You are all forgetting a very important aspect of international production/sales.
Currency exchange rates. There have been and are LARGE fluctuations in the US-EU-JPN currencies in 2008/2009. Sony is at a disadvantage because of the Yen, Microsoft is not.
Microsoft has it's biggest market in the US where the currency rate of the dollar don't matter.
I suspect Microsoft pay for the parts of the 360 in dollars (probably Sony does this too).
Sony has it's biggest market in Europe and reports it's earnings in Yen.
With fluctuations up to 30-40% in 2008 this will affect potential profits VERY much.

The problem with this kind of argument is that there's really not much which can be cut from the PS3... Most of the potential cutting back already happened when Sony removed backwards compatibility chips.

From several similar threads that I read, Wifi and USB ports are about the only candidates, and those things are probably among the cheapest components. Sony already had a model without wi-fi which got discontinued.

Yes the both of us are guessing, you and I have no idea of how they are planning to make profit. As I said though, I think they will cut the price of the console in line with the biggest game on the system. Software is what makes the companies money during the first few years, after that hardware makes money. Wii made money from the start though but that was expected, did not exactly push the barrier in terms of tech.

Yeah, I know and you are right. They don't have much else to remove right now. But don't take it as I'm implying this will happen.

I really don't know what will happen to the ps3 this year. I'm not going to argue that they can do it (a price cut) or that they will remove even more internal components. From your previous posts, I also know you are a smart guy and you know Sony's current financial situation, so I wouldn't even dare trying to argue with you that this will happen (I can barely convince myself if I try too much). My post was mainly to argue about those three options that were mentioned before. I certainly don't think any argument about this should be limited to just those three.

Yeah... Sony's situation is very interesting right now. I really don't know what to expect. So much that I think that anything they do will surprise me. If they don't cut the price, I'll be a bit surprised as they are putting the ps3 in a difficult situation to go forward. If they cut the price by any considerable amount, I will be surprised as it might put Sony in an even worse financial situation. If they discontinue the ps3, I would be really surprised as they were really important for the console market for such a long time. If they manage to increase sales without reducing the price, I would be extremely surprised as only a true genious could pull this off. In the end, they are a big company and have a lot of people thinking about this, so they could come out with something really unexpected.

By the way, what I mentioned about removing the wifi, usb or any other internal component which we don't know about is if they try to do a price cut. It might not be much, but they would have to be very aggressive in reducing the manufacturing costs. Not much? You're completely right... but it would be something and it would help them... even if a little.

EDIT: BTW, then I mention the situations that could come up in the second paragraph, I'm not considering some of them as actual possibilities. It's just for argument's sake.

@rubido: Yes, I understand that you were not really defending it would happen. I don't know what to expect either, there are just a few things that I don't expect at all.

components are going cheaper every year.in 09 blu-ray rom will be cheaper to produce.cell and SPU also.I think the 100 $/euro price cut will be in April.It will be begining of fiscal year and no big exclusives until summer.

Sony will cut the price when they are ready. its not good trying to second guess them. Wait until the financials are in

No matter how you look at it, the best thing Sony could possibly do is issue a $100 price drop in Q4.

1. Sony has all year to make profits off the PS3 starting March.
2. Sony won't lose significant marketshare to Microsoft since both consoles will be within 50,000 of each other every week anyway.
3. Sony will disrupt a likely $50 price drop Microsoft probably has planned before Christmas.
4. PS3 cost reductions will have gotten to the point that they can issue a $100 price drop without selling the PS3 at a more significant loss then they are now, if any at all.
5. PS3 is set to have the biggest releases in every region for Q4 by far. Combining them with a $100 price drop would upset any price advantage the 360 may have for the bargain season.
6. They will have a good standing with an infinitely expanded market going into 2010 to overtake 360 worldwide sales all together.
7. By the time Q1 2010 ends, PS3 will be making a profit again and the whole process starts over.

large popular belief is that sony will drop the price in april... I say this coming month it will happen. Seems like a very tempting time to have a heavey hitter game coming out and multi- games too. Its kind of like the ace in the hole. no one will see it coming. Which explains the no collector edition of KZ2 and the upcoming release of C&C. Now I am just shooting arrows stright up and watching them land close to me...... This arguement will go on forever until they announce it. there is no way to predict this anymore. It is sony. As far as we know they might have a stock pile of money hidding some where in the snads of egypt.

This goes out to all the PS3 fans that believe there will be a price cut early next year is...