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Honestly, I'd say Sony's biggest problem in regards to profitibility isn't the PS3. It's the exchange rate. They may lose money on every PS3 they sell, but Sony earns less money on every single sale of any product in the U.S. or Europe be it hardware, software, or even digitally distributed material as long as the yen stays as appreciated as it is. Unfortunately, there's really nothing Sony can do to change the yen's deflation so they are just going to have to ride it out.

I think Sony has the right idea though. Right now I believe that they are concentrating on selling as many systems as possible so as to establish a market base so that when the exchange rates do inevitably return to normal, Sony will stand to make much more.