NJ5 said: If true, this goes against my predictions but it will be amusing to see Sony's financial contortions to deal with the consequences of this price cut.
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Price cut consequences can be temper by software. Easily. Arcade definitely cost more than $199 to manufacture. Despite this I don't expect to see Microsoft in red.
Personally I believe Sony has plenty of time for a price cut. Sales are good. Sony sold more in two years than Microsoft in same period. I think they will also outsell Microsoft in third year.
This gen one system is not enough for most developers. No1 is going to ignore 20 million PS3.