If we're talking about the whole history of the two companies' gaming division, you could be right but that doesn't matter much nowadays. Companies have to strive for profit now, regardless of their history (especially if they don't own huge cash reserves as Sony doesn't).

I think Squilliam has done a pretty decent of job with the tables. After all, these are all possibilities, but I think the PS3 becoming more affordable will have a larger impact on PS3 sales then the 360 had.

With the amount of Money both brands have lost in this division, it is hard to say if MS can afford to give another price cut or not. All depends what they are after; profits or market share. The winner can be the one who either, gets both, or what they were aiming for (market share or profits).

As someone has pointed out on this site, there is also the possibility of a slim 360 and a slim PS3 to take into consideration and then there is a very valid point someone else made to how much MS can drop the cost of a 360. You drop the value of something too much and it loses its appeal sometime.e.g. If everyone can afford a Ferrari, there would be nothing special about it anymore.

MS are more likely to offer more lucrative bundles then cut their prices some more to match PS3 price cuts. The reason behind it is simple; even at the current price of both consoles, the PS3 is still shipping good numbers.

As for the economy - yes, it is pretty bad, but statistics show people are still spending money on entertainment. The entertainment division has not been hit so hard. It is the more expensive purchases such as; houses, cars and commodities which have been hit harder. The money people would have spent on going out, or buying a house is now being spent on smaller purchases which keep consumers entertained and happy. A feel good factor for the recession at hand.

Both, the 360 and the PS3 will do well this and next year, and both will be around next gen to yet have another console war.

I concur. The smartest thing Sony can do is hold steady and try to ride out the fiscal storm as best they can. Think about it - does second place really matter one iota in this "console war", outside of fanboy theatrics? The 360 will never sell so many systems that it will pull multiplatforms away from the PS3. Both will continue to get 90% of the same library. The single dumbest thing Sony can do is get into a price-slashing war with Microsoft, which they are never going to be able to win, and especially not in this current climate. (I think Microsoft's latest price cut was done specifically to try and goad Sony into making damage cuts. We'll see if they take the bait.)

Sony fanboys will be crying a river, but who cares? They're fanboys. By definition they're idiots and their opinions don't matter.

No buisnesses save money for rainy days to my knowledge.

Money uninvested is potential money lost.

Hell most buisnesses spend money before they even have it!

I mean that's why companys like Sony make profits yet have "debt" in loans.

Microsoft saves money for rainy days. I think I remember reading something saying that Bill Gates's objective was to always have a cash reserve big enough to operate for two years without selling a single product.

I don't know if they're at that level now, but they do have a huge cash reserve which allows them to survive long after most companies would. I think Nintendo is also quite conservative with their finances.

Well, not no buisnesses... that was an overstatement. 

More like most... I mean Sony is one of those "run and gun" type companys.

Personally i perfer the cash reserve strategy.  Few investors and buisness people do though.

It's one of the reasons i like Warren Buffet so much.  "Don't think of it as lost money, but as paying for the chance to be flexible enough to jump on a great oppurtunity."

Some possible things I guess: Xbox 360 Slim.

We haven't seen Jasper and its late so exactly what Microsoft is doing now is anyones guess. But we do know that the 40nm process from TSMC is early so if they want go slim they'll need to jump to that process quicksmart this year. With the delay in Jasper its really up in the air exactly what they are planning. They've hidden their moves here so well, it makes me wonder what it is they are doing.

The PS3:

The 360 will probably have a 7.5-8.5 million console lead by the time Killzone 2 releases and most likely the best course of action first is to slow the 360 down in the Americas because its on the verge of running away with things. If they leave it too late they will be so far behind that they won't have a hope of catching up. The more Xbox 360s sell, the more they will sell due to network effects. The friends/neighbours/collegues who buy consoles also influence those around them. So a combination price-cut and the release of the first 90+ exclusive shooter is probably the best way to go in a market which prefers shooters.

In Others, Sony is in a much stronger position. They don't need to cut the price straight away and they need the extra revenue to give them the profits so subsidise the American price cut. They will probably cut the price in September and they will take advantage of people buying consoles for GT5 by keeping the price higher for release so they can double dip a profitable console sale and the sale of first party software for a quarter and then drop the price to spur sales over Christmas.

I don't think Microsoft are quite stupid enough to cut their price again. They must be selling at a huge loss already, so the bottom row is pretty much impossible. Perhaps 0.01%

The second row is more likely, but they've just had a price cut. Another will make them seem desperate. 19.9%

The top row is, in my opinion, the most likely by far. Microsoft cannot afford to cut prices again and again. They're already selling a premium model for 300 bucks. What does it cost to manufacture, maybe 350? If they cut that by 100 bucks, they would be losing 150 dollars on every console sold. As much as they want to defeat Sony, they're not going to do that.

Remind me- how many people thought Microsoft was doomed after 37 weeks of losing to the PS3? A lot of people. Did Sony keep that lead forever? No, they did not. Although I suppose if they had to make cutbacks, Sucker Punch wouldn't be missed an awful lot.

Maybe you should make the bottom right square yellow, to show it could go either way. Sony is not leaving the console market. Really, they're not. If Microsoft makes the 360 cheaper, Sony will make the PS3 cheaper if they realise it is imperative for their console's survival. But like I said, the last row is near impossible.

Doesn't Nintendo have a pretty big warchest? Iwata talked about it at some point...

A plausible and possible analysis, not necessarily realistic though. Smells a lot of GAME THEORY to me :)