@madskills

the 40gb ps3 plays ps1 games.

Well, there is a certain point where Sony can't drop the price any further.

The problem is here, the PS3 and X360 are almost feature-equivalent. So people who simply wanted a "next-gen" system already have a X360. Microsoft's going to pimp that lead until they annouce the XBox 3 or whatever they call it.

Take a look at the Gamecube. Feature similar to the PS2 and XBox, but much less expensive. The PS2 had a year head start and used that time to maintain its massive game library. When Nintendo made a AAA game for the Gamecube, Sony had a few AAs and a dozen Bs. Even when the Gamecube dropped its price waaay below the others, nothing happened to sales. The PS2 library was too large at that point.

Fast forward to now. A mere price cut isn't going to save the PS3, even if they went below the Premium's price. The X360 can simply publish more games than the PS3 can. Basically Sony needs a constant stream of AAA titles to make up for the 360's quantity. And because the systems are too similar, there is no feature to encourage great, unique games on the PS3.

*Super meter empties*
Uhoh.

Well I have to say their is no reason for Microsoft to counter. The 40-gig model of the PS3 won't do much better then the 20-gig one that came before it. Honestly Sony doesn't have the software this fall to push its hardware that well and after Christmas is over I can't see PS3 sales being that big till Killzone2 and such sees release. GTA4 won't assist Sony much either since Microsoft gets an exlcusive version of the game as well as the fact that 360 actually get GTA4 the same time or earlier then PS3.

Face it PS3 40-Gig can at best add a couple hundred thousand in sales over the next few months but nothing that Microsoft even bother responding too!