"We expect PS3 sales to continue to grow significantly in 2010 (vs. 2009), as the platform faces easy comps," he noted. Consumers shouldn't expect any upcoming price cuts, however, even with the launch of Move later in the year. "Despite the price-cutting measures by rivals Nintendo and Microsoft, we are not convinced that Sony will cut the price of the PS3 due to continued tight supply, and in our opinion, Sony appears to us to be a price taker, as we believe that the company is barely gross margin profitable on the PS3 at its current $299 price point, meaning that a price reduction would likely trigger a loss on each unit sold (until manufacturing costs come down further). In contrast, Microsoft was able to cut the prices on all Xbox 360 models due the flexibility provided by lower manufacturing costs," Pachter noted.

As for the other consoles, Pachter commented, "We believe Wii sales will continue to show declines due to tough comps, but expect the declines to be smaller on a relative basis to last year due to the new Wii software bundle (launched May 9). We think that Xbox 360 sales are likely to be flat to up for the balance of the year, with the swing factor being the rate of replacement units sold following the launch of the new 250 Gb model black Xbox 360. Xbox 360 sales have kept pace with PS3 sales since the price cuts in 2009, and we expect this to persist well into 2010, expecting both to sell very well, and implying solid year-over-year growth for the PS3. We think that PS3 sales continued to be constrained by low supply throughout May, but expect the PS3 to sell near parity with the Xbox 360 in the months ahead."

The one system that really does need a price cut soon, Pachter believes, is the DS handheld. With the focus turning soon towards the 3DS, Nintendo may need to drop the price of the old DS to spark sales. And after all, practically everyone already owns a DS. "We believe Nintendo’s biggest sales challenge is the already high installed base for the DS. Without a meaningful price cut, we expect a 25% sales decline for the DS in 2010, especially after the announcement of the upcoming release of the 3DS in the fiscal year ended March 2011," Pachter said.