depends on how bad they want to play catch up

YES

hum

I m close to 100% sure it will happen

but it will only minorly affect the Xbox360 sales (since it will only decrease the Elite sales, the sku that (personnal guess) sell the less ...

I m even wondering if MS will not discontinue it indeed

Yes of course IMHO 100$ drop will come in September.

They should drop it to 333.33 for the christmas shopping holidays. I think Sony is fully capable of dropping the price, but it looks like they don't really care about increasing the install base as much as they care about looking after their money.

It's not a matter if they are selling at a loss or not. It only matters if they can justify the extra expense with future profits.
No one can deny that more consoles means more software revenue in the future. If they can get that revenue in the future to cover the cost of the initial investments (sellign at a loss) then the only thing they need is cash to cover the initial costs and they can easily get that at any time.

No, since it could cost upwards of $1 billion in a single year. That's more than 10% of Sony's cash reserves, I think they'll hold on to that cash due to the economic uncertainty.

A $50 cut is possible but I think it's unlikely as well (unless the Yen weakens further).

Another thing... It's very hard to fund a price cut through software sales...

Let's say the PS3 sells 9 million this year without a price cut, and 12 million with a $100 price cut. This means the 3 million userbase gained from the price cut will have to spend around $1 billion in software to compensate for the lost revenue from the hardware side. That's $333 of software per gained user, not counting retailer margins.

Honestly, I don't think its a good idea for Sony to do a price drop. Simply because they can't afford it. At this rate Sony will continue to sell a decent amount of units and eventually get out of the red. At this price they'll never be number one or even number two in world wide sales but not losing money is the best way to go at this rate. And I know selling more consoles will sell more games, but I don't think people will buy enough new games to make up for the $100 price drop.

Sony just better hope Nintendo and Microsoft don't do price drops. Which they can most likely afford to do.

Your numbers don't make sense. Do you realize you are insinuating that Sony is going to be losing $333 on every console sold at $299.99. So by your numbers, Sony is currently losing over $233 on every system sold.

I don't even think anyone is acutally dillusional enough to believe that.