No matter how people spin it having a decline in sales going into your 3rd year is just not good. Whats the most a console has ever sold with sales declining in its second holiday season and continuing to decline going into its third year?

Lol.  Awesome.  I wish I could build a 360 out of twigs and leaves too.

Why are people so unwilling to accept that the 360 Arcade is sold at a loss, and that MS makes its money off the 360 software sales, and accessories (which are stellar) to recoup?

You have to take into account how well the PS3 is selling atm with its hefty pricetag... with todays economy a $100 pricecut would be MASSIVE.

Saying the 360 could also cut the price is true... but it wouldnt have as big an impact as the PS3 dropping $100.

And why are people so unwilling to accept that SONY cannot cut the price of the PS3 by $100? In addition, even if the arcade is sold at a loss MS has a lot of ways to recoup the cost that SONY doesn't have.

1.) LIVE costs that as the install base increases more money flows in

2.) Software sales from XBLA, XNA, games- its a well known fact that MS sells a lot of software and almost double that of PS3 when XBLA and XNA is added.(also Xbox originals)

3)Accessories- no matter how expensive it is MS makes huge profits of those harddrives, wireless adaptor, headsets, cables etc

True.

Do you think a console that cost $300 can outsell a system that cost $130-$150 that plays like 99% of the same games and has a new Halo game out by end of the year? Seriously, what planet are you guys from? Helghan perhaps.

If the Arcade is $150, it will put an end to the PS3 for sure (at least in America)

I also find it funny for those claiming Microsft is selling the Arcade unit at a loss and can't afford to lowered the price of the system any more. And then claiming Sony can just easily lowered the price of the PS3 by $100 with Blue Ray, Blu Tooth, Wi-Fi, and Cell and still makes a profit! LMAO

Also, you know what are the 3 most hyped, best selling, and powerful franchises are that will be releasing at the end of the year? No it is not KZ, Uncharted or even GOW. It is Halo, COD, and Madden. And guess what, all three are availble on a cheaper console.

If you are a customer and you see a system with those 3 games added  together that cost the same as another system by itself, now tell me which console will sell more?

Nice OP M$ has really turned it around and SONY is going to follow suit. When the PS3 gets a price cut it will be much closer

Not all price cuts are born equal, there's a law of diminishing returns in action.

A price cut from $400 to $300 is more valuable - in sales returns - than one from $300 to $200. And under $200 you will not gain much sales at all because you're in the "comfort zone" already for what the public percieves at this point as the value of a console.

Even when it was doing crappy it still did better than the PS3 till MGS4 spurred sales...  Microsoft could easily match a 50 dollar price cut... a hunder dollar price cut isn't feesable for Sony this year.  I expect that around Sept or so Sony will drop the price 50 bucks.  Depending on it's sales leading into the holidays Microsoft may also drop it's price... they have the new chipset scheduled to come out this year if I'm not mistaken... and if Microsoft does a 360thin it may be game over in the US.

I didn't know you were an integral part of Sony's financial team.  I'm sure Sony could cut the cost of the PS3 by $100 and survive.  It's a matter of letting the market saturate itself with the Xbox 360 letting it run it's course a bit and then hit the market when the time is right.  It's pointless for Sony to drop the price $100 , when they are only about 20-30k weekly behind the 360 in sales (At almost double the price). 

Believe it or not,  Sony has more power the longer they hold out to drop the price.  (Within reason).   It keeps the value of the system high in the consumers head.  So when the price drop does happen?  People feel like they are getting the bargain of a lifetime.  

Yep.  Live brings Microsoft the revenue to do other things.  Like price wars with Sony.  Personally,  I would prefer free online than my company trying to secure more marketshare.

You do know the PSN has a store as well right?    Also,  Sony is no doubt getting a healthy chunk of the pie from their movie download service.

You're right Microsoft does make profit on it's accessories.  As does Sony.   And with each PS3 sold,  the Blu-Ray market grows (Which is a net benefit on the entire company). 

I would imagine,  Sony gets a fair share more out of movie downloads on the PSN than Microsoft does from Netflix.  Sony also collects more on movie downloads simply because many of those are Sony related studios.  As well, each Blu-Ray player sold (PS3) is just another potential movie buying customer.   Additionally, Playstation Home provides additional revenue for Sony as well as advertising.     Also Sony has more first party studios to profit from (Something Microsoft doesn't have).   First party studios are going to bring more money back to Sony than a third party studio.     Also Sony has the PS2 sales to rely on (Which almost assuredly result in hand over fist profit).  

So, sure Microsoft has solid money flow, but don't mistake the fact that Sony has a pretty significant money pipeline as well.