Sony "nervous" following Xbox 360 price cut

In the face of Microsoft's Xbox 360 price reduction, Sony will be feeling pressured to drop the price of its home console to continue recent sales momentum, according to analyst firm Strategy Analytics.

However, as with other industry experts, the company believes Sony is likely to wait until later in the year before cutting the price of the PlayStation 3 in Europe.

"Sony will be nervous that the PS3's recent sales surge may fizzle out now that the premium Xbox 360 undercuts the PS3 by GBP 40, and the cheapest Xbox model is almost half the price of the PS3," commented principle analyst David Mercer.

"Sony will be scrutinising the daily sales reports, but will probably try to hold out until later in the year before making its next price move," he said.

Following Microsoft's Entertainment and Devices division making a profit in the last two quarters, Mercer said that the company must continue to cut manufacturing costs to sustain profit.

"Microsoft must continue to drive cost out of console manufacturing in order to sustain these improvements in financial performance," he said.