Yeah the 360's software is doing great. If they aren't making a profit now, then they are close to it.

@ProfDallas: I'm not sure about lying in expectations being illegal, but in USA, you definately get sued by shareholders.
M$ gaming division definately will have two profitable quarters in a row, but i would like to wait until Q1 calendar year 2008 numbers before saying anything about them being profitable without Halo 3 release and christmas. It's possible that they can make profit early next year.

Sony is kicking MS ass in japan and europe(in europe way more that the estimations here would make you believe).MS plans to take over,they explicitly said so,but it wont be so easy.

I don't think that you can claim that Sony is kicking Microsoft's ass in Europe when the XBox 360 has a 2 Million unit lead and is only being outsold by (approximately) 10,000 units per week; at that rate it would take Sony 4 years to catch the XBox 360.

But you can only be sued (successfully) if an illegal action has occurred.

Anyway, I've finished a finance degree, doing sales now, and no you won't be sued by shareholders if your expectations about future events financial or not are incorrect.  It is the shareholders job to judge for themselves as the the validity of Sony or any other corporation's claims.

I've been noticing that the definition of "Sony ass-kicking" has been getting softer and softer with time.

As have i, that along with

Sony domination begins in 2007 ......2008!

no seriously, i cant wait to hear all the "sony is making a comback!" when it finally outsells the 360 for a week, hopefully eventually

Microsoft has already lost $6.5 billion on their games venture since 2001, due to bad planning, dependence on FPS games and sheer corporate arrogance, so they're under lots of pressure to cut their losses. I'm not sure a price cut would help them at this point, though. Their hardware quality issues are what killed them in Europe and Japan, and there's no short-term fix for that.

Microsoft's position in the console market is surprisingly tenuous. They have no way to compete with the Wii at the low end, and they have no media strategy comparable to Sony's emphasis on BluRay and multimedia functionality. Add up sales of the PS2, PS3, Wii and 360, and Microsoft is still slogging along with about a quarter of world market share. And this is as good as it gets for the 360 - its lead in software will vanish, and go into reverse, as all those exclusives from Sony and Nintendo studios hit.

Your forgetting that the mass market is more price sensitive than they are feature sensitive. This will hurt PS3 in the long term. Remember why the PS2 was so successful was that by their second year they had a ton of AAA games and was priced at $199. Its all about the games and price.

I'm sorry but the 360 has been anything but killed in Europe. It's getting very slightly outsold by the PS3, and the weekly sales gap decreased last week. It still has a much bigger install base.

Regarding Blu-ray, Microsoft doesn't want (or need) to compete with that.

Regarding money losses, I'll just say this: 360 is now starting to be profitable, and the PS3 has already eaten about half the profits that Sony made in its entire games division in the last 10 years!