Excellent read, Shams. I liked it!

pretty nice read there. i think that sony is just trying to find new methods to getting back in the black. a company such as microsoft and sony can handle huge losses of money but nintendo wouldn't be able to sustain such a loss on a grand scale.

sony is def taking the right initiatives to garner profit in their games division but a company can only lose so much before they become desperate. sony illustrated this last year with the various model changes and price drop. all they can do now is hope that their changes finally pays off.

getting off-topic, i honestly cant wait to get my hands on little big planet.

I wouldn't call it 'throwing in the towel' nearly as much as I would say that Sony is finally accepting reality ...

Long before we ever saw the PS3 (and probably well before they released the PSP) Sony envisioned where they would be today and planned their strategy on how to be successful in this generation. I personally expect that Sony believed that the PS2 and PSP would be pulling in so much profit when the PS3 launched that they would be able to sell the PS3 at a reasonable price and not be bleeding money. Unfortunately for Sony the PSP never took off like they imagined, the PSP doesn't sell that much software, UMD never caught on as a media format, and the PS3 was (probably) more expensive to manufacture than they imagined; all these factors meant that Sony could not launch the PS3 at the reasonable price they expected to and they were forced to launch at $600.

Leading up to the launch of the PS3 Sony probably expected that 18 months after the launch of the PS3 they would have sold 24 Million units of hardware and PS3 software would be selling at an amazing pace, and Blu-Ray sales would be skyrocketing; the high turn over of hardware would mean that any component price reduction would (rapidly) work its way into the system, and the high software sales along with Blu-Ray royalties would mean that Sony would enable them to continue selling the PS3 at a huge loss, and they would be able to rapidly reduce the price of the PS3 to mass market levels. As we know, hardware sales of the PS3 are not that high, software sales are not amazing either (mainly due to a small userbase), and Blu-Ray sales are only really occuring within the PS3 userbase.

To rephrase in a much shorter way ... Sony has a very expensive piece of hardware which isn't seeing cost reductions in the price of hardware all that rapidly and they don't really have any alternative revenue stream to offset further losses on their hardware within the games division.

 Not really, wait till the cut manufacturing costs then wait amonth or two afterwards. The month or two will allow previous chipset models to earn their money back and new chipset modelsto earn them a small profit.

Thats the point of avoinding aggresive strategies, I think is more than clear that there is no price cut in the near future, they are just waiting for good sales based on software rather than price of the hardware...

If they are close to make some money of the PS3 or already making some, why should they loose that cutting the price again???

The best financial strategy right now is wait to the next year Q1 for the price cut, after the good games of this year and a xmas season...

Are you the grammer police or something? I been looking threads and news and all you've done is corrected everyone's grammer.

(Note: The grammer is a leo-j joke. For irony.)

The only towel sony have thrown is the one made of razors at microsoft.

I really hope that Sony can cut the cost of each PS3 fast. If they can sell the new model at the same price for a reasonable time, they can make some of their losses back before they make a price drop, and break even again maybe on every unit sold. Sony needs to stop bleeding money fast.
I think they should have a temporary price drop for the Christmas period, and then have an official price drop half way in 2009. This would probably minimize their losses instead of having an official price drop at the end of the year.
Bundling major software with each PS3 is probably less of a problem then having 100 price cuts I think, but its a double edge move, so I don't know.
Sony is losing alot of money, but I'm sure they'll be in constant profit in the second half of 09.

i think the ps3 should be able to make an overall profit in its lifetime.

unfortunately, it's responsible for losing the seemingly unassailable market position inherited from ps2. leading brand name gone.

admitting to that reality, people, is throwing in the towel.

it took nintendo more than a decade to come up with the Wii to revive their flagging fortunes, despite being profitable all along. sony is just gonna have to focus on making the best product possible and compete honestly now.

Actually last year Nintendo actually became larger than Sony (in terms of capitalization) much to Sony's chagrin. With that level of cash reserves and two profitable platforms, if it came to any sort of financial pissing match, Sony would be the one at a disadvantage. Right now Nintendo can pretty much do anything they want because suddenly they are the 500lb gorilla. 

As far as throwing in the towel, Sony has not given up on the PS3, nor should they. But let’s not pretend that not competing all out aggressively balls to the wall, was a very difficult decision and a big disappointment. This is not where they expected to be. This generation was theirs to lose and they almost did and they still face a daunting uphill battle with an uncertain outcome.