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While all consoles are going to be sold out, what about after the fact. Pricing it at $400 and losing $60 per console they're going to be making a lot more than that back on the games. Honestly it's what they should have did with the Vita much earlier on and more Vitas would probably have been sold.  You can't say that people are going to buy the console and then not buy atleast enough games that Sony profits $60 from.  The way it is now at $400, just means that instead of dropping the price earlier, they can just keep it at $400 for a much longer period of time.  If Microsoft drops to $450, they could keep it at $400 or drop to $350, but when Microsoft drops to $400, that's when Sony should definitely price drop to stay ahead.

Take what Sony has said about the Vita. There's 10 Vita games per Vita sold. There are obviously a lot more people purchasing games than others, but an average of 10 games per Vita sold is quite a bit.

Also Sony hasn't really lost money. That's what their sales projections are. They sold less than they thought they would and to companies, that contributes as a loss in revenue. Until they come out and say their operating costs have been more than the revenue they've gained, which they haven't, then I don't see it as a loss. Last time I've heard anything, Sony was profiting, but like every single announcement they make, their TVs are making them lose a massive amount of money.

It makes you wonder why the hell Sony keeps selling TVs when for the past decade they've been losing money on them.  *edit*  A lot of their TVs in the past decade haven't been that great either, but they've still been overpriced, only recently Sony TVs have been getting closer to the quality of Panasonic and Samsung and they've lowered the prices a bit.  Sony HDTVs have far less input lag for large HDTVs than anything on the market for their last couple models.  17ms input lag for TVs 47"+.