Yeah Sony can't just pump out the easy to make games and continue to hype the next gen HD requirement. Nintendo can release a Mario Party every year using the same engine (4 for GCN) and sell a ton of copies and it probably costs very little to make. I dont see Sony doing this. Also the so called next gen games take a lot longer to make. So Sony may have some killer games due out, but they wont be here anytime soon...

RolStoppable is preaching the gospel. It sounds just as good as if it came from my own mouth. Lossleading is supposed to be a strategy to break IN to a market. Not be a way of life & standard procedure. It's a not-to-good strategy to begin with that being said but that's what it's supposed to be. Once established a business is supposed to learn how to make money & profit more securely. Have you ever heard of the term "Pyrrhic Victory"? http://en.wikipedia.org/wiki/Pyrrhic_victory That's how Sony ran the 12 years of Playstation dominance. Sure they profitted but look at how much they put in to GET that profit. Having the two greatest selling systems of all time and only making in comparison little money take-home. Revenue means nothing. That's the TOP line. It's profit, ONLY profit that matters. Stone Cold says "And that's the BOTTOM line" We're talking accounting talk here. The Bottom of the ledger when all counting has been tallied. My gross sounds nice when I pick up my paycheck but I gotta look at that net after the government jacks me of my money to figure out where I REALLY stand. And then I gotta pay my civilian bills & expenses. What's left over is mine (and usually that ain't very much LOL!). Foolish strategy because it requires keeping up that dominance to survive. Sony can't survive as the underdog like Nintendo who works their monies more wisely. If Microsoft wasn't in the picture Sony would be safe as the alternative to Nintendo but Microsoft made sure to mirror Sony's platform so well that it supplants Sony's position in the market leaving them basically redundant. Of course Microsoft being an outsider still hasn't capitalized like they should on sealing the deal luckily for Sony. Some markets are still up for #2 grabs so Sony can stage a building here. It's scary when Sony actually has to NOT sell as many PS3's in order to not lose as much money. It's just bizarre. It sounds fatal quite honestly. And then this forces less gamebase to make up in software sales. But then on top of all that it stalls on the shelves. Worse of all their money isn't as long as Microsoft's is so MS will just make them spend themselves out of the game with that green stamina. PAL launch was a shot in the arm to save this failing project. Yes I said failing. But they're gonna need more than that to stay afloat here. As this generation wears on you're gonna see the telltale battle scars upon the Sony Computer Entertainment Division. They've lost Japan & they're losing the other regions to the competition as well. It's gonna take a miracle for the PS3 to even survive. Forget about becoming #1 in the market, they just have to make it TO the market. John Lucas

 Sony is an enormous, globalized, heavily diversified company. The larger investment by their entertainment and manufacturing divisions in Blu-Ray is spearheaded by their gaming division's flagship product of the PS3. Though MS certainly also has sacks of cash which they've proven they will throw into the market to scrap this out, it's not like Sony is going to run out of money to compete with them.

The entire internet bubble of the late 1990's was based on companies providing products at below cost  to gain marketshare in the hope that they would grow fast enough where they would eventually become profitable. Well, we all know how that worked for most of those companies.

In the 2001 fiscal year, Sony's game unit lost 51 billion yen ($427 million at the current exchange rate). Not pretty, but it's built into their long-term plan.

250 billion yen sure sounds like a much bigger pill to swallow. In April 06 they thought it was going to be 100 billion which kinda seems ok I guess. But that extra 150 billion can't be making them smile. And the yen is really high right now, which must even sting more.

This is a large part of Sony's overall long-term high def strategy, in addition to games. There's certainly a great deal of risk involved in this strategy, but it's not like the loss is a surprise, or like the console will just last for 4 months.

If it wasn't a surprise, why was the April 06 estimate so far off?

Its funny seeing people saying "Sony is a big company! These losses are part of the plan!" Riiiiight. They've got MS and Nintendo right where they want them. The plan all along was to have 2 billion in losses over one year, with no end in sight, reach 50% of their initial sales goal, make dangerous cost-cutting decisions like dropping full backwards-compatability and their "cheap" SKU soon after launch, all while losing exclusivity on key franchises left and right, and getting outsold by at least one competitor in every region of the world--two in the largest market. I can tell... They're about to spring the trap! Watch out when all those 1st party mega-franchises come out! Gran Turismo!! ... erm... SOCOM?... Ratchet?... Uh... EyeToy?... Everybody's Golf? Yeah, bitch. Console war over.

The thing of it is that sony is going to take a little longer than the rest of the crowd to get its act in gear, b/c its product is higher end, and more complicated, which implies that if all 3 consoles came out at the same time, the wii would get the early lead until the eventual winner emerged.