They have every incentive to not produce too many of the 65nm RSX chips as moving quickly to 45nm versions would likely save them considerable money. Its the most likely explanation because the switch over coincides with shortages.

but that was my initial point if they wanted to increase production they could. It would just cost them more money, which they don't want to do.

Yes, but you must understand that in mass manufacturing, suddenly increasing production at some random point means a _massive_ increase in manufacturing costs. In the worst case, you'd have to buy all your additional stuff on the spot market (figure something like Sony walks into BestBuy and buys 20'000 harddisks for the additional stock. Sure they'd get a rebate and the store clerk becomes employee of the decade, but the disks will still be considerably more expensive than usual). This is why companies make fy production plans and stick to them, no matter what.

The japanese source is almost certainly wrong (disgruntled shop owner) or the $7.40 is the net amount after all expenses are accounted for by the dealer - a net profit of 2% is in line with other sales ares - the food industry (and  I think actually WalMart) is roughly in that range. Japan generally has higher cost of living, higher rents and social security costs so I'd even assume that store margins are equal if not higher than Europe.

Store margins are highly privvy in Europe (in one of my NDAs, it was specifically mentioned that giving out such numbers would result in serious court spanking..) and vary depending on the kind of product sold. I doubt any (bigger) shops will tell you anything if asked. For everyday clothing, for example, it was around 33% years ago (might not have changed), rising to 100% for better clothing and reaching 1000s% for haute couture. A game console is located in the standard consumer electronics area where margins hover in the 20%-25% range. Obviously I have only limited knowledge as far as other countries are concerned, but the business models in Europe are pretty identical (particularly since Europe business is governed by large multinational companies like the Mediamarkt/Saturn group. Microsoft probably is a special case since they would lose tons of money on their gaming hardware alone (despite the fact that 120G HDs are $150 here in Switzerland) given the standard margins. However, MS sells a lot more than gaming hardware so they might cross-finance and bundle stuff. Personally I am quite sure that MS loses more money per console than Sony (comparable systems sell around $60-$80 cheaper), but there is no way of knowing without hard data.

Did you read my previous posts about how mass manufacturing works? Stop distributing these "shortages because the dog ate my homework" rumours. It is exactly as I described above. At every moment in time, Sony exactly knows what chips go inside their products - beause those chips were ordered months (sometimes even years!) in advance. There is no "quickly move to XY nm". Again, this is NOT how mass manufacturing works. Sony had shipped exactly the number of PS3s as ordered for last fiscal year and Sony is going to ship exactly the number of PS3 that were ordered for this fy (whatever kind of RSX chip is inside). All the components, down to the last screw, for this fy had been ordered sometimes last year. There is no "incentive" involved in mass manufacturing. It is follow "standard procedure as every year" - unless you want your manufacturing costs go through the roof. This is the exact reason Nintendo went through their draught period without manufacturing a single Wii more than planned in their fy plan.

So again in one simple sentence: "If your fy plan underestimated the demand - you don't get enough stock and you get problems".

U may be right but if its in US n Japan its around $8 - 12 than i have serious doubts that its around $50 in Europe.

ps. quoting for clothing is not right when we are discussing PS3.. they r two totally different markets.

Its simple really. Just because the chips were ordered doesn't mean they were delivered. It happens all the time in the semi-conductor business, theres nothing surprising about it.

Oh boy, you can't be more wrong than that. Believe me, there are contracts between manufacturers and OEMs that detail down to the last screw what is to be delivered at which time, at which quality, to where. These are thick books, not single page order forms (I have seen one of those books, wasn't allowed to read it though..). The contracts also tell you the penalty you pay if you don't deliver and the penalty for not paying the penalty (there has to be a reason for all those lawyers running around..). If your foundry doesn't deliver in time, you will soon be looking for a new job.