There are two things that I think would help make your estimate more accurate.

1) The semi-conductor industry (much like oil) prices everything in dollars and hence Sony's losses per console is probably going to depend more on the ratio between the euro and the dollar. The recent near-run on the pound might also significantly affect the numbers if only because of how rapidly it has deteriorated. I should note that I would expect this to increase the predicted losses, but im not certain.

2) The bottom has fallen out of the electronics industry as you noted, however this has also had the effect on putting massive downward pressure on producers further up the supply chain lowering Sony's input costs.

The only contentious point I see is the predicted date of October for a price cut. I think the 45nm cell/55nm rsx would be in production before then or even an emergence of a 'slim' model allowing greater cost savings, which should be passed onto the consumer asap.

If they wait until October and keep the status quo, I can see the 360 averaging 60k more per week (not unreasonable, considering the 300-400k differences this holiday) - so by october (44 weeks) x 60k = 2.64million. That would be ~10.5 million lead that the 360 has over the PS3, which would probably cost Sony more than cutting the price with the loss of third party support. The Valhalla chipset would probably be ready for production in the 360 by that timeframe as well so price cuts in tandem = status quo remains unchanged.

So I'm predicting a price cut before October and be completely unoriginal and go with the 'leaked' report and Pachter and say March-April.

Thanks for the interesting comments :)

1- That could be right, the reason why I didn't base my estimates on that is that I don't have any good data on it, or even an indication from Sony's declarations that it matters a lot. The pound as you said is just a disaster for any company selling a lot in UK (fortunately it's not as big a territory as the US or the € zone).

2- Frankly I didn't use the falling electronics demand much for my (rather conservative IMO) predictions regarding losses. I regarded it more as a safety cushion in case their currency hedging is not that well portrayed by the CFO's statements. What you mention should also be a mitigating factor though.

I am certain (yes CERTAIN) the PS3 will have a price cut in Japan before Q3. There are many hardcore gamers in Japan and they get games first day, FFXIII releases this year with SF4 and Yakuza 3 next month. Add on RE5 as well and GT5 that is some serious amount of software sales.

Japan would hit Sony the least in terms of losing another $100 because it is the smallest region but it will give them massive gains thanks to such strong software sales coming this year.

Switching to a high-k and metal gate process was probably more important to cost reduction than 45nm, however everyone other than intel is having problems.

I do... Sony will report a loss in the BILLIONS of dollars!!

I'm not saying it will happen, but I do believe in the possibility. You can bet some number cruncher at Sony HQ has done the math to see their chances of them becoming profitable this generation.

Edit: my New Year's Eve resolution should be to proof read what I write.. at least once!!

Drop a £300 console even without seeing how it goes at £200? Yeah people just want the PS3 to fail but sadly for them know the console will not be discontinued.

NJ5

These are all predictions about Sony as a whole, but what about the Gaming division? What do you predict for example the Holiday quarter, how much loss/profit?

A $100 pricecut means that they'll have to sell around 12 3rd party games or around 3-4 first party games EXTRA to earn the same amount of money. PS3's attach rate is something between 5 and 6 games per system, so the $100 pricecut is not earned back very soon.