It's great that Microsoft finally got to the position where they are both aggressive (price cuts, massive advertising etc.) and profitable. It does feel like a healthy change after they were losing cash for so many years or trying to be profitable but gave up marketshare a bit (FY 2008).
Hopefully soon to be released Sony's soon to be released financial report will show that Sony are going to that position as well. I'm sure Nintendo are breaking even more records in the category "how much money can be made on video games business".
I wouldn't read too much into anything honestly; Microsoft definitely finds themselves in a more favorable position today relative to both Nintendo and Sony than say a month ago (on purely global trade grounds), but it's difficult to say how much anyone will be able to spend on 'aggressive' behavior. For Microsoft, we can't be sure what the exact profitability of the console business is, but we do know that they are at least comfortable with its trajectory. The recent price cuts are the right cuts at the right time in terms of positioning, that's for sure, and come at a good moment considering shifting consumer sentiment.
Nintendo and Sony have both been slammed now by a foreign currency 'tax' that is going to take 10% of the earnings out of everything they were selling in the US, and 20% out of everything they were selling in Europe. For Nintendo they'll be able to absorb it and still be profitable, but for Sony this is going to have a disastrous effect. This currency pain is a major part of why the entire company cut its profit outlook recently across all divisions. That's a price cut right there in effect in terms of Sony's numbers, except that it doesn't carry through for the consumer. And in that environment, I just don't see how they're going to be able to offer a 'real' price cut. We can already consider the margins of the business to be completely blown out on the strength of the yen alone.
Microsoft will suffer some in terms of their margins in Europe as well, but Europe isn't as important to the XBox business as it is to the Playstation business. And as far as 'decent' sales in Japan go, the Japanese margins have actually been improved for MS as those yen earned will translate into greater dollar amounts than recnetly.
Bottom line is that I don't think anyone's going to be getting aggressive at all in this environment, but for MS they seem comfortable with where they are in relation to it all for the next couple of months, and for Sony I expect them to simply be hunkering down to weather the next year of economic drama. The potential silver lining for them is that externally sourced components will reduce in price for them due to the currency strength, so they may eventually be able to find other avenues via which to further reduce costs, putting a 'real' price cut back on the table maybe next year.
EDIT: Forgot about the UK though, which is a pillar of strength for MS. Those margins will have gotten completely blown out as well (though for Sony and Nintendo also), considering the 25% slide in the GBP vs the dollar. Expect all console business conducted by MS in the UK to be done so at a loss, so where the recent price cuts in the US came at a fortuitous time, the recent price cuts in the UK are going to come at a much greater price for them.
