Calculations and hand-waving are no longer necessary to show that Sony is in significant trouble for the foreseeable future. That said, and to balance out the doom and gloom here are the reasons why I don't predict the PS3 to be discontinued:

1- The biggest problem the gaming division faces right now is the exchange rates.

2- Their second biggest problem are declining PS2/PSP sales.

3- The Japanese government or central bank will probably intervene at some point to prevent the Yen to strengthen any longer... Japan is an export-dependent economy, and all of their exporters are suffering due to the Yen's strength. However it's uncertain whether it would be much up from the current level.

4- I think Sony will be posting bigger losses in its Electronics division, with bigger loss margins too (the percentage of losses as compared to revenue)... Therefore the biggest candidates for being cut are likely within the Electronics division. Sony was lucky that the recession only hit when the gaming division's losses weren't as big as they were a year ago.

Now here's why I may be wrong (and some mitigating factors on that):

1- Sony will probably not be able to cut prices soon, which could make things worse at the gaming division by having low PS3 sales and consequently the PS3 software sales increase not balancing out the PS2/PSP declines. They can try to counter this by striving to launch their cash cows this year if possible (GT5 is a must, GOW3 would be good too). This should significantly increase software sales and clear out hardware inventory.

2-Strictly speaking, the gaming division would probably be much more profitable by making games for the Wii, DS and 360... In dire times, it's possible Sony will consider doing that, but pretty much a last resort as it would kill one of Sony's valuable brands.

Give it a rest man,,,how many of these threads do you need to make?

One?

Did you even read it?

I dont think sony would ever place their games on a competators console so long as they are in the console busniess.

Keep them coming NJ5, i am just as fascinated by Sony as you are.

If this thread was created by a Sony fanboy, you guys would probably be gushing at it right now... I seriously can't understand you guys some times.

This would mean accepting defeat. And thts NOT going to happen. Its like MS making software for Linux :)

Microsoft makes software for Mac (for Linux I don't know). I get your point though.

If this thread was created by a Sony fanboy, there'd be more ass-kissing, the last two paragraphs wouldn't exist, and you'd be dropping the names of several titles.

On topic, I agree with your thesis, but not your reasoning. The exchange rate only plays a small role in the PS3's lack of profitability; image is a much bigger one, although it's not as big a problem as the decision to make the system a technical behemoth (along with the accompanying cost of doing so...).

Reason number two doesn't really affect the PS3 in a positive way: less profits in the Gaming division can't be better than some profits from the PS2/PSP (although isn't the PSP doing better?) If anything, the older systems' declining sales would make scaling back the Gaming division more attractive.

Reason number 4 seems plausible, but weak. It boils down to "sure it's a money-waster, but it's not as bad as Division X!"

I never understood how the Yen getting stronger can cause trouble? Can someone explain?