“Demand is really the key. Bobby’s comments suggest that the US recession would trigger a decline in demand for consoles. He may be right, but we’ve seen no slowdown whatsoever. Console pricing is typically a function of two things, cost of production and demand. If production costs remain above the wholesale price of the console (certainly true in Sony’s case, likely very close to breakeven in Microsoft’s case, while Nintendo is making a profit on each console), it will be hard for the manufacturer to increase losses by cutting price. My best guess is that Sony cuts first (as its production increases on PS3, its costs are coming down), probably by $50, perhaps by $100, but in any case, late in the year.” - Wedbush Morgan analyst, Michael Pachter

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