| disolitude said: they are doing it to cripple the competition and then get even bigger marketshare. |
No, they're not trying to cripple competition. They're trying to compete over the product life cycle. The way it is supposed to work is that you have approximately one year of loss, then 4+ years of profit. You want powerful hardware -- more powerful hardware than customers are willing to pay for today, and you want it so you can compete and so it will have a slightly longer life cycle.
Let's say you have one year of loss and 4 years of profit. Well, this equates closer to three years of profit as the first year of profit is spent paying down the loss from the first year (this is the easy way to think of it). That's about 2 years to break even. If you miscalculate and get two years of loss, then suddenly you need spend twice as long recoverying and don't break even until you are four years in to a product life cycle. Of course, this is over simplified, but it mostly makes sense.
Sony's problem is that there were many miscalculations with the PS3 and poor communication from Kutagari. He thought Sony was losing its edge and that Sony should be able to make the product cheap and fast, regardless of how complex it was. As a result, Sony over promised on the PS3 ("it will render dual 1080p displays", "it will have a 2 core cell processor", etc) and then under delivered. And its cost (to Sony) was much higher than anticipated and as a result, the price ("five hundred ninety-nine US dollars") was extremely high.
These miscalculations cost Sony the console war. Sony has done a good job turning around the PS3, but at best they'll end up in a virtual tie with the Xbox 360 for market share (maybe +5% of total market at best, but that's close enough to consider a tie), and they may not even make a profit on the system overall.
The primary reason Sony continued to sell the PS3 even though it looked as though selling it would cause them to lose more money than not is that they're a long-term company and are planning to keep the playstation name profitable long term.
