Although Sony will bleed more financially they're move is pure strategy. The Sony consoles have always out-sold in Japan over the Microsoft branding. With Microsoft heating up the market and pushing more sales figures Sony needs a bit more leverage to stick their product in the hands of the customers.
Sony is going into a market that has been dominated by the Xbox 360 for a year with a product that's short on units, high cost and full of unknowns in the realm of multi-player "live" networking.
You cannot do anything about the unit shortages - products can only be built so fast. You cannot do anything about Microsofts next-generation domination - they've had a year head start. You can, indeed, do something about the cost. Take the one variable that you can control and use it to your advantage.
The cut brings the basic PlayStation 3 model (now with HDMI in Japan) to 47,600 yent or roughly USD $410. The original price would have been 59,800 yen or about USD $515. A significant reduction in cost! Gamers can now pickup one or two launch titles more than they could before the cut.
The new price point drops the basic model inline with the price of an Xbox 360 console with the HD-DVD unit. Coincidence? No way.
Should Nintendo worry about this price war? No, not really. They're product is already well below the cost of the two rivals and Nintendo continues to state that they're Wii console is not even in the same market space; they're after the interactive entertainment market, a market that Nintendo invented to stand out from the big boys.
Thanks to lunatik-ZX for this information
