Its interesting that on one hand Microsoft go around telling everyone they are beating the PS3 in sales and are doing well and then their is Sony saying they are doing much better than the 360 etc in whichever way they want to look at it.

But what Microsoft have done is sell the 360 at a price point which yes is lower than the Wii and PS3 but its too cheap making it too cheap.

The Wii is seen as a must have toy and the PS3 as a luxury because of its technology.

However imo the 360 stands as a solid games console that does deliver and has the games and support to prove this along with the online.

But going back on the price cuts given how the market is at the moment its very difficult to offer price cuts when the economy is bad as it is especially with Japan being in recession also it could hit Sony even harder with a price cut on the PS3 now but what is better? Lower price and increased sales with a loss or a higher price point far less sales and a little loss?

Sony know what they can and cannot do in this case.

How is a price-cut for Sony bad in times of economic crisis? Have you been keeping track of the raw resources prizes? They're all tumbling down which means it's cheaper to make things in general in a mid-term thinking (and eventually will boost up the economy again, we're actually gradually sliding into the "reset" phase of a economic crisis, after that it can only go up).

And the Sony-MS shouting match is a direct result of how their consoles are selling in the different terretories. The Xbox360 is selling like the Xbox, only good in the US, low-decent in Europe and abyssmal in Japan. The PS3 is selling like a over-priced Playstation would, nicely spread out over all the regions but not at market leader making numbers.

So you'll have these kind of seemingly conflicting messages but really they aren't.

Aren't PS3' s made in China? I think they are therefore it would be doubtful that their production costs will really have dropped much as the Chinese economy hasn't really been touched by the global slump. And they are in a good position to ensure their citizens wages don't drop because they are still considerably cheaper to employ than workers in other industrial nations. So the price drop is probably because Sony are worried about being behind the others and then productions runs tend to become cheaper as time goes on anyway.
Or possibly they are gonna make a slim PS3 and they wanna get rid of what would become the chunky PS3's.
Either way it won't be cheaper resources, it may be cheaper to buy raw materials but if you bought the raw materials to make a PS3 i would be suprised if they reached more than £20, probably not even £5. It is the manufacture of all the seperate parts that would the value. So the price of oil might have an impact here but still buying electricity is more than just paying for the oil/coal that is burnt to produce the power, its paying for the chinese beuracrat's children to get into harvard or where ever.
athankyou

They are assembled there, but it's the source of the components that will affect the costs more than the assembly process. Granted a lot of those components will also be made in China and other "cheap labour" countries, but Sony will buy them at the going market rate and that will be based on the country they are bought in. Remember, the component manufacturers use Chinese fab plants to make themselves profits, not to pass all their savings on to their customers.

As the global financial crisis (or whatever we are calling it today) takes effect, fewer consumer devices will be sold, prices will have to come down to maintain the markets. That will cause a downward pressure on component costs. Component companies (and Sony is one of these too, remember) will cut unit profits to try and maintain volume profits.

Sony's problem is that it manufactures a lot of the components for the PS3 its self and therefore doesn't have that room to manoeuvre in costs because it's just shifting losses to another part of its corporate structure. Microsoft, for example, can muscle suppliers to reduce their overheads whereas Sony will be reducing profits in the semiconductors division to mitigate losses in the gaming division.