I think the picture, regarding price drops, will become MUCH more clear after the quartely earnings of MS and Sony come out.  I wouldn't go and predict a PS3 drop too early, nor an MS drop on the Arcade, from what I know.

360 Core - launched at the end of 2005 for $300.

Why can't it be half price at the end of 2009, 4 years after launch? That hardly seems extreme considering some people are calling for Sony to halve PS3's price 2-3 years after the European launch.

What is the current market price relative to launch in the U.K and U.S?

Over here the PS3 was 600 € at launch (only 1 model available), now it's at 400 € (with higher disc size and worse BC as far as I know). Launched in March 2007, had that 200 € price cut before Q4 2007 if I remember correctly.

The 360 I don't know for sure how much it launched for, but I think it's a similar situation to the USA.

My guess is along with what others say: Arcade hits $150-$175 and other models drop a bit more.

MS wants to do everything they can to bury Sony. They realize Nintendo is impossible this gen (and may take a crack at them next gen, but obviously not this one) and they want to hurt Sony as much as possible so they can get more developers to jump ship.

Go get em MS.

ha i could see this as a bluff. they are stating this to make sony thing "will a price cut help us or not" cause if we cut price we are loosing on per unit again and microsoft will just cut again as they said they would

Thats a significant cut, whats the situation with the Xbox 360 pricing? (Sorry im not up on the pricing trends.)

OK, I did a few searches... 300/400 € at launch (Core/Premium), 170/270/300 € right now (Arcade/Premium/Elite).

Some of you seem to forget that Sony is losing around $50 a pop now. Add a $100 price tag to that and you get $150 loss, even if they can cut the price it will still be around $100. So I am certain M$ could match that loss rather easily, esp.. considering M$ are near breaking even or making money on all their sku's.

M$ is trying to finish off Sony at this point, why battle them next gen if they can cause them to go under this gen? So M$ doesn't mind losing a little money as long as it helps them out in a few years.

Even if Sony does survive this gen, the more people M$ can get onto live the better for them next gen. Why would anyone want to leave their friends list when everyone you play with daily is on it?

If Sony drops the PS3 to $299, it will have much more of an effect than MS dropping the 360 pro to $199 simply because the 360 already IS $199 and the people who are buying consoles now don't really pay much attention to the details.

All they see is "PS3 is now $299!!!" vs. "a different 360 model is now $199!!!!!" Which one will make more difference?

Either way, I seriously doubt that MS will drop the 360's price anytime soon given how well their sales are doing.