Just to add to the general sentiment here, no, definitely not. Sony can turn a profit in individual quarters, but it's already impossible to turn a lifetime profit on the PS3. They're simply too far in the hole already ($3 billion and counting). That's not even including this current holiday quarter just passed; when Sony releases its financial numbers in January, we're going to see the true costs of their latest price drop - and it will not be pretty.

Both Sony and Microsoft run a business model that necessitates achieving PS2-level dominance in the market in order to turn a profit. Since the PS3 is clearly never going to get anywhere close to that level, we're going to see XBox-level financial losses. That article posted by libellule is a good example. Cutting through the PR spin, Sony is stating that they HOPE to break even on PS3 hardware sales in the NEXT fiscal year - that's April 08 to March 09. So "maybe" Sony will stop losing money on PS3 hardware within the next 18 months.

Hardly an encouraging prospect.

Software prices are likely to remain high to help them claw back some of the damage the PS3 unit is doing.

They are loosing a lot of money with each unit sold and I do not see that changing for several years!!

libellule said: damn, +1 for Darc Requiem  EDIT : Sony's Hirai eyes PS3 profit as costs decline Mon Jan 7, 2008 5:02am EST Email | Print | Share | http://license.icopyright.net/3.5398?icx_id=2008-01-07T100222Z_01_WEN3264_RTRUKOC_0_US-SHOW-HIRAI.xml&icx2_id=USWEN326420080107&section=CMPTRS',%20580,%20635,%201,%20'purchasePopup')">Reprints | Single Page | Recommend (0) [-] Text [+] 1 of 1Full Size Related News Take-Two CEO: Video game mergers inevitable Video game industry has turned corner: EA Metal Gear Solid 4 last of the great exclusives? European car industry choking on emission rules Sony PS3 weekly U.S. sales double after price cut powered by Sphere By Franklin Paul LAS VEGAS (Reuters) - Sony Corp (6758.T: Quote, Profile, Research) gaming chief Kaz Hirai hopes to turn a profit on the PlayStation 3 console business in the entertainment conglomerate's next fiscal year, fuelled in part by falling costs for the parts used to make the device. "We want to get to the positive side of the equation as quickly as possible," Hirai, who is chief executive of Sony Computer Entertainment, said late on Sunday on the sidelines of a news conference at the Consumer Electronics Show in Las Vegas. "The next fiscal year starts in April and if we can try to achieve that in the next fiscal year that would be a great thing. We are going through the budgets right now. That (profitability) is not a definite commitment, but that is what I would like to try to shoot for." His comments came after Sony announced stellar holiday sales for the PS3. The company said on Sunday it sold 1.2 million PlayStation 3 video game consoles in North America over the period, two-thirds what it sold in the rest of the year. The Tokyo-based electronics and entertainment conglomerate currently loses money for each PS3 it sells. Sales of the PS3 have lagged those of Microsoft Corp's (MSFT.O: Quote, Profile, Research) Xbox 360 and Nintendo Co Ltd's (7974.OS: Quote, Profile, Research) Wii consoles due to what analysts say is its lofty price and a dearth of must-have games. Great games, which draw consumers to buy the console, matched with declining component prices will hopefully lead to profitability for the PS3 and the company's gaming division overall, Hirai said. "Component costs are coming down, and the number of components ... we are seeing a reduction," he said. "The 40 gigabyte PlayStation 3 obviously has fewer components (than more powerful models), and uses less power, which means that components required to dissipate heat, for example, can be smaller, so there is some cost reduction there." "So costs are coming down significantly," he added, noting that the decline is in line with what the company had expected. (For more from the Consumer Electronics Show, please visit the MediaFile blog: blogs.reuters.com/mediafile/)   ==> I suppose the important word is "hope" ...

 Well, this pretty much answers the question, doesn't it?  Yes, they could make a profit, but it depends on how soon BD starts selling at a higher rate.  That will naturally drive costs down and as the BD drive is the single most expensive part of the PS3, will make the biggest difference.  No one knows right now (as far as I've seen) where Sony is in selling the 40GB units.  How much of a loss is that?  

In any case, the article also makes it clear that while they (of course) "hope" to make a profit on the console over the next year, they're fully prepared not to.  They know they may need to drop price again in response to MS or other market pressures.  The fact that they think they even MIGHT be profitable over the next year should tell people that they're not losing near as much per unit as they used to be.  Something worth checking out, don't you think?

Either way, we all know Sony has always made profits on the software end, not the hardware.  They've been operating this way for some time now.  It's much more crucial for MS to get profitable in their gaming division and stay that way.  MS MUST sell a good bit more of the 360's than they did with the original Xbox.  Right now over 2 years into the lifecycle as opposed to about 4 years for the original Xbox, it looks like they're on pace to slightly outsell the original Xbox.  I'm assuming they lose less money on the 360 than they did that original unit (one of the reasons they switched to PPC, etc) so hopefully they'll be able to attain overall profitability on that product.  If not, they'll have to seriously evaluate strategy when bringing out their next generation.  And before people get their backs up, yes I know MS has tons of money, but they still operate under business principles and that means they expect profitability from ALL their divisions, at least after initial scrambling to carve out a spot in the market.  We'll see... 

Lifetime it should make a small net profit of roughly 200-500 million. Although I think Sony will be more than happy just to break even. Sony will be getting more than enough profits from their bluray royalties.

mid 2009 they'll start cutting into their losses, they won't come back from the losses they've already dug out this gen though.. probably next round

Not that I'm doubting you guys, but could someone give me a source for how much money Sony made with the PS2? It'd be nice to have more than "some very credible guys told me on a very credible forum" if I later quote the numbers and someone asks me where they're from. =P

If you have them handy, then I'm also interested in the same numbers for Nintendo and Microsoft (-4bn$ wasn't it?) as well, but don't strain yourselves for little old me.

Well if they are really going for a 10 year plan, as in no successor for 10 years (which I honestly don't think the CAN do, but I won't get in to the myriad of reasons why that is right now) then they might.

But think about this, If they start turning a profit in TODAY, they would need to make 1 billion in profit each year just to break even in 2011. Their losses are still piling up and if they start making a profit in 2009, as I suspect they will, they should be around 3.5-4 billion in the hole.

That means making an average of 1 billion profit a year (which they wouldn't) they wouldn't break even until 2013-2014.

It seems the PS3 has won the format war for sony.

I think they've been vindicated from a buisness point of view.

For me personally, the PS3 still isn't a machine I'm interested in, but I think it's going to make more money for Sony than the 360 will for Microsoft.

Absolutely, the ps3 will most likely breakeven/slight profit this year, and make a net profit overall (offset 06/07 losses) by 2010/2011...PS3 should make a solid profit for years if it truly has a lifecycle until 2016.

Also, the ps3 helps bolster their main industry--electronics.

 e.g. I bought a 60" 1080p SXRD SOLELY because of my ps3.  That is a $2,800 sales Sony wouldn't have gotten if it wasn't for the ps3.

Also, as others have mentioned...Blu-ray will be HIGHLY profitable and that wouldn't have been possible w/o the ps3.  Not even remotely possible.

Well, I just thought I would clarify my point further ...

In order for Sony to break even on this generation they need to recover a pretty large sum of money from the money they have already lost in R&D, Marketing, Hardware Losses, and money lost in underperforming software; this would probably be in the $2 to $5 Billion range at the moment. Any action in the future which increases their losses, reduces their profitability or revenues (like a price reduction) would eliminate any chance of them ever breaking even.