MS can either make $$$ or outsell PS3, NOT BOTH.

[richardhutnik]

Let me attempt to make sense out of this, and make it of value more than just fanboy ammo being fired, that is bent and twisted, and trying to be used to drive in the heart of XBox fan(boys):
1. Let's say that the PS3 is now making a small profit currently. I don't see anything larger than say a $10 profit per machine, assuming the original poster is correct.
2. I can't see anyone arguing that the 360 costs more to make. It HAD issues with the RROD, but is there any reason why the unit is still having problems to the degree it had? Can ANYONE say this truthfully? The 360 is now on its third revision, and the system now seems to be more reliable on what I read, and runs cooler. So, let's say, for balance, that the problems are nearly ironed out. Also, let me go with what the original poster had said, that MS can either make $$$ or outsell the PS3. I take that now to be that it will be profitable (if not now) at its current price point), so I will say the problems are nearly ironed out.
3. The 360 is currently outselling the PS3 at a lower price point.
4. The PS3 is working to try to get profitable now. The division is looking, this year, to finally to start turn a profit.
5. Assuming there is a small profit margin is made now, if Sony cuts price, then they will again be at a loss per unit sold. The price still won't match what the 360 is now. Even dropping to $300 for the least expensive unit will put the system still $100 more expensive than the least expensive 360 unit.
6. The PS3 could then cut prices and outsell the PS3, but Microsoft loses money.

Conclusion I am reaching here, based on what the original poster wrote, and of value for the discussion of the videogame business is:
Apparently both companies have to have a price war to be able to outsell the other, and the only way for them to do this is lose money (or they make money if they don't want to). If the industry has dropped to this place, then there is definite potential for a crash here. This is not a good place to be in at all. It means Nintendo is the only one in a place to hold out.

Ok, I didn't even factor in revenues from other sources either, like Live subscription, and Micropayments over the Internet here. I have to avoid doing that, because I don't see the original poster factoring these in either.