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I think that it is probably making a bit of a profit, but nothing to write home about. As far as its future prospects, the PSP has been making a small comeback recently as far as week to week sales and I expect this trend to continue for this year. It is now 40% of DS sales, and as Home debuts so that PSP users can play w/ Home, and the people start buying more from the playstation store, we will see more money coming back into the PSP for further investment, especially as Sony's gaming becomes more profitable. One way to simply crush the competition is just to spend more on everything (hey it worked for MS more power to em), and the profits that Sony's gaming is starting to generate expect Sony to spend more on the PSP.