Hmm, I tend to agree with darkfire, the 360 is still comfortably cheaper (on average) than the PS3 at this price point, Microsoft will use bundles instead.

If sales really turn around then maybe Microsoft would unveil a price cut for black Friday or something.

MS is clearly in a reactionary mode. I don't think they would have slashed their prices in August if Sony had not slashed theirs in July. I suspect we'll see a price cut right in time for Black Friday -- around Thanksgiving, in the US.

where i think both need the price cut most is Europe. Everyone knows that Europe is sony's boytoy lover and the 360 is finally getting momentum there. Plus both systems are already over priced there and never got a drop in the summer. I expect the PS3 to get a worldwide drop but I wouldnt be surprised if there was a drop in Europe at the end of October for the xbox too. In NA however, maybe $50 cheaper at the end of october but i wouldn't be surprised if microsoft rode this christmas out at the current price.

Yes. My sources tell me that Microsoft is going to make an announcement on the 12th Oct @ 11.59pm...

They are going to reveal a $5.00 price drop to all their SKU's and it will cause such an excitement this announcement alone will null the effect of Sony's 3 huge surprises.

In all honesty though, I think Microsoft were smart... They COULD have dropped their prices by $100 and had a great rush of sales BUT decided $50 was enough, STILL GOT their great rush of sales, will drop a further $50 Soon after the Sony announcements, then get ANOTHER great rush of sales boosting them throughout the holidays.

At the earliest I see MS pushing a price drop the week before Thanksgiving. Personally, I don't see them dropping the price at all unless they're confident that ATI can get their fabs to 65nm shortly thereafter (clearing out shelves for cheaper units to follow Christmas). With RRoD rumors persisting, they're probably very anxious to get that GPU to 65nm.

If they don't drop the price before the holidays, expect them to drop right before GTA IV hits.

Most likely MS wont do a price drop.

in fact its pretty much a known rumor(there have been pictures roaming around showing these, even best buy had preorders up but took down the site) that they are coming up with a 2 game bundle with the Premium and Elite Versions, coming with Forza 2 and Marvel Alliance. That seems like the more likely reponse to a ps3 price drop.

Even with the new rumored 40 gig, $400 PS3, a 20 Gig premium $350 X360 with 2 free games retailing at a combined $90 bucks still is going to give a sony pricecut some good competition.

I think they left themselves room for a $379/$329/$279 structure, but as everyone said I don't think they need to go there. Part of me thinks they will drop the elite to $399 to keep their best on par with Sony's cheapest.

They have the strongest lineup so sticking with the prices shows confidence.

I also think that the arcade pack with pack in games and a mem card can go for the casuals. Perfect timing for Guitar Hero 3. I am guessing that will help make the 360 the winning system for that game.

I think they should drop the price, if they do they will take away any steam PS has.....and thats the market they want to kill.

I do not think Microsoft has been in a reactionary mode to the Sony price drops. They seemed well aware they were coming. They were talking earlier this year about Sony dropping the price in the summer. They were right as we all saw. They were also the ones that told us about the supposed 40GB model of the PS3. Which looks like it is going to happen, and they said it would be around four hundred dollars which seems to be the likely result now. They seem to be following their own strategy. Their price cut after all was far more comprehensive then what Sony even offered. Further more their price reduction was set perfectly at the beginning of the fall season when it would have its maximum impact.

Microsoft seems to be the one that is being proactive. That being said there are three logical scenarios from my point of view. Microsoft intends to focus on packed in games to increase the value. They only launched half of their price cut earlier. They intend to save the revenue and focus it on the software war.

The packed in option seems to be the most likely candidate at this point, but by far not conclusive. Chains like Bestbuy often have their own promotional offers. A erroneous listing is out of the question this speculation might be based on a bundle offer they intend to provide. That would increase the value of each sale, but there is a valid question in that are these games true justifications to get the system. The rumor is Forza and Ultimate Alliance. While both solid games do they really have mass appeal. Had it been any other titles I might have greater faith.

A second price reduction has real benefits. They would enter the larger consumer market now gaining severe momentum. This seems very plausible if they want to finish the fight this holiday season. They would still keep the PS3 the more expensive system, and they are in a good position to eat the loss. With their holiday lineup they should easily generate far more capital to offset the loss on units. The cheaper the systems are the more games they sell. The only downside is that they might lose more profit then Sony. After all Sony is actually supply constrained. They might only be able to put out half the units of Microsoft this holiday season. Sony could very well be running a sale knowing full well that they could sell out, and not have to eat any more losses.

I have to say I like the notion of Microsoft seizing the initiative to go with a software war over a price war with Sony. Microsoft using the money they saved to buy exclusives out from under Sony could be a critical blow, and one that could pay dividends later on. Not only against Sony, but against Nintendo as well. Were Microsoft instead of announcing a price cut to announce they bought exclusive Final Fantasy rights among others. Would seriously curb demand for the PS3.

Personally I think Microsoft will opt to go with a combination of two options which would pay out better dividends. I also think that if the rumors are true this new PS3 unit will actually flop. So they might feel no need to price war it. Further more they might still come out much better. I think they will opt for the cheaper pack in model, and then use the remainder to purchase some strong exclusives out from under Sony.

The two titles mentioned in rumor are games on their last legs sales wise. Marvel has been out for almost a year at this point. Would Forza fair well against PGR 4? Both titles guaranteed to have marginal sales this season regardless. Further more that being said the majority of the profit in these titles has been exhausted so in reality they might actually have a real worth of twenty dollars. The remaining money which would probably be thirty dollars for a real price cut could supply the funds to buy many serious games for Microsoft.

I know people might not like to here this, but what would happen to Sony if Microsoft paid out huge sums to secure exclusivity of Metal Gear, Final Fantasy, Resident Evil 5, and a few other marginal titles. With the money Microsoft would save compared to Sony. They could seriously buy up the exclusivity on such titles. How many developers can turn down a thirty million dollar exclusivity contract?

Sony cannot fight them on every front. So while Sony tends to the price which is driving away consumers. Microsoft might take advantage and buy up the games that would motivate consumers to buy the console in the first place. Thats just sound logic.

I think Microsoft is going to do a combination of things really. There is less risk involved, and much less in the way of loses.

But isn't that the definition of reactionary? Waiting for Sony to drop the price, then dropping their own? MS had the Xbox 360 out for longer than even the PS2 was before a price drop.

I think they were in a strong position and felt no need to drop their price until PS3 did. Their decision was certainly influenced by the desire to take away any potential momentum from Sony's drop. It's too much of a coincidence for me to believe that Microsoft dropped their price the month after Sony does, but the two events were not connected. Microsoft waited for Sony to make a move they really didn't want to make (and let's face it... Sony did not want to drop the price on a machine that was already leaking money) and then swept in and cut the competition off at the knees with their own price drop. That's reactionary, whether they knew about the price drop in advance or not.

And why shouldn't Microsoft be reactionary, any way? They are operating from a position of strength here. They are selling far more consoles and far more software than Sony. They can afford to remain at the price they are for as long as Sony allows them to do so. But once Sony makes a move that could potentially shrink that gap, Microsoft will then move in and do whatever is necessary to continue outselling them. Their original $50 price cut was genius -- it gave them the exact same percentage increase in hardware sales that Sony's $100 price cut gave them and left them in a prime position to offer another $50 price cut later in the year and steal Sony's thunder without breaking the bank.

And I also think MS will go with a two-tiered approach to dealing with Sony this Christmas. They will create software bundles and they will knock $50 off the price come holiday-buying season. With the software they have, that's going to be a difficult hurdle for any company to combat.