Honestly, I don't see how Sony wouldn't be able to afford a price cut in 2009. Sales and profits from PS3, PSP, PSN and Home software along with PSP hardware are continuing to rise for Sony and are at the very least consolidating for the lowering PS2 software and hardware profits. The only real remaining factor is PS3 hardware which is at the breaking point of profitibility.

Back in 2006 when the PS3 launched, it was estimated to cost Sony $840 for one 60GB model. Now, two years later, it's estimated that one 80GB model costs Sony $448 to manufacture. That's an average drop of $196 per year to manufacture. Assuming that most of the steps to bring down the initial PS3's price have already been taken (i.e. Emotion Engine chips, 2 USB ports) I would assume that, by the end of 2009, Sony will be able to manufacture a low-end model PS3 with 45nm Cell Processors, 45nm RSX chips, smaller/cheaper heatsinks, and the general lowering costs of manufacturing the blu-ray components, for at the very most $325. And I assume this is all just for the North American PS3's, the Japanese PS3's will probably cost even less.

The following are my suggestions for Sony and my examples on how it could actually be quite easy for Sony to issue a $100 price drop by the end of the year without breaking the bank, or even posting a loss for that matter.

1. Offer *many* more PS1 games on PSN for download.
There's an almost unlimited supply of them and they entail PURE PROFIT for Sony. I honestly don't know why Sony doesn't take better advantage of this, especially with 1st party games.

2. Keep a constant premium bundle on the market for $499.
With the 160GB Uncharted bundle, Sony already almost definitely makes a small profit on each one sold. If they can keep selling these and have them dig into the small losses made on the lower-end PS3 sales, they could reduce overall PS3 hardware losses, even if only by bits and bits at a time. Other good games to continue the bundle with are other successful 1st party games that have already paid off their own development such as Ratchet & Clank Future, LittleBigPlanet, and by the end of 2009, Resistance 2.

3. Secure late 2009 releases for major games.
Each region has an upcoming exclusive game that will push serious hardware for its particular region. North America has God of War III, Europe has Gran Turismo 5, and Japan has Final Fantasy XIII. If Sony can manage to release each of these games during or right before the holiday season, they seriously stand to turn the tide of their marketshare disadvantage. Neither Nintendo nor Microsoft likely have an upcoming game in 2009 that can move hardware like those three games will in their respective regions. Furthermore, the closer Sony can afford to release those games near Christmas, the less expensive the PS3 will be to manufacture meaning that Sony stands to lose less off hardware while gaining more off software.

4. Drop the price of all PS3 models by $100 in all regions in Q4 2009.
If Sony timed a $100 price drop alongside the release of each one of the previously mentioned games in their respective regions, they stand to earn SO much more off of software sales from the existing and expanded market that it would easily overtake any hardware losses, and that's exactly what happens almost every year for all systems. Furthermore, if they waited until the end of the year to issue a price-drop, they'll have more than enough time to make profit all year long and secure the approval of investors and major shareholders.

So what do you guys think? Is there any obvious flaws in my logic? I mean, barring a complete economic collapse, I honestly don't see how Sony couldn't afford a $100 pricedrop or a $50 pricedrop at the very least by the end of the year.

If its coming, its no earlier than Q3

Each PS3 sale is losing money per console sold in most regions, and you want them to lose even more. Sony isn't really doing good right now to afford that

Agreed. Or at the very least not for North America or Europe. I could concievably see Sony issue a price drop in Japan before Q3 what with its strong yen after the 45nm revisions coming along around March. However, they're far better off waiting until Q4 or, like you said, Q3 at the earliest.

tl;dr I take it?

yes =/

headache today and didn't feel like reading that long of a post

They really need to lower the price ASAP. A large part of the gaming community is the teenage group. As most of us know from experiences from the past or present, a 5 dollar allowance is not going to get a ps3. 200 dollars is a lot easier to get than 400.

The other major problems are that the xbox 360 has very similar titles to the ps3, is on par with graphics, and is literally half the price. Final fantasy XIII and Grand Theft Auto already jumped ship from Sony; both devasting since they were key to the Ps2 success. Sony needs some more exclusives for sure. Downloadable content would also be a great benefit. Since most ps3 models are no longer backwards compatible, I'm sure Sony could rake in a fortune by releasing ps2 games via download.

We'll have to wait and see if Sony decides to step up its game plan.

It's okay, I'll summerize it for you.

Pretty much, PS3 will be profitible at $399 following the 45nm revisions in March and Sony will profit all the way until Q4 2009. When Q4 hits, PS3s will cost at most $325 to manufacture so Sony should issue a $100 price drop to coincide with the release of God of War III in North America, Gran Turismo 5 in Europe, and Final Fantasy XIII in Japan. Sony will make so much off the increased software sales in Q4 that it will more than overtake the $25 losses on each PS3 sold for the quarter just like with every Christmas season. In the meantime, Sony should sell premium bundles at $499 with successful, paid-off 1st party games to make profits off hardware until the lower-end model is fully profitible.

PS3 does need a price cut but i can see them actually making it happen. $400 vs. $200 is basically a steal from the competitor but Sony isn't in the right place to actually drop the price of the PS3.

In other words, don't expect a price cut for a while, maybe in 2010-2011.

Sony really can't afford to lower the price at the moment. They've said it multiple times that profitibility is what they're after at the moment and they won't reach that until March. Once they're at that point, then they will ride it out for a while and issue a price drop when they need it and when it would bring them the most profit in the long run, which is in Q4. Furthermore, PS3 really isn't going to be so beaten by the 360 come two weeks from now as they appear to be currently. Much of the 360's current sales are do to the Christmas rush, once that runs out mid-January, 360 sales and PS3 sales will be within 75,000 worldwide every week again. At that point, it comes down to not so much which one costs less, but more so which one is has the bigger new releases and the most desirable features.

As far as PS3's problems against the 360 on the software front, your assertions are quite unfounded. The fact of the matter is that the PS3 has, by far, the bigger hardware moving releases of 2009. God of War III, Gran Turismo 5, and Final Fantasy XIII (It's exclusive in Japan where it will sell the most anyway) are bigger than every single upcoming game on 360 this year. Furthermore, M.A.G., Uncharted 2, inFAMOUS, Quatum Theory, Yakuza 3, White Knight Chronicles, Demon's Souls, Heavy Rain, EyePet, Ratchet & Clank Future 2, ICO 3, and the various SingStar games are enough to compete well enough with the 360's line up of Halo Wars, Halo 3: ODST, Ninja Blade, Mass Effect 2, Ninety-Nine Nights II, Alan Wake, Star Ocean 4, Forza Motorsport 3, Blue Dragon 2, and the 2 games that Rare will likely release.