One factor you left out is the Yen. The dollar is still crashing versus the yen at 87 yen to the dollar. That's a full 13% below Sony's estimate. That is going to KILL Sony's earnings and revenue numbers.

What went wrong:
MGS4 was moved to 2008.
LBP was moved to late 2008.
FFXIII went multiplatform, and because of that will be released only in 2009/2010.
KZ2 moved to early 2009.
GT5 is set to release only in late 2009-2010.
Lack of good advertising and a lot media hate.
M$ bought every game they could.
+ CRISIS.

What went good:
Yet, in same LIFETIME PS3 still is doing BETTER then x360. =)
http://vgchartz.com/hwlaunch.php?cons1=PSP&reg1=All&cons2=PS3&reg2=All&cons3=X360&reg3=All&weeks=170
Blu-ray won the HD video format war.
People still buying MANY 400$/€ costing PS3.
PS3 still is not hacked.
PS3 still is getting 3rd party Japan support.
There is still place for a sales spike after PRICECUT.
Still MANY GREAT AA exclusive are in developement for coming years.

first statement bolded just LOL

second statement bolded just like when it launched, right?

PS3 is a good BR player. If they drop the price, other companies will be pissed.
I don't think they will drop the price until next Christmas.

 To some extent yes, but u has to remember that usually the strategy in the console business is to allow a loss early in a gen but take it back and make profit later. And what losses are we discussing? Yes, losses early in the gen.

Sony cant just drop the price of the PS3 and keep losing even more money. The profits must start coming sometime soon (unless you believe in the 10 year plan lol), or else their business model isnt working as expected (or the competition in this gen is too hard) and it's pointless for Sony to stay in the console business.

It's surprising that the PS3 did as well as it did at $600. As more games come out and as the price of the PS3 slowly goes down, expect more sales.

A price cut is out of the question even though PS3 sales are terrible.

Let's imagine the PS3 sell 8 million units next year with no price cut. If you gave it a $100 price cut and it instead sold 12 million, you'd lose 1,200,000,000 ($1.2 billion) extra on those 12 million sold, and you'd add that loss to the losses incurred per unit for the additional two million units sold.

Sony can't afford that. They need profits, that's how companies work. There are expectations, there are ratings, there are investors. You won't keep people trading your stock for value if your core company can't make a profit anywhere.

And while we're wiping out all of Sony's huge losses from 2006 to 2008, why don't we also wipe out all of their profits from 1999 to 2006? Since the PS3 ate those too.

I never said they would post a loss. I said that the losses posted by the games have been written off, but much of the revenue they will earn will be posted against the 2009 Financial year. Its quite simple, if they can sell more PS3s this year with a pricecut and offset the increased costs with the increased revenue streams from third party royalties and their stellar first party lineup then they will sort out the problems incoming in 2010 if they do nothing.

You're forgetting that the PS3 sold most of its software in the last year, and the third party software sales are likely to increase 50% YOY from 2008 to 2009. Obviously thats a significant source of revenue.

Actually you don't seem to be taking into account the increasing streams of revenue at all. You can't just look at one side of the balance book and say they can't afford something. If I looked at your bank account and disregarded your income when you're looking for a loan you'd be pissed right?

Squilliam,

basically I agree with u.

I believe in a $100 PS3 price drop in March 2009 and a year with 12 million consoles sold. And by next summer when PS3 is slaughtering the X360 in weekly sales ppl will say how genious Sony were with their pricing strategy (assumin MS only drops by a measly $50 again).