The dreamcast did well early and died. Not saying its the forecast  for the wii since its a nintendo console, which is currently popular in japan. SCEJ knows that the ps3 needs to sell better, they will drop the price, its as simple as that, if they leave the price as it is the ps3 may be doomed in japan. They need to do it, to double ps3 sales,as for europe dont be suprised if theirs a new heavenly sword F1 bundle, along with the resistance motorstorm package should increase sales slightly.

i see where your coming from, and a package might do alright, though sony should package white knight story as soon as possible since japan loves rpgs, best thing to do.

For the dreamcast again i see where your coming from, but, wii is nothing like dreamcast state. The only  reason that dreamcast failed was the release of the ps2, that destroyed dreamcast, it just didnt sell, now the ps3 is out, and it is not stopping the wii. Also sega could not continue the dreamcast because it did not have funds like sony did at the time. Nintendo has plenty trust me

It's a catch 22 really...  Sony needs to begin to break even with their consoles and they are/have almost reached that point however, if they keep the cost at it's current price, they risk selling so poorly that recouping their losses will take a very long time.

Their other option is to reduce the price further to increase sales thus loosing even more money which in turn will mean it will take a very longer to recoup their losses. (This is soley based on hardware sales loss vs software sales profit - although the more cosoles sold mean the more software sold).

However, one thing we all need to keep in mind is although it may now only cost $605 to produce a PS3, how long will it take until it actually sells these consoles?  I mean, don't forget that Sony produced 5.5 million units up until march this year, (which have still not sold) -  how much did each of those units cost to produce? It's those units that Sony is taking a huge loss on with this price reduction.  And also, Sony did not stop production of PS3's since then thus they would have been producing at least 600K - 800K units per month since then (an estimated 3 - 4 Million units so in total would be 8.5 - 9.5 million)  and all those units would have cost more then the current $605 units, although the cost wouldn't have been as much as the ones produced before March.

 One last thing to point out... Did anyone else find it strange for Sony, after so long of reporting Shipped to warehouse, suddenly changed to 'shipping to retailers'? - Of course it is a logical move but I think there was more to it.  I think they had realised they had more units is storage then they did at retailers and it would make them look incompitent to announce they had shipped 8+ million Units when only 3.5 million had sold. 

And on that note, does anyone actually know the current amount of Units produced by Sony?  I'm guessing anywhere in the range of 8.5 million - 10.5 million produced.  That would be a huge amount of $$ to be tied up in systems and I think that is mainly where this raised finances is going. 

Oh I forgot to point out one of my thoughts.

How much does sony actually make on EU cosoles? Many people seem to think that Retail price = what Sony gets but I doubt that very much.

In Aus: the PS3 bundle costs $999 AUS however Sony does not make $999, the retailer takes about 15% gross, the GST skimms off a further 10% and then there are the distributor costs too so in the end, that goes down to:

$1000 - $150 - $80 = $770 (Not including Distributor costs). Converted to US = roughly $620.

What profit do EU retailers get and the tax? That would more then likely bring the Profit for Sony down a hefty chunk If it's anything like the Australian market.

Well if some of you are right then The 60gb 500bux PS3 shouldn't run out at all this year. so if estimated 8.5 10 million 60gb ps3 are out there and say 40 % of them are in the US. then there would be almost 2 million 60gb PS3's in retail stores/ sony warehouses.

all the PAL PS3's have reduced costs in them since launch (no EE) so assuming 35% of the produced PS3's are in Pal area's they lose a bit less on those. I see the same thing happening japan like in the US. they will put out the 80gb ps3 with no EE in it and bundle the system with a game. maybe gundam, HSG (not likely as its still new) FolkSoul (cause sales weren't so good but its a good game and it can clear out the game's that have already been printed.)

Sony as a company has PS3 increasing thier other markets such as HDtv's and blu-ray. Hell even the 360 helps the entire HDtv market with the 360. Since the 360 and PS3 have come out the HDtv market has jumped a bit faster due to giving consumers a reason to get an HDtv.

wow so much speculation on why there shoudl be aprice cut. as for the ps1's first price cut it was cause the ps1 was 800 friggen dollars and was selling horrible and they had to match sega saturns 700 dollar price tag which within a year both dropped drastically cause people were not going ot buy them at those prices and now sony "thinks" people are gonna buy the ps3 at a constant 500-600 price? yes some "hardcore" sonyfanboys are buying them but the people that bought the ps2 are not cause what the ps2 had that the ps3 dont is and was the hottest thing going which was a dvd player in itself. you may say but blueray is the next best thing. guess what people dont care about HD as of yet the tv's are still 1000+ dollars and everyone already has a dvd player whether it is a ps2 or a normal dvd player. and like me it is adequate enough to play all my dvd movies.

whatever, finanacial problem behind Sony SCE,
they need market share for the future of the PS3 to try to make some money one day or another.
If I understand the problem of producing high price console and to sell it at a lower price that makes Sony lose a lot of money, I understand that if u want to sell games, u need a userbase !

And to be able to catch this user base, YES, Sony need a price cut, particularly in Europe where their price is quite elevated.

Sony sold their 4M PS3 based on BR and brandname only !
Even if games are coming right now, their are not anymore alone in the console market : price cut is needed.

(for me, a september price cut is a bit too quick, I think if they do it this year, they will do it at November, after the Microsoft momentum.

I don't think so. If it was true, does this make sense?

 - sell of part of your company
 - use this money to drop the price of your consumer goods
 - drop of price leads to further losses, as total loss ($cost loss/console x #consoles sold) goes through the roof

Seems like a great way to sink a large company IMO. 

...

In reality, Sony need money. They have almost exhausted their lending options, so selling off a non-essential part of the company is the easiest way for them to raise working capital. Its also a good way to reduce long-term profits.

If I was a Sony investor, I would be getting very nervous around now.

 If that's the case, Nintendo sold their 10M console on a wagle controller and brandname alone.

In trueth however, There are plenty of reasonably good games on the PS3 that are available right now. (and have been practically since launch). 

@Shams -Woh. I didn't click the link and read that they where selling 34.5 per cent of its Financial Holdings company.  That's insainly crazy.

Sony must be in WAY over their heads ATM.  Being maxed out or heavy loaded with their loans, having to sell assets to fund other departments,  Having Billions tied up in Unsold Products.  Ouch.

Yes, I can tell you right now from this news a lot of investors are going to be quite unsettled.  I thought Sony had plenty of reserve but to have to resort to this just shows how deep they really are.