Of course Sony can make the PS3 profitable, they are hardware manufacturers and know how to bring down the cost, it's all a matter of time, hell for all we know Sony could have already broken even with the PS3.
Except you're ignoring the fact that Kaz Hirai just said yesterday that they were hopeful but non-commital about making a profit with the PS3 somtime in the NEXT fiscal year.
Perhaps they already broke even in EU, but they don't say it to avoid stressing the higher price they charge here.
In Wikipedia's article about PS3 there are some details on recent savings in production costs.
Calculating also royalties on 10 games sold for each console and admitting that after 15 millions units they stop losing money on HW, start selling much more games than before thanks to a wider offer and also that at that point losses are $ 3 billions, they need to sell roughly 45-50 millions consoles to break even, while MS needs "only" to sell 35-40 millions XBox360s to do the same.
So it's matter of patience and stoutness, for XFlop 1 MS gave up after 3 1/2 yrs, ending losing 4 billions (also because they shot themselves in the foot and painted themselves in a corner by botching signally supply contracts with intel and nVidia ), while Sony, although initially losing also on PS2, persisted supporting it much longer and still sells it, earning on HW and SW.
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