While I'd believe the new 80GB models will be sold at a profit I cant believe the 60GBs were that cheap to produce. That'd indicate they cut $200 in costs before 65nm, before correcting the diode issues and with the EE still in the machine. Not seeing it.

Usually I'm willing to give companies the benefit of the doubt, but I'm not seeing this one either. I read Sony's last earnings report, and from what I gathered earlier this year, the PS3 wasn't even remotely close to profitability. Either something truly miraculous occurred, or Sony is lying, or (by far the most likely) Jack Tretton is playing around with numbers to produce a disingenous statistic that makes it look like the PS3 was making money. (Kind of like how Microsoft is writing off their billion dollar replacement losses into fiscal year 2007, so they can claim profitability for FY 2008. Technically true, but very shady.)

I believe that June 30 was the end of a fiscal quarter for Sony; does anyone know when they release their numbers next to the public?

Perhaps in Europe it was profitable. *shrugs*

MSFT approached the X360 with a slash and burn approach. X360 had to be the first out into the market. and it cost them to speed up the tech tree. To reduce prices they cut corners and the 33% failure rate is proof of that. It is going to cost them money to fix all 1 out of 3 X360's that have croaked.
The biggest cost for sony was going to be the blue ray diode which used to cost about 200$ at launch at fallen close to 25$ in the past few months.

But I doubt the 100$ price drop will double sales, PS3 needs the games and right now they are either getting cancelled or delayed. 

 Why in the world would they admit to the price cut before it happened?  If you bought anything, such as a car, and a week later they slashed prices and knew about it, why would they want to share that information with someone who wants to buy one today?

 There are many ways that they could have cut costs besides the Blu-Ray diode becoming less expensive.  Cell manufacturing could have improved greatly with fewer chips that would not pass testing/QC.  They did remove the EE from the new versions being made as well, and they haven't had the repair issues that MS has had with the 360.  They could have also reduced costs for manufacturing the boards and circuits that go on the ps3 as well.  It's most likely a combination of many things that helped reduce costs and make it profitable quickly.  When a device is $600 retail, and initial costs from the production of that was in the neighborhood of $800 (As we were told or heard somewhere), it has alot of room to go down quickly.  Simple production fixes will shave off quite a bit on the price, as well as manufacturing components done in-house will also reduce costs rather quickly instead of being dependant on a critical piece that a 3rd party may charge 2-3x's the cost for them to manufacture the piece. 

 It is hard to believe from all of what we have heard about the PS3, but I know with how quickly technology and production advances that they could get rather large chunks cut off the cost of manufacturing fast.  Just as when you see other pieces of electronics that come out that are cutting edge, the costs of making it fall rather quickly.  You can see this specifically in computer processors as they churn them out like no tomorrow and costs are always dropping fast. 

i still dont think they make a profit off of ps3's but i dont thin they lose anywhere close to 240 dollars anymore either.. i need to look up the production break down when i get a chance

The article says nothing about production costs relating to profitability. I'm not sure where people fished those facts from.

What it does say is this:

"Lower prices will allow Sony to target potential buyers of Microsoft's $479 Xbox 360 Elite model to increase sales and narrow losses at the PlayStation unit, analysts said"

...

Someone explain to me how Sony cutting the price of the $60Gig model by $100 will "narrow losses"??

That is an extra 4-5 games that have to be sold / console, to break even on each of these babies.

...

This is a clearance sale. After these units are sold, the price returns to $599 - on the new, cheaper-to-produce  units. Sony will make a lot more profit on those units - even at the $499 price - than the current units at $499. At $599, they are much closer to breaking even (throwing in an extra game that most people are not buying is just a smart marketing move).

Uh, Shams, if you read near the end of the article you'll see this:

"Sony can cut prices because the company has fixed production problems with a diode used in the PlayStation 3's Blu-ray disk player, said Tretton, who is based in Foster City, California. He declined to discuss costs for the console.

Clearing up the trouble made PlayStation 3 profitable several months ago, giving the company room to cut prices, analyst Doherty said. Microsoft still loses money on each Xbox 360 it sells, he said."

They don't give any hard stats or figures though, just a vague beating-around-the-bush sumation of a single production factor. And, its Jack Tretton, he's wrong as much as he is right and given Sony's track record for credible press releases and P.R. tactics one could simply default on the argument they're bullshiting.

People keep saying the PS3 has become profitable but I fail to see any hard evidence or statistics to support this, just individuals making vague overarching statements sprinkled with euphamisms and followed up with evading discussion of tangible figures. Given the possible repurcussions a price cut could have on the PS3's future via investors and consumers, playing it down as much as possible by implying it was just practical regardless seems a little too convenient a maneuver for a company facing a potential PR backlash. Does this mean they're lying? No. But it does beg the question especially when they're avoiding providing or discussion any possible figures to substantiate these conveniently timed claims.

come on, the ps3 wiil win this war, and you know it.......
maybe not now, but maybe in 2 years, you will see,