In the whole making profits type thingy, I think the one thing your argument forgets is how much money Sony will be spending on developing games. While in the long term these games will see a return Sony are still spending alot of money every week developing the huge amount of games in their 15 studio+ first party. That has to be taken into account too.

I think it sounds reasonable to expect a price cut around August / September time, albeit Sony need to get one of their big hitter software like GT5 of GoW III out to go with it. The figures you've given are their costs in the US, is it possible they could see profits from PS3 sales in the UK, Japan or Europe earlier?

What is certain for me is it's no longer about competiting for Sony, it's about making profit and selling as many consoles along the way. 2009 is a key year, SCE need to start showing green figures while selling more PS3's then last year, potentially at the same price for the most part. It's important PS3 sales don't really start to dry up, like what happend to the GameCube, especially if this happens before the price cut is feasible.

One thing I think Sony should do is be trying to develope more PSN games, the costs of a PSN game is approximately less then $1 million and they see pretty much 100% from every sale. IT's low cost revenue increasing developement... something Sony need.

You're 100% correct about everything you just said.

Game development along with marketing, PSN maintenance, and PS3 hardware production are probably the 4 biggest areas of loss for SCE. However, there's really not much that can be done with the previous three. Games will always cost money to develop. Sony has been getting better recently it seems on improving the length of development periods. I mean, come this year, we'll see the release of 5 games that have been in development since 2005 or 2006 (White Knight Chronicles, Killzone 2, Heavy Rain, ICO 3, Gran Turismo 5) All the other upcoming games were announced in late 2007 at the earliest. (inFAMOUS (2007) , M.A.G. (2008), God of War III (2008), Uncharted 2 (2008), EyePet (2008), The Agency (2007), DC Universe Online (2008), etc.)

I suppose a good step for Sony would be to start closing unprofitable studios such as SCE - Foster City Studios, Bigbig Studios, and SCE - Cambridge Studios as well as combine some of the others. I mean honestly, is there any reason at all to have two Sony Online Entertainment studios (SOE - Los Angeles & SOE - San Diego) within 150 miles of each other?

As for PSN games, Sony definitely seems to realize what a serious oppertunity it is and that's why I think PSN has improved so much with its features and games in 2008. The only part that need serious improvement I think is the PSone titles. The selection is pethetic, even among 1st party titles.

 With the games developement I think they can and probably are seeing better figures - developement costs will be falling now alot of their studio's are all 'set up' for this gen working on their second PS3 games or coming to the end of their first. I'd imagine all their studio's will be working on 2 year developement cycles like Naughty Dog and Insomniac are now. As you say Sony can't address much short term, albeit it's most likely falling pretty nicely in time with the hardware production costs.

 Shutting down the dud studio's is possible, I could maybe see them downsizing them and perhaps having a greater focus on PSN with them. With the trouble Sony are in though I don't think they'll really make a significient enough difference, albeit I guess SCE need to get profit as soon as possible.

My guess is PSone titles just arn't selling, I've never bought one and I'm sure I'm not the only one on here. It doesn't really seem like SCE can do alot except wait for costs to become cheaper.

I could imagine PSone titles not selling spectacularly outside of Japan, but that's mainly due I think to a severe lack of content. The Japan store is fabulous it has about 200 games on it with some real sellers such as Metal Gear Solid and all three Resident Evils, but there's less than 30 games on the North American store and less than 40 on the European store. Why is there such a huge gap between the former and the two latter? In any case, it's something that SCEA and SCEE both could use huge improvement on.

Well im sure if sony can afford it, they will cut the price (they just have to) sales have been dissapointing in the Holiday season, software sales were all right but they still do not have selling potential of Xbox and Wii because of the Userbase Limitation, only cutting the price and bundling with KZ2 etc. etc. will give Sony any chance of reducing the gap to the 360,

But the question is can they really do it? And what if there is a pricecut but it does not have expected effect? Sony brand is not as popular as it was in the past, and with 299$ console they will still be significantly more expensive then 360, and MS is likely to slash the price of PRo/Elite models.

There are some hard times ahead of PS3.

Won't say guaranteed yet, but I lean towards likely.

Yes, profits are increasing, so they are losing less money than they did before - not actually making money. And when they do, will they be so quick to go back into the red with a price cut?

It all depends on what matters more to Sony - saving their money or saving the PS brand.

We'll see.

PS3s 40GB versions are sold in Aisa for $799 (approx). 

Almost guaranteed...that it won't

Sony is doing horribly thanks to the recession, theres no way they can afford to lose any more money.

If Sony does choose to wait until the end of the year to issue a price cut and is able to coincide them with the releases of God of War III, Gran Turismo 5, and Final Fantasy XIII in America, Europe and Japan respectively, then I can tell you that the PS3 is going to have the exact opposite of "hard times ahead."

Think about it, Sony almost definitely profited Q4 2008 considering how much software they sold and how few PS3s they did. If the PS3 reaches profitibility in March, then Q1 2009 could very well be the last quarter that Sony posts a loss with the PS3. They'll be making almost pure profit in Q2 and Q3 without the PS3's losses dragging them down, then in Q4 when they cut the price by $100, they'll still almost definitely be selling the PS3 closer to profitibility then they are now. They'll still post a profit for Q4 2009 due to the MASSIVELY increased software sales and then by the time Q2 2010 rolls around, PS3 will be profitible yet again! Then the whole process starts over again and Sony can issue another price-cut in Q4 2010 of Q1 2011 if they choose.

Sony will most likely cut the price, but they can't say "we'll do it in march". Such a tactic would be suicide for their sales from now until then. It'll have to be done in a Solid Snake style. They hide their ps3s in the box, then out comes a price cut :p