I think Squilliams logic makes perfect sense. If the PS3 were to drop the price (which we have no idea how much it would be, when it would be, or how much effect it would have) Microsoft could easily drop the price and bury Sony in even heavier losses.

It did have a great 2008 up until recently, but the economy has dropped much over 2008 alone, and as of late, Sony is in a bad spot to be in. Unless the economy does a 180 in 2009, the PS3 will be facing a hard year indeed.

Squilliam I think something you might not have noted in your chart is the possibility of a re-design. That is, if the PS3 dropped prices and substantially cut into MS's market share, MS could lower the prices on all current stock, but keep the same price for a newer "slim" 360.

Clearly, at some point in the future Sony could counter-punch with the same move I just think it would be MS's first response to a changing market environment.

I also think that MS is done making moves for now. Even if Sony dropped prices tomorrow and started eroding MS's lead, MS would probably be content on amassing any profits they can from current prices. They have the luxury of time on there side.

I went to play my bongo drums somewhere, and then this guy joined me:

http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/3496632/Sony-to-raise-prices-by-up-to-a-third-to-offset-tumbling-value-of-the-pound.html

I was one of them that kept quiet also.. what did we have to say? MS was getting beat WW and it looked like the 360 was doomed to third place. We didn't make up reality and posted that the 360 domination was around the corner.

The first couple months of this year painted a real ugly picture for Microsoft. They had proved over and over again that their main goal was profitability. It was clear that MS had no issue falling to third place. The last example was the non existant price cut that should of happened with the GTA IV launch (Anyone remember those Pre-GTA MS price cut prediction threads?).

360 owners who visited this site dropped to an all time low, anti 360 threads where going up by the dozens, and PS3 owners circle jerked each other (ok maybe i'm exagerating... but not really). If MS didn't care about the 360, then why should its owners care?

But then it all changed.. at E3 Microsoft finally said what we 360 fanboys all wanted to hear - "We will Outsell the PS3"!!

And it happened, 360 sales picked up... Tales of Vesperia rallied Japan for a 6 week "woop ass"!... Europe Number increased gradually... and NA numbers took off.

Probably $50 price cut for PS3, no price cut to X360 but arcade gets better (HDD?)

FANTASY 2009:

M$ manages to get wow on 360. rest is history

wii.. well.. umm the same as 2008

SONY: cant compete with the price cut sells the playstation division to sega, which inturn sells the sonic series to nintendo to make umpteen M&S:ATOG sequels in order to cough up cash. Square enix and EA drop PS3 support in response. SEGA changes color of ps to white and orange, releases "little big plant unleashed".. where sackboy turns into a carpet as night strikes!

whats really gonna happen in 2009:

Obama is gonna raise taxes.. Palin will start her own fur line.

MS can't cut prices of the systems anymore really next year. It's already cheaper than the Wii in every territory. And PS2 isn't selling enough units for MS to cut into that either. And with a probably 99 dollar PS2 hitting next year, unless MS comes down to that price, it will border on useless. May as well take home some profit with the 360 by not price cutting.

Cmon guys, it's not as if M$ is rolling in profits. They lost billions on the Xbox and the RROD issue has hit them financially. The Playstation brand will not be ditched even if the PS3 finished 3rd (which i doubt) as I believe Sony will have a winner in the PS4. Microsoft can't jush push companies around at their will, they are darn right arrogant.

Microsoft's typical profit margin: around 30% (usually a few billion dollars every quarter i.e. every 3 months)

Sony's typical profit margin: 1-5% (usually less than a billion dollar every quarter)

Not only does Microsoft have much more profit in absolute terms, they also have a much more robust business structure. If their revenue decreases, they'll still be making big profits... If Sony's revenue decreases, they'll be breaking even or losing money (which is what the ongoing economic crisis will cause).

       Yes, but in the gaming market alone M$ aren't exactly streaks ahead of Sony in Profits.

       (PSP + PS2+ PS1 + Software Sales - PS3 losses is bound to be at least equal to Software sales + 360 Profits -Xbox losses)