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IMO the main reason for these losses if the $100 price cut that came with the slim, it would have been far more prudent to cut the price by only $50 or not at all, the numbers would certainly have been better atleast!

Sony really has to tread carefully here, clearly software isnt making up the losses like they hoped it would. This is in addition to the PS2 and PSP not being able to pick up the slack as they once did (primarily the PS2). Sony simply wont be able to launch the PS4 the same way they did the PS3 because they wont have the previous consoles to support it as well.