The pricing battle between high-def consoles took a new direction in recent days with Microsoft announcing an inventory-clearing $299 price tag for the 20GB Xbox 360 and Sony lowering the price of its 80GB PS3 from $499 to $399.

But Signal Hill analyst Todd Greenwald thinks that Sony’s PS3 now has the upper hand in terms of pricing and its growing library of exclusive software.

“Sony [is] well-positioned for first time since launch,” said Greenwald in a post-E3 investor note. “Sony's biggest announcement was a strong counter-punch to Microsoft's $50 price cut on the 360.”

With the price cut on the 80GB PS3, Sony also said that it would be dropping the 40GB model. [The new 80GB PS3, coming in the fall, will have the same functionality as the current 40GB model. - Ed.]

Although Microsoft currently has a $299 hard drive-equipped (20GB) Xbox 360, that price point is only temporary. The company is using the discounted price to clear out 20GB Pro models as it introduces its replacement: a 60GB model, which is priced at $349.

“Microsoft's $50 price cut was quickly nullified by its replacement with a higher priced 60GB model,” said Greenwald. “…Xbox 360 needs a real price cut. We remain very skeptical of Microsoft's pricing strategy and competitive positioning vs. the Playstation 3.

"At $349, with a 60GB hard drive, we just don't think it is a compelling product compared with the PS3 at $399 with an 80GB HDD (along with more processing horsepower, Blu-ray, Wifi, HDMI, and going forward, more exclusive content)."

Greenwald also said that outside of Gears of War 2, Xbox 360's software lineup isn't as compelling as PS3's. He noted PS3 exclusives Metal Gear Solid 4, LittleBigPlanet, Resistance 2, Killzone 2, Gran Turismo 5, God of War 3 "etc."

In June, PS3 sold 406,000 units in the U.S., driven by the release of Konami's Metal Gear Solid 4, according to NPD Group. Xbox 360 sold 220,000.

Meanwhile, Nintendo's Wii continues to plug away with a $249 price point and its accessible control scheme. Despite being launched a year after Xbox 360, last month the Wii overtook the 360's life-to-date sales in the U.S. with 10.9 million sold.