I don't understand the point of your math.
Right now, Sony is taking some loss on every PS3 sold. We don't know exactly how much. You are suggesting they cut the price by $50, which would be ineffective anyway, because to the consumer the difference between $350 and $400 isn't all that much.
You think Sony can afford to lose an additional half a billion dollars per year? On top of their mounting losses already? Why wouldn't Sony be interested in profiting from the PS3 in your magic world or at least minimizing their losses. From a business perspective, the PS3 has cost Sony so much already that it doesn't make sense to continue to throw money at it.
As a software developer, I've seen how bad it is when M$ drives competitors out of a market. Borland used to sell compilers for $100 or less, then M$ came in and under cut them, effectively killing Borland. Once that happened, Visual Studio suddenly cost more than $1000 bucks. Same happened with the Word Processer as they under cut Word Perfect (which was a FAR superior product).
Lots of companies still sell compilers though. Intel sells them, for example. Other companies release free development environments such as Sun. Finally, you can get your hands on the gcc compiler suite for free and choose whatever development environment you want. For my money, GCC+GDB is as good as Visual Studio Express, certainly (Visual Studio Express is the only version I've used in the last couple of years).
