Theres more to cost reduction than simply making changes. You have to sell a lot of consoles to really make back money on a lot of cost reductions. Also theres a question of their royalty fees to third parties such Nvidia, Blu Ray/DVD playback and whoever designs the XD ram and the custom nature of that XD ram and memory controller as well as the fact that they no longer manufacture the Cell CPU themselves and have sold off many patents, IIRC about the patents.

You probably have a better understanding of this than I do but what i'm confident of is that Sony probably wouldn't do anything that would signifcantly compromise their ability to reduce the cost of their console , they would have had in mind the measure and the mechanisms by which they would cut the costs of the PS3. Fee's can be negotiated downards , technologies will be improved and so on , like I said before Sony has a history in this which would have well prepared them for the unforseen .

Yes cut the price sony. While you are at it just go ahead and cut your financial wrists as well.

Yes, definately they do have a pretty good set of engineers working for them. Though my major concerns with the PS3 relate to the cost of the custom memory architecture and whether or not Nvidia will co-operate and let them combine the Cell/RSX into the one chip. Thats the significant question I have overall with the long term (3+ years) cost reduction strategy of the PS3. Some things definately get cheaper over time, but other things get more expensive. For example the GDDR3 memory in the PS3/Xbox 360 is probably increasing in price now that its becoming a low volume component (For the memory capacity in each chip).

In any case, I would simply not hold my breath. Just let them pleasantly surprise you when they meet their sales targets and the PS3 starts selling huge quantities per week.

Well, Sony can sell 13m PS3s this fiscal year, or they can work towards profitability for their gaming division. They certainly can't do both. Everything I've seen so far this year suggests that they are more interested in achieving profitability, which makes sense given the utter disaster SCE has suffered over the past three years.

Maybe Sony is playing coy; maybe they have price cuts, slim models, and "megaton" software surprises planned for holiday 2009. But they sure didn't show any of that at E3, and at this point those things are more wishful thinking than likely possibilities. I guess we'll have to wait and see, but I think Sony is in trouble right now.

Here is what will happen:

They will cut the price of the current PS3 by 100$

BUT

Will introduce the "ultimate" model. This will be slim and remove BDRoM and so it is totally run on digital distribution.  Also, it will only work on a smaller TV. They will price this must have model at $599 US and $599 Euro, because it is the same currency in Sony Land.

I don't think Sony's gaming division can ever be significantly profitable during this generation:

- PS2 business is constantly declining.

- The PSP doesn't sell that much software.

- PS3 hardware always needs a price cut as soon as it gets near profitability (or earlier). In other words they're always behind the curve in terms of hardware profitability.

- Their business is probably sized to PS2-era requirements. With a much smaller userbase as the PS3's, their expenses are too high.

Now there are some things that would definitely help, such as the yen getting weaker and the PSP GO taking off at the $250 price point. That would make a PS3 price cut much easier.

And what are the chances that the PSP Go will take off at $250? zero?

@NJ5: The PSP go has a much higher profit margin for retailers, so the profit margins probably aren't as high as you'd imagine if you hadn't considered that piece of information yet.

not without a $100 price cut and gt5 & remake of ff7, could this be even possible.