Sony isn't pulling the trigger on price cuts. They have everything in place - video on demand, downloadables, online service, etc. Whatever money they lose on hardware they will get back twice over in media content.

In April 2009 Sony will probably drop the PS3 $50-$80. This way it won't impact their current fiscal period and get a good jump on sales for the next.

They may do in in March if they feel they are going to miss their units sales goals AND it will not impact them from showing profit for the fiscal year.

I agree. A lot of people (including myself) usually don't put the Wii in the same category as PS3 and 360. If Sony and Microsoft don't watch out, I think it is possible for Nintendo to dominate even more. As you say, Sony better do something about its price as soon as it can.

100 dollar price cut next May

Sorry, the Playstation division posted a small loss last quarter, so even the profit from PSP/2 can't balance the loss from PS3

I don't believe Sony needs to do another price cut until sometime middle or late next year. Yes, the 360 and Wii are outselling it right now (well, the Wii is outselling just about everything and will probably continue to do so for a while), but it's not like the PS3 has just stopped selling. If it starts to stagnate really badly in the spring, Sony might be forced to do something, but I think they're fine at the current price point.

I dont think ps3 is in deep trouble now, they keep selling a lot like they did, its just that 360 had its pricecut and great games that have helped it gain a bit of what they have lost. I mean, JRPG for japan, pricecuts, Gears 2, fable, etc...; even if Resistance and LBP helped a bit they didnt help that much.
I think the pricecut may be next year, either in the middle or like in the same time 360 did this year.

 This...

I do not think you will see a price cut next year, as the economy will only get worse.

The economic crunch isn't going to hurt Sony's gaming division specifically, as diversionary spending (feeding our vices) usually goes UP when the economy is down, not the other way around. Alcohol and tobacco were recession-proof at retail for the past 50 years. I think video games will show to be recession-proof for the next 50. Just look at October sales -- the industry was UP 18% over last year* despite the economy.

* http://biz.yahoo.com/ap/081113/video_game_sales.html?.v=4

Sony faces stiffer competition from cheaper Asian manufacturers in their other CE lines, particularly TVs, and there could be a stall in the growth of Blu Ray, both of which will hurt Sony tremendously. The games division, despite recent losses, is arguably in the best position to weather the current storm. I think they maintain the status quo and keep the $399 price tag for the time being, then look to shed $100 post holiday, likely in the spring around April or May 2009.

The minimal, short-term bump in sales would not be worth the additional losses. The "magic" price is the sub-$200 range. Sony can't get to $199 anytime soon, so I don't see the point at rushing headlong to $299 or $349. Anecdotal, word-of-mouth evidence suggests Sony might pull in more casuals and move some systems thanks to LBP. If that's true, Sony needs to milk sales at $399 for as long as the market will bare.