WereKitten said:
I don't understand all this obsession with the profitability of the console hardware itself that some of you show.
Sony can increase profits while cutting the price by increasing sales and thus the profits coming from extra controllers and software sales, even if the cost of production doesn't decreas of the whole $100
Let's say that they expect each PS3 to sell an extra DS3 and 2-3 games in the short term (averaged over the year) after the console is bought. Let's make that $30+2.5*$20 = $80 of profit.
Thus right now each PS3 sold this year will bring $40. Let's say that's 10M sales, thats of the order of $400M.
Now let's suppose instead a new slim PS3 decreases cost of production by $90, and it's sold at $300 with the famous $100 sale cut. Now each new PS3 loses Sony $50, but with accessories and software it actually brings in $30.
Thus the condition for increased profit is that due to the price cut it can sell more than $400M/$30=13.3M.
If the cost reduction is bigger, then even a lower increas in sale will bring in more profits than the current situation.
Plus, gaining marketshare will bring in extra money in the long term when new accessories and games are bought.
Basically, they know the statistics and the average numbers, thus as soon as the production cost reduction will be hefty enough to match the sale increase they projected, they'll cut the price.
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Stop making good, accurate points. If Sony cuts the price in the next 4 years they will immediatley go bankrupt and be out of business as we know it. Only Microsoft and their infinite wealth can just give away their system for free. 
