1. A $50 price cut from $399 means little in the grand scheme of things. They'll probably cut it $100, or not at all.

2. Hardware costs are still going down. The 45nm Cell and RSX will help a lot. We should start seeing 45nm Cells in ps3s by mid-Summer, last we heard. Smaller chipsets leads to smaller heatsinks, less required ventilation, etc.

3. The isupply figure you used is from back in December. Things can change drastically in a year.

4. Retailers don't pay Sony substantially less for consoles than consumers do. They pay $4-5 less. GameStop actually loses 20 cents per console sold after they factor in their own shipping costs. Retailers aren't in this to make money from hardware. They make some money from new software (not much more than $6 per game in the US), but the lions share of their profit comes from new accessories (Sony manufactures a DS3 for ~$6 and sells it to retailers for under $20, who then resell it for $55) and used goods.

I personally think we'll see a $100 price cut no later than the holidays, barring the economy going even more haywire and the yen spiking even further.

Sony's financial results for the last quarter should best clue us in to how SCE is doing financially at the moment.  I just hope the recent restructing doesn't keep us from seeing the details we'd like. 

Ps3 hardware sales were down significantly this past quarter compared to the year prior, while they were making more per PSP sold than before, and they shipped (which for them means sold) at least 1.1 million copies of Killzone 2, based on the retail pre-order numbers they released prior to launch.  They may not have been bleeding quite so bad as a result.

The Yen is another issue I didn't mention.  I agree that a lot can happen in a year.  But even if the PS3 was only losing $50 earlier this year, a $100 price cut would make that $150, which at best would probably STILL be a $50 loss by the time cost reductions are taken into account.

Bear in mind the ever diminishing revenue from the PS2, which is what created the profit back in the final quarter of Calendar Year 2007.

Hey, they managed to make a profit in the final quarter of Calendar Year 2008, too.  A measley $4 million USD profit, but a profit nontheless. 

And in your "best case scenario", Sony would only be losing $50 per ps3 sold, which means they would've been MAKING $100 per console sold just prior to the price cut, so they would've been doing quite well the previous quarter, possibly well enough to justify a cut that would significantly boost their sales over the holiday quarter.  :P

The real craziness we have to think about is the rumored PSP2/PSP-4000.  Would they really launch a PSP that has had a major hardware overhaul before dropping the price of the ps3?

Btw, check the stealth edit from my previous post.  :P

All that would mean is that Sony is in the same position with profiting from PS3 hardware that they are now, which isn't exactly horrible to begin with. However, they will have drastically increased they're marketbase and will thusly gain more profit from software sales so it's a pretty fair trade off.

Profit from the PS2 is diminishing, but at the same time profit from the PSP is blossoming. If Sony releases a PSP-4000/PSP2 later this year or early next year as many sources have hinted and speculated at and they can make a profit off of it's hardware from launch, I don't see the PS2's death being a severe problem.

Well that depends... will the PSP2 be sold at a loss like every other console they've ever released?

We really need to know more about what the PSP2 will entail before we can discuss any of this.  Is it a full on next-gen handheld?  Is it more of a DSi/Wii-like upgrade?

As I said before, it all comes down to whether Sony think the software will cover the hardware losses. I will be utterly shocked if a price cut does not occur in Japan during the release of FFXIII and EU for GT5.

Looking at the numbers, it really does look like one game ala GT5 can take the EU region from the 360. FFXIII, GT5 and further multi-plat titles will murder the 360 in Japan.

NA is an interesting region though since one game cannot cause a huge hardware surge. NA sells so much software the big wigs at Sony must be clutching their fists knowing they are losing so many software sales.

For a consumer such as myself a $100 price cut by years end in all three years seems a given and nothing more. The first party titles would benefit greatly from a spike in hardware sales and with each game release that would cause another spike in sales.

PS2 got a price cut but come on, that must still be making Sony a huge deal of money. PSP was making money from the start and the new sku coming in should boost sales, then all these games are releasing on the system.

Either way it will be interesting to see what happens, for many the price is the issue with the PS3, a good situation for Sony to be in knowing that the console has large appeal.

E3 is when the magic happens

no
may be 10 members believe it but others don't.

@makingmusic- sorry but i'm not buying ur sony spin.

The fact the all 3 playstation conoles only made 4 million (ps3 almost lost more than the combined profits of the psp and ps2) during the busiest shopping season of the year is TERRIBLE!

It has also been noted by financial experts that sony likely delayed profit taking on currency exchanges until the four quarter of their fiscal year in hopes of a less costly exchange rate.

When their end of year financial results come out later this month expect sony to lose 2 billiion $$$ OVERALL for the year and approximately lose $150-200 million for the 4th quarter in their games division.

Sony put itself into an ugly financial reality that cannot be ignored. A price cut won't be coming any time soon