The problem with this is that those prices will struggle to compete with a $399 PS3, even if the PS3 is dummed down. You cant have a blu-ray-less console at just 50 dollars cheaper even if it does come with good games and have access to a better library. it also has a smaller hard drive

Your right, but those $399 PS3's are rumors nothing is confirmed.

I'd like to believe that but its starting to look pretty certain. Hopefully Microsoft is seeing it too and taking action. It would take at least a month to set up a price drop, but if they take action now they could do it about a week or two after Sony. It wouldn't have to be massive, just $40 off each SKU.

Incidentally, a small cut like $40 would take the core bundle below the price of a Nintendo Wii, and bring the Pro down to around $300. These two SKU's would look very attractive with their bundled games, not to mention the lower priced Elite. The problem is MS is so set on being profitable this year, that they may choose to appease their stockholders by holding price rather than really sticking it to Sony whilst they still can.

The bundles are with two games most people won't want: Forza 2 and Marvel Ultimate Alliance. So pack in two games that aren't selling because no one wants them and you're not adding value.

Give us a $100 rebate and a working console. People in the SA forums are reporting failures within a week on new consoles.

I beg to differ. Seriously, if Sony drops the price of the P$3 to $399, it will be losing money like a hemophiliac losing blood. They would be in it just to say they beat the 360, but it would still need a huge surge to sustain momentum. And at what cost? Just look at it - the 40gb PS3, with just software emulation, will compete with a 360 with 2 games (That's like $100) and the even lower Arcade version at $279. The PS3 will still suffer a gaming defiency, and with no real games out this holiday season, the sales will surge temporarily and then start falling again.

My question is ... what compelling reasons NOW does the average gamer have to buy a PS3? Nothing comes to mind for me ...

And of course, M$ will just match their price cut - eventually - but with Halo 3 burning the charts, Sony's looking very, very desperate these days ... 

I have to disagree since most gamers are buying a system to play games not blue-ray movies.  I am strong believer in games lead to sales and the 360 has alot more to offer which is far greater then the price difference.  Obviously we will see how this turns out fairly soon though I have faith in games over price drops. 

Getting two free games isn't like $100.  It's like 80 cents.  And if you don't want the games, it's no value at all.  Giving people $100 off would be real value, and that was a big part of MS' success last holiday.  Let people decide which games to get with that money.

The average gamer may have no compelling reasons to buy the PS3 now other than the Playstation brand.  And for many gamers, that is still enough.  They may not be able to point to a game and say, "Man, I want that" but they know the PS2 is where they had their fun last generation and the PS3 seems like the logical choice.  They don't know MS and Nintendo have all of the good games right now.

A $399 PS3 would be compelling for me.  The biggest reason I prefer the 360 over the PS3 right now is because the 360 has Viva Pinata, and that's not even for me but for my fiancee.  Sure, there are a few other reasons I want a 360 and no reasons I want a PS3 yet, but there just isn't enough motivation to put another device in my crowded entertainment center.

Want to know why MS won't offer good discounts this holiday?  Because they need to show their investors they can generate a profit.  They've told them that this will be the fiscal year they generate a profit, and even if they don't count the cost of repairs and considering the huge financial windfall from Halo 3, they are going to be right on the edge of generating a profit.  This would be a big opportunity for Sony if they had any good games coming out.

A price cut doesn't mean anything if 360s keep dying due to hardware failures.

It's sad but I know quite a few people who have yet to purchase a 360, not because of price, but because they're so wrought with hardware problems.

Low price + free stuff is always good though