Your thinking is linear. Dropping price doesn't necessarily mean less profit. Just consider why Microsoft's game division is doing so much better financially since they dropped the price of the 360. The truth of the matter is that PS3 is getting cheaper and cheaper to manufactuer all the time and sales from software is growing and growing. Earlier this year, Sony's president commented that losses from PS3 hardware sales were being 100% covered by profits from PS3 software sales. And this is still only its second year. Next year Sony stands to gain phenominal ground. Gran Turismo 5, God of War III, Killzone 2 and Uncharted 2 will net Sony hundreds of millions in software sales and a $100 price-drop for the PS3 could potentially double its current market which will turn into software sales for Sony which will continue to cover hardware losses while Sony continues to eat away at manufacturing costs by releasing cheaper chips and possibly even a slim model. To think that Sony can't make an overall profit off the PS3 within the 7 or so years that it will likely be available is laughable.
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