Can you acknowledge that R&D costs go on the books on a quarterly basis or are you under the impression that they don't go on the books until a product goes on the market and begins to generate an ROI?

That's a rhetorical question. 

You don't seem to have any idea how much money goes into assembling all the bits, the packaging and logistics of delivering the end product to retail. Try not to make the mistake of projecting one's own ignorance onto anyone else. If you don't know, say so. It's not a big deal. 

Assembly costs for smartphone devices generally run under $10 per unit. "Supporting materials" includes documentation, manuals, printed materials, and of course the box it's packed in. In the case of the PSV, it's about $10 per unit which was included in the BoM. Traditionally when iSuppli does a BoM breakdown, they include assembly costs as well. 

The point wasn't whether SCE was making a profit on every unit based upon the per unit BoM; it was that the cost to produce each piece of hardware is significantly less than what just about everyone had assumed. 

Overhead costs and labour costs. You can only assume how much they are? I guess the clue is in PSVita's current price. ie pricey

And I believe development costs after the testing stage is capitalised and amortised overtime. So not all R&D costs go down in the books as quarterly expenses

By comparison, the PS3 originally retailed in late 2006 for $599 with a BoM of about $840; a loss of $240 per unit over BoM alone. It took until late 2008 and one major hardware revision to drop the BoM to just over $400.

Anyone feel free to look up at which point SCE was actually selling the PS3 for more than the cost of the BoM alone, but I think it was close to the 4 year mark.

It goes without saying that the PS3 had overhead costs, labor costs, R&D costs, also capitalized and amortized over time. And yes, it also had a marketing budget and literally everything anyone can think of that applies to the PSV as an additional cost over the cost to produce and box the hardware itself.

To put it simply, SCE went from losing $240 over the BoM per PS3 at retail to gaining $90-140 over the BoM per PSV. There's no way to put a negative spin on that. 

It's generally acknowledged that retailers make the majority of their profits on peripherals and controllers that have much higher margins than the consoles themselves. 

I can only assume that the benefit of selling volumes of higher priced items like game consoles is that it inflates the outlet's revenue stream even if it contributes little to nothing to their profit margins. 

I was actually somewhat surprised to see how low their profits were on new games as well. There's a reason why they all want in on the used game business. 

It goes without saying that the PS3 is indeed a financial mess at the early stages of this Gen. Any new console's cost breakdown will look better than that of the PS3.

But the bom does suggests that Sony has improved on its costing strategies. .

Sony's policy is to sell their products at extremely slim margins. So I could definitely see a price drop to $199.

One more thing: I'm quite sure when Sony says "we are making a loss on it" they are making a loss. Has that changed? Anyone seen anything regarding this in Sony's financial reports? I'm being serious here. I don't trust these reports. I remember the 3DS BOM was estimated at $110 yet they are making a loss at $169. I want to know what SONY has to say on the subject. They are the ones who know if the Vita makes a profit everything considered.

If they're going to sell the Vita with 4GB memory , they're are better of opting for flash memory, it will save them so much money. I say Phase out the 4gb memory card towards the end of the year and cut the 16, 32GBmemory card by 20-30%, as  the Vita will need to build momentum. I havnt bought a system yet, not because the cost of the system itself or lack of games but due to the combined cost of  a VIta+decent memory card.

Seems like nobody here is in the business of manufacturing so there you go:

PSV is very likely made by a contract manufacturer. A typical CM will have a GM of around 10 - 15% of the BOM.

Packaging and shipping costs are still to be accounted for. Let's say packaging cost is $5 and shipping cost is $10.

It is unlikely that Sony will sell directly to retail. The typical scenario is there is at least one layer of distributor, and in some cases, several layers; typical GM of distributor is around 15%.

Finally, retail will have a GM of around 15%.

Add the numbers up: 165 x 1.15 x 1.15 x 1.15 + $10 = $260

For 3DS, if we apply the same calculation, we get around $170.

Since 3DS is about to make a profit, these numbers may be $20 - 30 too low. I reckon the cost of PSV is $290, whereas that of 3DS was $190. Sony is probably going to lose a substantial amount of money from selling PSV this year, even without a price cut.

The GM for distributor and retail may vary, but these are typical numbers for consumer electronrics. Regardless, I just want to show that BOM cost only account for a portion of the unit cost for any product.

Looking at the BoM and comparing it with 3DS's, which is 103 and due to turn profit this month at $170. I think it would be safe to assume tha sony's addtional cost range from $70-100, their marketing budget was no where near the size of the 3DS's, yet Vita doesn't benefit from the same economies of scale.

From this i think its safe to estimate that the Vita is making anything between $10 profit-$20 loss on each system. Either way, its sounds like sony's in a fairly confortable position. A $20 loss will mostly be covered by the sale of a single memory card, any size. Within a year of production those $20 dollars will be negated completely.

Sony should keep the price, focus on bringing games that people care about (especially in japan), encourage indie developers to start supporting the PSN platform and move away from 6month old ps3 ports.

The part of your initial post that initially caught my attention was the following statement: "
It's not like new projects build up some sort of bill paid for on credit that has to be paid off once the product ships".

I disagree with this. They have to either pay for the project out of current income or borrow money to pay for it. Since Sony as a whole entity was losing money during Vita's R&D period it's hard to say that it would have been paid out of Sony's current income. However you look at it, Sony has large liabilities that will have to be paid down in the future with interest, and the cost of developing the Vita form part of that current liability.