Well, the way I understand it, companies rarely make a profit on consoles, but instead rely on software sales for the majority of their profits. A $50 price cut would probably increase PS3 sales by 10-15%, which would in turn increase software sales. Would that be a net gain? I have no idea.
My reason for not owning a PS3 has much less to do with the price and a whole lot more to do with that god awful brick of a controller that should have been done away with after the first Playstation, much less the 3rd.