Microsoft has only had a minor $50 price cut in 2 years. Even with the 40 gig out now, they are only within $50 apart. They are letting Sony get some market share but not a significant amount to where they can do any damage with software sales and seeing as how they lose substantial money on every unit sold, it only hurts them more. Microsoft knows that they could do a death blow or at least significant damage if they followed with similar price cuts or at least bundle Halo 3 this holiday but their not. Why? Is this just conspiracy theory? I personally thing that Microsoft wants them to dump 5 billion + dollars in gamming like Sony made them do last generation. Eye for and eye kind of thing

Just your friendly neighbor Bill Gates trying to do something nice.

They don't want to be accused of dumping... they can only loss lead for so long, and they are to the point where they have to start showing a profit overall in the game area...

 Microsoft can't deal any"deathblows" b/c of 3 reasons.

1. The gaming division had a really hard time turning any sort of profit since the original Xbox launched, would you rather make money or lose money when you're finally in position to?

2. Microsoft knows they cannot completely snuff out the PS3 that early. If they droped their price dramatically past the PS3, then Sony would be forced to cut their price to get as close as posible. That strategy is nothing more than jumping into a hole and grabing someone else with you.... which leadsme to reason number 3

3. Nintendo will only benefit as the only profitable company out of the three.... in other words, while MS and Sony lose insane amounts of money trying to kill each other for 2nd place, nintendo would just watch and laugh.

I honestly don't know where they got the information, but back in 2004 there were a lot of people who claimed that Microsoft was forcing the XBox division to turn a profit on this generation or there wouldn't be a new XBox. The fact that the PS3 launched at such a high price took a lot of presure off of Microsoft to reduce the price of the XBox 360, and thus any need to break even on the generation became an easy task ...

Sony is bleeding itself dry. Nobody forced them to sell consoles at a loss. They could have been like Nintendo and made sure to sell at a profit.

So is there any chance that Sony will make any money on PS3 this generation? Eventually, 360 will price cut, probably another $50 maybe around the time of Lost Odyssey and Sony will feel forced to price cut again to stay cometitive

Nobody knows for sure. Sony could be making a profit on every console now. There's is really only one company that can give you that information. Sony.

True enough, although Sony claimed to be losing money on the 40GB model when they launched it ...

Realistically speaking you have to consider that the differences between the 40GB PS3 and the 60GB PS3 is 20GB of hard-drive space, and the loss of the Emotion Engine and the Graphics Synthesizer from the PS2; I suspect that these changes probably don't add up to more than (about) $50 in savings. Beyond that the price reductions come from other hardware improvements (65nm process) and volume discounts; I think it wouldn't be reasonable to expect much more than $150 or $200 in savings from this.

So, basically I suspect that the 40GB PS3 is selling at a similar loss to what the 60GB PS3 was at launch.