Summary
We think we set the price for our products, but the market later tells us if we have it right. Sales of the PS3 at $599 weren't working. Sales of the XBox360 at $399 weren't as brisk as Microsoft would have liked. Sales of the Wii at $249 have exceeded Nintendo's expecatation.
Analysis
The robust sales of the Wii made the PS3 and now the XBox360 price cuts a necessity. Time will telll if it makes a difference in the sales. At $349, the XBox360 is still $100 more than the Wii, but it is closer to the magic price point of $199 that Nintendo learned many years ago was the price to start new consoles at. It was just recently with the Wii that they pushed it to $249.
Of if I was Microsoft and if I had a library of first-party titles, then I might have preferred to bundle a game with the console. And if Nintendo feels the need to match the round of price cuts, which I'm not sure they will, they could easily do. I'm not sure that the first-party titles (those that Microsoft publishes themselves) are enough of an incentive, many of the second-party titles are the ones in most demand, but that would require cutting a deal with the publisher with some cost associated with it.
Now Nintendo on the other hand has a large library of excellent first-party Wii titles that are in demand with consumers that could easily bundle another title (besides the Wii sports) with the console without having to strike a deal with one of their licensees. Although, I'm not so sure they need to do anything right now. They have other new games and exciting peripherals still to introduce.
