Prices for PSP have been dropping worldwide, and some have been asking why the price drop wasn't more significant. According to IDC's Billy Pidgeon, Sony will never price the system lower than its manufacturing cost. Unlike PS3, which Sony sells at a loss, PSP will bring profit for the publisher. "[Sony] will continue to lower price as they gain economies of scale, but it's not likely that the company will price below its marginal cost of production to move a few more units."
The price drop should not be seen as a move of desperation as some people have been painting it. It's undeniable that PSP sales have been lacking compared to the DS. However, comparisons between the two simply are not apt: "I don't think Sony will 'beat' the DS, nor do I think that they aspire to do so." Pidgeon blames the media for encouraging the PSP-DS debate, a crime which we can admit to. "Games for the two devices are different, and the gaming experience is quite different. I think that the only people who care about the DS-PSP sales battle are the media."