We've pretty much reached the point now where any "analyst" who recommends price cuts, more blockbuster games, and more third-party exclusives as the ways to save the PS3 should be disregarded immediately. Yes, let's keep doing the exact same things that got SCE into trouble in the first place! Surely that will turn things around!

I imagine Sony's response should look something like this:

From: Sony
To: Ars Technica

We would be happy to implement your price cutting suggestion, just as soon as you can tell us where we will get the extra $1,000,000,000 in lost revenue it will cost us. Thank you.

i dont see a need for a price cut. frankly i think sony should rerelease the 160gb model at $499 and cut 40gb manufacturing by over 50%.

They should release a 160GB model with BC (and make people aware of that fact) for $499

Doesn't make much sense to me. The real point is: how many games/blu-ray discs/controllers and other hardware will each console move and how much profit will the console maker make on these things. If the average console sold to the public on a specific price point (as you can imagine hardcore gamers will probably buy the console on a higher price point and will probably buy more games/blu-ray discs/controllers and other hardware) brings in more profit for software/hardware than lost profits due to the lower price point, then the price cut is justified. Offcourse, this is simplified because in real life other benefits can be gained from selling more consoles (think for example of lower costs of parts for the console because of the better negiotiating position of the console maker).

Selling more consoles does have benefits, but these benefits have to be greater than the initial losses in order to make a price cut beneficial from a business standpoint ...

(Now, I realized I made a mistake on my quick calculation in my first post)

Suppose for a minute that Sony is breaking even on the PS3 currently, would sell 8 Million consoles in 2009 at a price of $400, and would sell $12 Million consoles in 2009 at $300 ... Now, for each gained sale there is a $200 loss from the consoles that would have been sold without the price reduction and a $100 loss from the sale of the system for a grand total of $300.

Once again Suppose that Sony makes $2.50 for each Blu-Ray movie sold, $10 for each third party game sold, and $30 for each first party game sold ... This works out to each new PS3 owner having to buy 5 first party games, 10 third party games, and 20 Blu-Ray movies for Sony to break even on the sale of the system.

Yes you're right now (I forgot indeed that Sony otherwise also would have sold some systems). However, you assumed that these people will probably just buy the same amount of games etc regardless the price, you could argue with that though, because if a sysem costs $300 instead of $400 people will have more money to buy games etc so they may use that $100 to buy extra software. Putting this small side note aside, it becomes clear from you (good) quick calculation that a price point is probably not very beneficial to Sony at this point because I don't think that each new PS3 owner buys that amount of games and blu-rays.

my 4 things would be

A 299 sku

MGS4 trophy patch

Get the games GT5, GOW3, MAG, FF13, Next Jax game out b4 09 ends

Mess around with HOME a bit but it looks like they will with the EA space and Cafe

I don't care about the messing social features and waiting tell Thursdays just look at how well the Wii is doing with its online

Very nice points indeed.
I'd rather see Sony cut the price and watch them lose even more money than watch their PR dept. put out pathetic statements about how the ps3 is a "better value".

If the price went down low enough who knows, I might even buy one.

There is no chance in hell of them selling 8 million consoles