The gaming division is losing a lot of money. Unlike Microsoft, Sony is not in a position to subsidize the Playstation.
The gaming division has the cost structure of the haydays of the SP2 with its massive sales. This cost structure is outdated for the current realities and Sony's position in the market.
The overhead in their cost structure means that they are very sensitive to sales revenue reduction or currency exchange changes because these overhead costs stay fixed regardless of the sales.
Sony must review all aspects of the gaming business to ensure its return to profitability. The economic environment is not improving for Sony. Recession means less premium product sales. If Sony will not be taking steps now to adjust their business model, pricing and cost structure then they will continue to lose money. Not being able to reach break even point in gaming very soon may lead to much harsher steps later on, when things are reaching desperation point.
Prediction made on 11/1/2008:
Q4 2008: 27M xbox LTD, 20M PS3 LTD . 2009 sales: 11M xbox, 9M PS3
