Sony first denied, then confirmed a planned $100 price cut for the PS3 after retailers leaked the information. The price cut is part of a plan by Sony to boost the console’s poor sales, after strategies based on exclusive software failed to differentiate the console enough to spur sales. The announcement comes alongside plans for an 80GB model to be sold at the old price point of $600, and a yet-unannounced UK price cut, where the console currently sells for £425 (over $800 US).
Microsoft has their own plans to please customers, announcing a grandfathered upgrade to the warranty, giving full repair coverage for three years from date of purchase for the “three red lights” failure, at a cost of about $1.1 billion US. Since the console has yet to hit its second birthday, the three-year plan covers every console sold to date, and MS will be issuing refunds to those who have already paid for repairs.

Meanwhile, the Wii’s strategy of a low price point and unique features have kept it on top of the console war. Wii sales are continuing to grow and are outpacing supply in Japan, outselling the PS3 by a factor of six, where the console was “only” selling four times as many units three months ago. The robust sales of the latest Nintendo console are probably the reason for their relative silence in relation to Sony and Microsoft, but we’ll probably see a lot of action in the next few weeks as E3 rolls into town.

Sources:
TimesOnline
The Inquirer (UK)

PS3 Update

It seems the PS3 price cut is just a ploy to make room for a cheaper-to-produce model to come back at the original $599 price point. A lot of interviews and confusion later, and the unfolding story is that the 80GB model is cheaper to produce for Sony since, rather than having hardware support for PS2 games, it will rely on software emulation like the European models. So in the end Sony’s taking less of a loss on each of the new units, by taking more of a loss on each of the old ones. Confused yet?

Source: salon.com