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taxman said:
It's not a matter if they are selling at a loss or not. It only matters if they can justify the extra expense with future profits.
No one can deny that more consoles means more software revenue in the future. If they can get that revenue in the future to cover the cost of the initial investments (sellign at a loss) then the only thing they need is cash to cover the initial costs and they can easily get that at any time.

Honestly, I don't think its a good idea for Sony to do a price drop. Simply because they can't afford it. At this rate Sony will continue to sell a decent amount of units and eventually get out of the red. At this price they'll never be number one or even number two in world wide sales but not losing money is the best way to go at this rate. And I know selling more consoles will sell more games, but I don't think people will buy enough new games to make up for the $100 price drop.

Sony just better hope Nintendo and Microsoft don't do price drops. Which they can most likely afford to do.