Sony hasn't made money of the PS3 yet.  The fine print of the last quarter said that the PS2 and PSP covered smaller PS3 loses.  Sony are not simply waiting for sales to slow, they are praying that sales DONT slow.  They cannot afford more short-term loses, but must instead start to MAKE money off the PS3. 

At BEST they can only afford one price drop this year.  If they have to use that in the next three months, and GT5 doesn't make it out this year, whats left for Europe at Christmas 2008?

Microsoft on the other hand could probably afford another 50 Euro cut at the end of the year, alongside cheaper and more reliable hardware.  Their goal here is to make Sony use their price cut soon, so that the Xbox 360 can have a just-extended price advantage going into the holidays.  

Microsoft have no chance of 'dominating' Europe this generation, but they may just have prevented any chance Sony will ever have of dominating either. 

IMO both the XBox 360 and PS3 are overpriced. $199 US is like the magic price point that generates the most sales.

It's always been a common theme among anti-Sony people - "Sony cannot afford another price cut." However, they always have managed to do it. I think they will take the price to 299 Euros for the 40 GB in April, if needed after monitoring the PS3 sales. The Euro is very strong right now.

Many analysts have said that a price cut for the PS3 is probably on the way in the next few months (as in it's possible to do it via cost reductions). Even though sometimes these analysts don't know as much as they think, I will take the word over opposing fanboys' judgments.

Right now, Sony has the investors optimistic about the PS3's performance. Blu-ray won, sales have made a huge upswing this year, etc.

I think the effect will be that 360's will get more sales in Europe. But I wouldn't know how long that effect will last. It seems pretty desperate and the only thing they pretty much can do to prevent Sony from outselling them all the time. Tbh, if people of Sony themselves would only read fora like these and see people wanting another pricecut for PS3 (as they are gonna buy it by then), I think they should go along and make PS3 40 GB cheaper than xbox 360 Elite next week, just before GTA IV releases. Soon after that we will see GT 5 Prologue and than a lot of gamers will get one...

So for the moment I'm really looking forward to another good (at least 100 euros off) price-cut by Sony, allthough I must say that starcraft made a good point, that MS is probably going for another price-cut around the end of this year.

200 dollars would indeed be a very nice price, but I don't believe Sony will go that low. They will loose too much money per console sold...But MS is already at that point. 199 euros for the Arcade version and 269 euros for the Premium version... That's just 20 euros higher than a Wii...

How much have Sony lost on the PS3?  Anti-Sony people were right when they said Sony couldn't afford another price drop.  They did two and it cost them billions.  They have to make money off the console at some point.  What Sony fanboys fail to realize is, as much as Sony would love to be number one this generation, they'd much rather make an overall profit.  At this point that is looking like a distant pipe-dream.

A strong Euro doesn´t necesarlily mean bigger profits. European personnel, Eropean development studio´s, shipment and advertisement must be payed in expensive Euro´s.

You could also say that the dollar is weak, leading to smaller profits in the main market. 

I think Sony doesn´t want to cut prices before MGS4 because it will lead to less profit at the launch of one of their biggest games. Remeber that Sony´s goal is to make money, winning the console war is not a must. Since the PS3 sells ok now, I think Sony wants to keep the price this way for a while, to make some money. 

Like I said earlier, I don't think that Sony will do anything yet, seeing as that we don't even know how well XBOX 360 will sustain in "Others", but if it is sustained higher, Sony will have to think about price cutting in order to stimulate sales.

But like starcraft said, if they price cut, they're also cutting into their profit, and if they don't they're cutting into their market share... They're stuck between a rock and a hard place.

If you remember what Hirai said, the goal was to become profitable by the end of the '08-'09 Fiscal year. So March 2009. I think this last quarter came as a bit of a surprise to pull a profit.

Thats true. At the same time, whilst Microsoft has as much scope for ANOTHER cut after this one as Sony does, they too want to make a profit (prioritized over market share). So I expect they are hoping for a BIG boost in sales after this cut. They will want to ride the coat-tails of this cut for over six months, perhaps with another cut in early november. To be honest, if sales are high enough, I could see MS not cutting again this year in order to maintain high profit. I hope they don't hold off on a second 2008 cut, but I wouldn't put it past them.

I'm pretty sure Hirai was talking about making the PS3 profitable, and it wasn't last quarter.  It's loses were smaller and so were covered by the PSP and PS2's profits.