Price war = customers win in the short term. My lil' bro for one will be a happy Nintendo chappie.
Long term effects? Who knows? Could trigger another boom, a la 90's SNES/Megadrive. One or other machine in every kids' room. Game sales in six-digit numbers. Everyone happy. Even Sega.
Or M$ break Nintendo and turn the console market into the X-Box market.
Pfff! Nah, never going to happen!