No one is denying that they've cut the cost of manufacturing. Everyone is saying it isn't profitable, which from the article posted, it still states that they will lose 400 million in March of 2008. That's a big difference than the 2 billion they lost last year, so it's obvious they've reduced costs significantly, but I don't see profit anywhere.

 they could be losing money due to game development costs instead of from the console. I did the math, the costs of the 60GB PS3 should have been cut by $260 or something like that from what I did. 

... 400 million on game development ...?

*sniff* Yeah, you're gonna have to provide some linkage to whatever numbers game you're playing, cause the last thing I'll believe is they somehow lost 400 million dollars making games.

Note that it was an analyst (Richard Doherty) who said this, not a Sony representative.

Still, I don't find it that hard to believe. What have they done to reduce costs?

-Earlier this year, they moved from 90nm to 65nm Cell chip production. This was estimated to bring the loss down below $200.
-They removed the Emotion Engine, and the 32 MB of RDRAM that went with it, from the PAL version of the console. This was estimated to save them around $30. This modification is now also being made to the US consoles, and probably has been for some time as they've been stockpiling 80 gig machines.
-A variety of improvements in the Blu-Ray manufacturing process reduced costs by around $100 for all BD players, including the PS3. (Sorry, couldn't find a source on this one, but it was about a month ago and most BD players dropped as a result). I'm not sure if this was in addition to the improvement in BR diode supply mentioned by someone else, but if it was then the savings were even higher.

That's a minimum of a $170 cost reduction over what they launched at, which would bring the loss down to $70 per unit. Now, add onto this the usual savings that come with streamlining/increasing production and decreasing failure rates, and I think it's entirely plausible that the PS3 had turned profitable, at least outside of Japan.

 well take the 15 or so exclusive PS3 games and idk .. 5 PS2 games from Sony coming out this fiscal year.

 PS3 games cost like 20m to make now (according to devs I've talked to).

 15 x 20m = 300m

PS2 game probably large games cost 2m (maybe idk the average price anymore)

5 x 2m = 10m

Plus you have to put in R&D costs for the cutting down of the PS3 size.

Maybe 40m

R&D for PS Eye

Maybe 10m

360m total from above. 310m from games. So... even if its not all from games. its mostly from it.  

Thanks for the breakdown, Borkachev. That leads me to believe that perhaps the EU model 60GB without the EE chip might have been on the brink of breaking even.

Are we to assume that these games will make no money? Then, and only then, will I believe they lost 400 million developing games.

With what they charge for a PS3 in Europe I can safely say that they lost nothing there. At worst they were break even, and they have very likely made money since day one.

I appreciate Borkachev pointing out that the estimations are already at over $170 cut from manufacturing costs already, but I still have to laugh at that troll (GBall) claiming other are wrong for not providing evidence when there's not a damn thing "she" has ever provided to back her point up. It's a shame "she" wasn't just permabanned.

 how could they make money on games that havent been released?

How could they have spent the entire budget of a game if a game hadn't been released? If the games you're referring to haven't been released yet, or in fact aren't close to release, then they haven't spent 20 million+ yet, and those wouldn't be fully factored in to a budget.

You can't have it both ways. Either they spent 20 million dollars to develop, market, and publish a title, or they are still developing a title, and haven't come close to your 20 million mark yet.