iceberg187
Regular
Or when your hardware sales are absolutely dire 2 months before the start of the holiday season and you desperately need to get some sales momentum. Cut the price to $399 and you'll get plenty of people on board purely to buy mainstream titles like Madden, Fifa, Need for Speed, etc. There are millions of PS2 owners out there looking for a new console to buy - make the price attractive enough and the PS brand will do the rest.
And as for Sony undercutting the other Blu-Ray manufacturers, they've been doing that since day one. Nothing new there.
I'm sure it is required for Sony to price the PS3 relative to other manufacturers. They will not give Sony total free reign to cut at will.