So Sony has officially killed the PS3's sales until the price is dropped?

The PS3 is probably too cheap as it is, never mind a price cut! :P

I don't disagree about the location of the sales, but the numbers over all world wide are the same, and we are 8 months in.  Systems are selling much faster this gen if you add up all three systems, and it is very unlikely that PS3 will surpass the other two.  We should be able to tell for real in the next couple months as games become available that people really want to play.  Ninja Gaiden Sigma, Lair, and the Cross Platform games come out for '08.  Remember a large group of gamers only play sports games and first-tier marketed titles.  The Playstation brand is still strong.

You'll see in the chart that I added the sales really picked up around week 30, I don't think there will be a great increase that early, but I think it will reach 70%.

Remember in 2000 alone you had many more EA titles released including NCAA football and basketball, Unreal Tounament, Tekken Tag, NASCAR in america and several other Japanese Hits.  None of us can say for sure what will happen when the other games start showing up on Discount Department Store shelves, but I think that by the end of the year the major exclusives like Lair, Heavenly Sword, Warhawk, and Ratchet and Clank along with non-exclusive system sellers COD-Modern Warfare, the EA NCAA's, more Clancy Games, Assasin's Creed, etc.  With MGS4 probably hitting Japan as an exclusive for some time.

Will PS3 be as big as PS2, probably not.  Is it holding it's own by last gens standards yes.

My point in the first post was that PS3 price drop would be good for PS3, but the PS3 isn't really doing that bad for hardware.

This chart is also interesting.  And I want to remind everyone that I am a Nintendo Fanboy expressing that PS3 will come in at a  close 2nd to 3rd by end of 2008. 

If the production cost goes down by 241.35, (if Blue was right about that number), in a year then maybe they will do a 100 price drop. Can production cost go down that fast with the Cell and Blue-ray?

Ultimately, Sony is making the right decision by knowing they've got to lower the price, even if it kills PS3 profitability for another 1-2 years.

IMO, Sony's going to take a loss in the entertainment division this generation, something that hasn't ever happened for them.

A $100 price drop sounds just about right - by Christmas, the wholesale price of goods should be around 575~600 for a PS3, and dropping it to $500 won't kill Sony, but should make it a far more viable option against the 360.

However, MS just needs to drop the X360 by the same ammount ($100), sooner, and Sony will lose a bit (but not all) of their price drop advantage.

 you mean gaming division?

Whichever division involves gaming :)

IMHO its a tough choice the one sony has to make. Is like chosing the way you are gone die. I base my opinion in the fact that if they don't do something now it would be impossible for the to rise on top in this gen but if they do something to drastical, they will have to pay a great cost that i don't know if the can afford.

Let's take into account some facts that anyone can't deny and with some basic math, i will show you why i think it's better for sony to reduce the damage caused by the ps3 rather than trying to pursue the lead of the race.

Imagine that today the PS3 breaks even... it sells at 600 and it cost 600 to produce (adding every cost, storage, shipping, etc)... Ok so the PS3 reduce its price to 500 and sony loses 100 bucks per console... lets say that it takes a year for sony to brake even again on the 500 price. So is a year loss of 100 for every console. If this price drop encourage everybody to buy a ps3, it can be easily said that it will sell at the least 15 million consolesin a period of time of a year (with all the ups and dows... xmas, summer, games draught, etc). Now lets do some basic math. 15 million X 100 bucks = u$s 1500 million or 1,5 billion. How many games, accesories and souls they would have to sell to overcome this loss plus the previous loss of 2 billion.

Same scenario... but with a 200 bucks price cut, in this case we can easily say that the amount of consoles would rise exponentially... at 400 even a retard would buy a hi-tech console with free online, br, hd and bla bla bla. So we can state that during the period of time of a year selling 30 million consoles could be sold without any given doubt. Basic Math again. 30 million x 200 = 6 billion dolars (Now i am picturing Dr. Evil saying this). We also had to add the 2 billion dollars loss already known by everybody and this is a great load of money to earn by selling games and everything else.

IMO i don't think that sony is doomed or the PS3 is a failure but for the sake of the PS brand and sony itself it's a better policy trying to reduce the damage and turn up with the and really small profit or really small loss than dooming itself by chasing and possible goal (of being again the leader of the console market) at a really high cost.

Production costs should drop substantially by early next year. There are two ways to interpret Moore's Law -- that the number of transistors per integrated circuit doubles every 24 months, -- one is that processing power/hardware will double in speed while remaining the same size, and the other is that hardware size and cost will be halved, while remaining the same speed.

From what I've read, the three most expensive components are the Cell processor (~$89), the nVidia Reality GPU (~$129), and the Blu-Ray drive (~$125).

In order:

Cell yields are terrible. Because the cell processor is a 64-bit PowerPC + eight SPE vector processors, the margin for error in producing nine processors on one chip is very, very narrow. Early reports were that cell yields per wafer were in the order of only 10-20%, whereas simpler chip yield rates can typically reach in to the 95%+ ranges. e.g., If Sony, IBM, and Toshiba are indeed "throwing out" 80-90% of the processors they're producing currently, once they better understand the manufacturing process and produce more consistent results, they'll increase cell chip output by at least 400%, without absorbing any additional manufacturing cost. Fixing yields + following Moore's Law would mean the cost of per-cell manufacturing should drop to (and I'm going to be real conservative here) ~$35 over the first two years of the PS3's life, so Sony saves ~$54.

nVidia's GPU would see a similar price drop, and this will be the biggest saving passed on to Sony. If GPU manufacturing prices are cut 50% after 24 months, Sony saves ~$65 there.

Magnetic and optical media, while not usually thought of in the sense of their processing power and number of transistors, still seem to follow the same price trends, so there's no reason not to expect Sony to save ~$63 per unit on Blu-Ray.

Add those three up and you knock off $182 per console build. Now, toss out the EE ($27), and similarly lower the RAM ($24 from $48), I/O Bridge ($30 from $60), Seagate SATA HD ($27 from $54) and the Power Supply costs ($19 from $38), adjusted for Moore's Law, and you have a savings of another $127 from all of that.

Total expected manufacturing drop in 24 months: at least $309. That's not counting the nickel and dime stuff like Bluetooth & 802.11g, but that is already so low it's not worth cutting in half -- maybe $5 - $10 total there too.

So, assuming the costs of the other components remains relatively static, the build price of the PS3 should go from $840.35 down to $531.35 by approx mid-2008, and down to $376.85 by mid-2010, and so on and so on.

Where all of this fails in the face of price cut speculation, however, is the fact that these obvious cost savings (and the non-obvious ones too) cannot be realized until new units are built. Sony allegedly has about 1.9M old units sitting in warehouse. They really need to get those sold first, and without a price-cut affecting that initial 5.5-6M run, where they're already hemorrhaging cash.