Sony: "Unlike PS3, we are not planning a major loss with the launch of PS4"

[Dodece]

Loss leading as a strategy like all strategies has its own particular pros and cons. The increase in market penetration that is offered can actually generate greater profits. Then might be had by selling at a profit out of the gate, because it allows more consumers to own the product for longer. Meaning that they will not only buy more for the console, but they will more often then not be buying at full retail. There is simply a lot more profit to be made early in the lifespan of a console then near the tail end.

At the end of a consoles life discounting starts to take its toll. Those who buy at the end don't necessarily have to pay retail. They have a huge library of games to choose from that have been heavily discounted. Other companies have knocked off most of the choice accessories. A larger used game market also effectively knocks out a lot of potential sales. Anyway the real money in consoles doesn't come from the hardware. It comes from the licensing. Which is like a money printing machine.

That said I think Sony going anywhere near that strategy with their next console would be the height of stupidity. That isn't to say that I doubt in the least that Sony has more balls then brains. What I am saying is given the cash reserves of the other two, and the gleeful willingness of one in particular to drive down profit margins and increase losses. It would be financial suicide for Sony to not leave itself a healthy margin at the outset. To protect against the very real possibility of a price war.

It wouldn't be so bad if Sony had the composure to withstand the temptation to compete at full throttle. Something in them wont let them settle for just finishing the race rather then winning it. Think about it every time they get to a point where they can start to make back some of their losses. They double down by enacting another price cut, or jumping onto another bandwagon. Given what we know about the specs. I have almost no doubt that Sony is going to end up repeating the last generation, and running the company right into the ground along the way.