Thats a good point. Most further cost reductions will have to come from economies of scale, which relates directly to sales. If they cannot lower the price much more, they cannot increase sales.

If it cost them $400 to make a 40GB PS3 they are still losing money on each unit sold. With the MSRP being $399.99, retailers probably pay around $380 for each 40GB unit they stock. Thats assumming the $400 cost estimate includes the actual manufacturing and shipping cost. If its only component costs, then the losses would be much steeper. The quarterly report from Sony will give us an indication of what the costs of the 40GB model is.

great, if it is true, great

then Sony may be able to match MS price modification during 2008

I wander if anybody really read before posting a reply.. the report simply say that Sony has reduced the cost of PS3 to half.. and thats only manufacturing cost... administrative, advertisement and all other gaming division cost is not mentioned so reducing the cost of the manufacturing of the PS3 doesn't mean in any way that Sony gaming division will turn into profit..

wander why we people jump to conclusion without even understanding what is being said or talked about.

Good news there

Great news for Sony maybe now they will correct some of the things i hate about the PS3, mainly the price and lack of games that appeal to me.

Perhaps they'll be in shape for another pricecut this year, as a countermeasure to Microsoft's cut that is bound to come soon.
I think Sony should focus on lowering prices in EU/Others, that would gain them hugely longterm I think.
And perhaps it would make up a bit for those who felt short-sticked when they launched in NA only in 2006.

I call BS, until you see this story official on mainstream industry news websites like Gamasutra.

Until Blu-ray players drop well below the price of a PS3, I call bullshit on anyone who says the PS3 is profiting or even breaking even.

What, do you guys think that Sony is making $150 on every Blu-ray player sold? Even $150 doesn't cover the additional hardware in the PS3.

No, because the 400 € price includes things such as taxes, EU recycling fees, and possibly a retailer bonus.

Eliminating the VAT alone makes it less than $500.