With the exceptional sales numbers that Nintendo did with the Wii this holiday season, it is now expected that both Microsoft and Sony will make additional price cuts to remain competitive and to capture more market share, but each will do it for different reasons.

According to our sources, Sony will likely hold off on a major price cut of the PlayStation 3 till the June time frame. With PS3 software sales growing, the company may not feel that cutting the price any sooner than necessary would be a good thing at this point because of the poor initial yields and the longer ramp-up to get die shrinks, as well as other cost reductions. If our sources are correct, expect to see a $299 PlayStation 3 arrive in April.

Once Sony makes its move into the $299 range, we expect Microsoft to respond with a price cut to $249 on their Pro system bundle. We expect to see this cut either right before or after E3 in the June time frame. We also expect to see a slight price cut on the Elite system in this time frame, as well, but our sources are doubtful that the price cut on the Elite system will be a full $50. The Arcade bundle will continue to stay at $199 and be the price leader.

We think that once Sony slashes the price of the PlayStation 3 to $299, you will see sales of the console grow again; but as soon as Microsoft moves the Pro bundle to $249, we think that sales for Sony have the potential to stall if Microsoft announces a stellar slate of titles for the Xbox 360 at E3.

As for the Wii, we are doubtful that you will see a price cut. However, we do expect Nintendo to make some changes to the console in favor of cost reduction to boost profit on the Wii console sales. We also expect to see some developers moving to announce and release more titles for the Wii. We don’t expect hard core titles to come to the Wii in droves, so most hard core gamers will still stay away from the Wii and opt for the Xbox 360 or the PlayStation 3.