@Avinash

You also underestimate the power of a sale. Especially one that lasts only one day. Now us here on the boards (for the most part) are educated about consoles. But a lot of people just see that one day only sign, with a $200 dollar machine basically being sold at $100, and just grab one up. Now if the price falls to $100 permanently, it will get a boost, but your average Joe will also have more time to do some research. And in doing so he'll find that to fully enjoy the Arcade, he's probably going to have to buy a:

HDD - The cheapest being $50, and that's only for 20GB. But to be at the same level as PS3, a 120GB HDD is $150. You can get a 500 GB one for a laptop or the PS3 for a little over $100.

Rechargable Battery Pack - $12. Now I know you'll be like those who say you don't need one, but come on. Without it you'll easily spend that every 2-3 weeks in batteries.

Live - $50/year. Now this you can argue that you don't need it. But since the PSN comes with the PS3, I'll just add it to make them comparable.

WiFi Adapter - $80. Again I know it's not needed. But WiFi is included in the PS3.

Now I'm sure you've seen this types of lists before. But I'm not trying to argue which is the better console for you or others, just which is the best value when researched by your average Joe.

But anyway, that puts the $100 Arcade at a cost of just shy of $400. And I wasn't even including HD-DVD, as it has no value in an argument since it's dead. Now for $100 less you can get a PS3 with all that included into the price. Plus Blu-ray and controllers that already are rechargable and connect via Bluetooth, which offers a stronger bond and signal. These are the reasons PS3 has constantly outsold the 360 since the PS3 price drop. People have seen the value in the PS3 all along, but it has only just spread to a greater scale because it has become much more affordable.

As far as Sony not having the money to do anything risky, remember this gen isn't over yet. And in 2010, they predict they will have the cost of the PS3 down to a point where they are making profit off of it. And each company has already said that this console gen will last longer than the others. Partly because of the recession, but I also predict they are waiting/developing the hardware so that there will actually look like a big leap in graphics and power, instead of a small one. Now that last part doesn't apply as much to Nintendo, but they are still making tons off of the Wii, so i don't see them trying to end this gen anytime soon, either.

Damn this turned out longer than I thought it would. Oh well.

^A sale can be a driving force, but the sale without demand would do nothing, the sales of that week do show a demand which is waiting to be satisfied

True. But then you must also admit there is a demand for the PS3. Otherwise, it would not have been able to come out on top, with no $100 back sale, against the 360.

Another thing to consider: As the demand for Blu-ray continues to climb, so will the demand for the PS3.

Yes the sale show a demand but does not show that it will be the same demand once the console is always at 99$. Once again the sale was good because people were buying something at 99$ that worth 199$. I can take a bet with you that if microsoft do a permanent price cut at 99$ it will not have as much success as this.

Blu-ray won't really help PS3 at this point, as there are many cheaper blu-ray players already and its only going to get cheaper in the next few years.

It doesn't have to be that huge an effect to carry it over the PS3, yes the PS3 has demand, but the reason it took the lead was because it achieved price parity with the 360, beofre the 360 was cheaper, once the 360 is cheaper again, you'll see its sales pick up again

Forget about your favorite console, be neutral and then reevaluate what your saying. Theres a lot more factors then only price.

^My favorite console is the Wii, I don't own a 360 0r PS3 nor do I want either, so I'm very neutral on this

Ok then you need marketing courses

^No, its price in this case, 360 and PS3 have similar libraries, so price plays a big role in sales, PS3 was prior to a few months ago, $50+ more than the 360, as a result consumers were able to decide whether the features like Blu-ray were worth paying extra for PS3 or getting the 360 for less, now that there is a price partiy, there is little reason to purchase the 360 over the PS3, due to the similar libraries, but as we saw from the sale, there is a demand for the consoles at a lower price, this demand will likely be satisfied largely by whatever console enters that price range first.

When two products are able to act as substitutes of each other, issues like price become an important aspect of sales

yes but still you are forgetting that xbox 360 did not outsell ps3 by much even with its price cut last year(and it was a worldwide price cut), i know you say your favourite console is the wii, but you keep on going on about the 360, maybe you should wait to see what happens to xbox 360 sales over a longer time (when then finally market it at those prices) before making such claims.
Oh and by the way PS3 has already proven itself as it still sells over 200k every week since the launch of the slim, also finally you might not be in such a rush to get rid of sony, they strive for quality in games (just like nintendo's first party bar the wii-party stuff), if you want lots of rubbish half hearted games then fine.