This article is not about net profit, it's about "per hardware unit" profit.

Yeah, I highly doubt that they are breaking even with the 40GB. I think they aren't losing as much as they did when they first launched the PS3, but they still have a while to go for them not to lose money on each PS3 sold.

However, if it's true, like I said, highly dobtful, then I wonder if Sony will remain with the current price, or will they have another price cut. Then I wonder by how much Microsoft will cut the price for the 360.

Should I dare believe that both Sony and Microsoft will encroach one of Nintendo's safety net this year: Price point?

so in one year the PS3 went from $900 device to a $400?

thats bull shit. Sony says everything they can to try and manipulate ppl into thinking "oh hey, Sony isnt falling off" when you look at the big picture they've taken huge hits PR-wise and marketing-wise

Microsoft certainly will. The Arcade is almost there already. Sony doesn't really have a chance of doing it; $150 is way too much in one year.

Not that I really think it will hurt Wii sales but price parity shouldn't be far away. 

the sony quarterly reports dont lie... i think this story is true though.. everyone is waiting to hear it from sony but the people who are waiting dont realize that sony never really says what the production cost is...

Like others here, this information is so shocking (has any major electronics product ever been able to half its production cost in a year? Going from 800 dollars to 400 dollars in 12 months?) that it's hard to believe, but the really puzzling thing is that the same people who made this statement -- Nikko Citigroup -- also expect SCE to lose 1.4 billion this year, and that they will "not be prosperous until late 2009."

So, if Sony isn't losing money on the consoles, why are they are apparently still going to be hemmoraghing cash for a long time to come?

I can see the cost being cut in half from the initial production run for the 40 GB model vs the initial 60 GB. The diode, PCB changes, chip shrink, chip removal, slightly smaller HD (40 GB drives can be 80 GB drives where one side of the platter is not working), SACD removal (DACS price cut in half or more), removal of memory cards, USB ports, Power Supply redesign (since lower requirements). Also the the initial GPU + Cell costs look very high and I would expect these have come down a bit. The initial 800 cost estimates looked bloated (there was hundreds of dollors to come off the cost once production started to run smothly). Another 200 hundred is believeable with the 40 GB redisign. Don't focus on if this makes a profit. That isn't the point. I believe Sony could cut costs in half with the 40 GB vs the initial 60 GB.
RabidBunny

I was still thinking along the $300 price range for both the 360 Pro and PS3. To be only $50 away from the Wii could attract a few more customers. And yeah, the Arcade sku could very well be the cheapest console on the market.

It would be interesting to see how all 3 consoles pan out if there was a price cut from both Microsoft and Sony.

@Bodhesatva
Many electronic products have cut costs to half over 12 months. The main factors have been that the product had new technolgies (e.g. Consumer DVD Players had DVD drives, + Decoder Chips both which dropped in price by more than half over the initial 12 months) and were not designed as cost efficiently as possible due to need to hit production dates (get out for Christmas with minimum risk, have redesign available ASAP).
RabidBunny

You should have seen their Christmas party.