Yes, costs scale over time.  Again, I'm not sure what this has to do with anything?  Especially the flat out misguided notion that the US 120GB loss is only $18?

It has to do with your refusal accept the fact that 250gb cost more to produce than 120gb. You have the notion that they lose a lot from the 120gb and make a lot from 250gb so it averages out to be 6cents/dollar overall.

"about six cents for every dollar of PS3 hardware sales,"

Because you are paying a higher ratio on the 250gb compared to their cost, I would say that this 6 cents is an average.
Basically, they took their total sales world-wide, and took the costs and divided it evenly. I don't think they looked at every console one by one.

I think they are probably losing 30$ on the cheaper units, and making 20$ on the more expensive units. Of course, there is the whole currency value on top of that, but for simplicity, they make money on some units and lose money on others.

But they don't cost more?  Outside the HDD, they're identical, and going from a 120GB HDD to a 250GB HDD is a negligible cost in the sort of orders Sony's likely dealing in... I'm not sure why you aren't getting this tbh?

Obviously, it is because I am not convinced that 250gb does not cost more produce than 120gb. You can accept the fact that it would be more costly to produce PS3s with 512mB ram but it would not cost more to build 250gb PS3s considering that the price scaling suggest that both upgrades would be 'negligible'? 

I don't think you understand how these things work exactly... in terms of memory you can't compare RAM to a HDD, it's like comparing carts to CDs.  With a HDD, most of the costs are fixed and for the case/drive/laser/moving parts themselves.  The disc platter can change costs, but by a tiny, tiny amount comparably.  Doubling your HDD, isn't a large cost increase, unlike doubling your RAM.

The production cost between the 120GB PS3 and 250GB PS3 is likely less than a few dollars, if even that.

http://www.pricewatch.com/hard_removable_drives/

3rd column.

120GB SATA HD 28$, 250GB HD 35$

However, the 250GB Playstation costs 350$, whereas the 120GB costs 300$.

As you can see, even with retail pricing on the disc drive, they made 43$ more than they would have on a 120GB ps3.

I agree with jarrod. Why aren't you getting this? And secondly....what are you talking about?

Because it is inconceivable that you can instantly go from a large loss to a large profit by swtiching one 'negligible' part. If this can even be remotely true, then why don't jump ship and turn all their production line into 250gb to instantly go into a profitable business?

Because the 250gb ps3 costs 350$, and if you've been paying attention, which you may or may not have (since you're new), the price drop after E3 last year doubled sales. 350$ plus tax is a considerable burden on the consumer. Cutting the 120GB ps3s would effectively be a price HIKE. This would lower sales, which is bad. Sony wants to sell as many ps3s as they are able to afford. Losing an average of 6 cents on every dollar for ps3 sales is not bad, considering that when the console launched in 2006, they were losing more than 200$ per console sale, which turns out to be about 40 cents per dollar. (cost to produce launch 60Gb ps3 ~847$, cost to produce launch 20GB ps3 ~820$ / Price of each was 600$ and 500$ respectively) So, on a 20GB hardrive they were actually losing about 320$, and a 60GB lost about 247$.

Now, I think you are missing something important. You seem to think that Sony makes all of it's money on selling ps3s. This is completely wrong. Sony makes their money off of game sales. For every game that is sold (as a new copy, not used) Sony gets between 15-20$. Currently, sony loses about 18$ per console, and then makes 20$ on the purchase of ONE game. Also factor in the controllers and peripherals like eyetoy or microphone or keyboard which costs Sony much less than they charge you. In total, for someone who buys a new console (-18$), and one controller (+22$), plus one game (+15 to 20$), Sony makes about 20$.

Now then, instead of calling things inconceivable and arguing how reasonable something sounds and thinking you're right about everything. Ask better questions, because you are obviously misinformed about a great many things. I don't fault you for this at all. You are a new member here and we like to focus on the facts. You might just not be used to people who actually know what they are talking about, or something.

Is there a source to your information? Particularly on PS3 20g loss @ $320 while the loss @ 60g is $247, again I am still not convinced changing the hdd have such large effect on the income margin. I would be entirely 'inform' if i look at the 'facts' myself tho.