Kevin and I have a standing debate about whether or not Microsoft will drop the price of the Xbox 360 when the PS3 drops in November. His argument is (paraphrased):

“Microsoft knows that when the PS3 is launched, Sony’s next gen console will outsell their’s immediately, given Sony’s much larger userbase. To help counter this, they will drop the price to entice Sonyphiles to pick up the 360 instead.”

My argument:

“Microsoft most expensive 360 SKU is a full $100 less than Sony’s cheapest. There is no incentive to drop the price any further.”

This debate is part of a much larger “Nintendo vs Microsoft vs Sony” debate, where he believes that Sony will trounce the competition on all fronts (console and handheld) this generation, pushing Nintendo closer to being purchased by MS or Sony.

I’m not foolish enough to believe that Sony will be knocked out of the #1 spot during this generation, but I do think that the gulf between MS and Sony will not be as great as it was during the last round. Sony seems to be playing the “me too” game this time around, waiting for the other guys to play their hand before revealing their own; look at the last-minute addition of the motion sensing controller and the very LIVE-like online presence. Of course, we can’t overlook the very high price for both of the PS3 configurations.

We’ll see how it turns out in November. My prediction (in terms of sales): PS3 #1, 360 #2, Wii #3. Also, the 360’s price will remain firmly at $299 and $399 when the PS3 launches.