With the price of the pieces and adding the other cost, It is possible that Sony is not losing money on each unit, maybe even making a very, very small profit (5 dollars?). But they are in no position to reduce the retail price any time soon, unles they want to start losing a lot of money. Maybe by the holyday season they can afford to create some bundles with memory cards or even a launch game and just lose a few dollars in each unit, but it will help increase the market share.