@Blackstar - I think a fair and honest discussion on your topic is hampered by some false assumptions in your op. Specifically:
1) The box is cheaper to make now then it was three years ago, and the price cut in all regions is pretty much in line with the PS2's pricing strategy (European price cuts are probably more aggressive). Simply meaning there is no evidence to suggest they are losing money, and historical evidence to suggest that they are not. Your assumption that they are losing money on hardware, is at best debatable, and not a firm positive on which to base a discussion.
2) The RROD issue was paid for, in a lump sum (6 quadrillion or whatever) out of last year's financials, and the heatsink issues have been addressed in all recent motherboard/processor iterations. They are still trying to make this money back of course, but your assumption that is has not been addressed, is well, false according to every source I've read. If you have hard evidence that current hardware still have this issue, please provide and I will, stand corrected.
3) How much exactly did MS pay for exclusives? Because, you know, access to 20 million players/possible buyers wouldn't entice ANY company, right? I'm not suggesting that MS hasn't spent any money securing titles, but I think again, that the assumption that the ONLY reason they get any developer support is because of vast sums of money is pretty ridiculous.
Given all this, I would guess that the financials for MS's entertainment division will be out of the red, long before 2011.
