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RAZurrection said:
Complications said:

You have no clue about business. Sony need to produce as many PS3 units as they can sell.

Uh, you're the one recommending Sony would make more money by selling more units of a product that they sell at a loss.

Complications said:

If they made 10M PS3s every quarter, who would buy them all? Then sony would have to store all these excess PS3s - and storage costs money. Be serious please.

But you just said "The more PS3s Sony produce - the more production costs are lowered", why wouldn't they take advantage of that if it were true?

Because those savings would be offset by storage costs....which Complications already mentioned.
Their capital would also be unavailable for use if a more profitable opportunity arose, because they would have placed it all into an overproduced item.