Last year for the 10 weeks for Christmas.

Long term vs short term, in the short term you can have a massive spike in sales due to a price cut and in the longer term total revenue from hardware falls whenever the price is cut. Therefore a 25% cut for the PS3 in price given that both the PS3 and Xbox 360 will fall below these numbers without any other changes will likely show similar numbers for the PS3 12 months from now as the PS3 is currently selling now. You may be wondering why the sales are so out of proportion with the current sales pattern. It isn't because of a massive short term spike in demand, its more due to how the consoles sell during this period and to whom the majority of people buying consoles are.

Now for the short term with a PS3 price cut. The short term you would expect to see a large initial spike followed by a drop off as the pent up demand for a lower price point is satisfied. This is pretty similar to how a hyped games sales numbers drops over the following weeks, only we're interested in how much additional sales the PS3 gets over those weeks rather than the total sales. Since much of this initial boost is likely to happen outside of the 10 week holiday period it does make the comparison feasable.

In terms of the market the Christmas season is a relatively favourable one for the Xbox 360 always. There are 3 important favourable conditions for the Xbox 360 coming up to christmas. The proportion of sales made up by the Americas rises to over 50% which is their strongest territory. The entry level cost of the Arcade unit becomes the most important price as the sales of the Arcade start to make up proportionally 50-60% of overall sales as people look for cheap gifts and because they feel the pinch due to excessive spending which is inflamed further by the recession making people more fiscally conservative. Lastly the rest of the market which is the core market have pretty much already made up their mind as to which system they want to get and in the United States (which makes up a larger proportion for this period) it is the Xbox 360. Therefore the relative price of the Elite compared to the PS3 is less relevant because that market has decided if they want an Xbox 360 or PS3 already and the people who haven't want the lower entry cost of the Arcade unit.

To wrap it all up!

The Arcade price must drop ~25% world-wide as this is the most important SKU for the undecided masses. The HDD upgrade should also fall to $75-80 which would make another clearly distinct price level @ $225/$229 which is distinctly cheaper than the PS3 (the old Premium). The most important price is the price out the door with the stuff people want. As the Xbox 360 Elite will still give some fantastic margins @ $299 we can look forward to some excellent bundles as we saw in 2007 with the Forza 2, MUA and Viva pack.

Well, after the Wii, DS, PSP GO go crazy numbers wise, the 360 will prevail over the PS2. Right, Mr S.