@ikilledkenny, welcome BACK from the future. =)))
Sony was selling PS3 at 200$ loss, and now, they can`t have 100$ loss? =))))

@libellule
1. They are only making a profit on PS2 and PSP. Once the PS2 finally dies, the division will lose money again. PS3 is still hemoraging cash.
2. I never said it would be useless, I said that its impact would be reduced because the others would cut their price as well.
3. They are being dominated by the Wii every week. Weeks like last week, when there is no big releases, will have similar sales for 360 and PS3. When GTA4 comes out, PS3 will be buried by 360 in America. Plus, 50k sales IS abysmal. Outsold 3:1 by the Wii. And at 50k vs. 80k, that is still a more than 1.5:1 more for Microsoft.
@crazzyman
That is still a lot of money. Last I heard, it cost around $450 to make a 40 GB PS3. Dropping it to $300 would mean a $150 loss. That is still difficult to make up, though I agree, it is not as bad as $200. The reason they launched at a $200 loss, however, was so they would be competitive. Anything more than $600, and they would have had an even worse 2007. They still did the worst in 2007 despite dropping the price $200.

{sigh}

I have said MANY time....

if a $50 price drop + HALO 3....not any random game bu TEH HALO

couldn't result in 360 OUTSELLING PS3 in the HOLIDAYS....

then NOTHING will...unless M$ drop the price of 360 so much that it costs $100...n that aint happening

Hey! We agree on something. MS needs a $100 drop in Japan (Oh look! Arcade available March 6th 2008 for $260 in Japan!) and a $100 drop in Europe. As for NA? They can get away with just a $50 drop.

The reason why PS3 will beat MS is because how could MS come out with HALO 3, arguably, the biggest game of last year, and sold four million units in one week, but was still beaten by the PS3 last Christmas? hmm... SOny has yet to have a killer app like Gears, so when something like MGS4 or Killzone2 or LBP come out, and provided PS3 with theiir much needed killer app, the PS3 will pull far ahead of the 360, but for it not to have software, and have a higher price, and still outsell 360 on a weekly basis, IDK how anyone could say that the PS3 won't beat the 360. Especially with a price drop looming, and after seeing the lack of enthusiasm most had for the 360 price drop.

Couldn't you also use the exact same argument as the reason why you shouldn't expect too large of hardware boosts from any "killer app"?

If you have a system which had several of the largest games of the generation released within a couple of months of eachother, and it still did not produce a massive sales boost why would a similar situation have a different result for another console?

 So when this semi-casual PS2 gamer is in the store when GTA4 is out and wants to play the sequel to the only game he played last-gen (with Maden 03-06) it suddenly matters that the PS3 will have FF and GT5 somewhere in the future?!?

This guy doesn't follow game news but WILL know that Halo 3, Gears of War and Bioshock are on the 360, that also happens to be the cheapest console of the 2. 

The above will happen when GTA4 arrives, and it will be in 360's favor.

That's the price Sony has to pay for letting exclusives slip away. 

Indeed, your username is apt.

We don't know the PS3 costs less than $400.  We doubt it, in fact, or Sony would have put up much more favorable numbers.  Sony has played with words a bit suggesting costs were down a lot, but we never *knew* the original cost of the PS3, nor do we know the cost of the PS3 now.

Secondly, the PS2 sales are decreasing.  They will continue to decrease.  Sony can drop the cost of the PS2 to breathe a little more life into the platform, but you can't keep an old man kicking forever.  The PS2 is way past its prime and its revenue and associated profit will continue to decrease.

Sony does want to profit, obviously, but they also see the value is establishing the PS3 as the #2 console this generation.  There is a question as to how much the name can get them, and how much a lower price will get them.  If sales are decent, they're obviously going to try to avoid the price drop.  If sales aren't good enough, they'll do whatever they can to drop the price.

Part of Sony's strategy right now is to make the more expensive SKU look appealing enough to get people to buy it.  It probably costs $10 or $20 more than the 40GB model, even if it comes with a 160GB drive, so it will bring them $80 closer to profitability per sale.  The idea is that they're getting the best of both worlds: customers willing to pay only $400 are still buying your system and customers who want the best PS3 are paying the extra $100, almost all of which is not tied to any cost

Microsoft does it very well with the Elite: it's $100 extra for a package that likely costs Microsoft less than $15 extra. 

@ HappySquirrel

360s killer app was Gears of War, which, if I remember correctly, helped MS move four million or so units in the last quarter of 2006. The PS3 hasn't had a killer app. They've had a host of good games come out, but not one game that you HAD to play. When that game comes out, this race will become much tighter than it is now.