I think loss this year = PS3 slim in 2010

Well Said.

Yep...the cheapest is usually the most successful. If you know your gaming history the most expensive system is never the most successfu.

Sony needs to stop hemorrhaging money.

A price cut would not solve this problem. Why sell more consoles at a loss when the people can't buy enough games to make up that loss?

They need to keep doing what they're doing, to make a profit.

Selling a quality product, with quality software at a reasonable price... $400-500 for a game system w/ WiFi, a free gaming network, online media, universal music and video, a blu-ray player, an HDD, and a rechargable wireless controller is the price they want to charge. It's the best hardware deal around. 360 just seems to have the more attractive core library - going by sales not my opinion of the games.

You know in a way, reading between the lines it could mean that they aren't doing a price cut, or as big a price cut as people would expect.

For a price cut theres quite an involved calculation really so for a $100 price cut:

First you have to work out how many PS3s would have been sold without a pricecut.

So lets say 7M *$100 = $700M.

Then you have to work out how many extra PS3s would have been sold at a $50 cut.

So lets say 1M *$50 = $50M

Then you have to work out how much revenue each extra PS3 is worth in terms of software/accessories so lets say $150 over the lifetime of the machine.

Then you have to work out how many extra PS3s will be sold @ $300 rather than $400, so 7M + 40% = 10M

Finally you have to take the production cost of the PS3 into account, so lets say it costs $350 to make each PS3 in September when they cut the price.

So without a price cut: 7M * 400 - (350* 7M) = $350M

So with a price cut: 10M *300 - (350 * 10M) + (3M *150) = -50M

The difference between a price cut and no price cut over the long term using these numbers is -400M in profit and thats only netted over the long term as the new PS3 owners who would have otherwise not bought a PS3 buy games and accessories over the lifetime of the machine. This is obviously a simplification and you could make a case that more PS3s sold would spread the fixed costs over a wider base and lower the variable costs.

In that case you could argue that the PS3 would cost $310 on average over 40% more units and that changes the equation considerably.

So 10M *300 - (310 * 10M + (3M *150) = $350M then they would be just as well off selling 10M as they would 7M but because of the benefits of greater 3rd party sales, better brand recognition, network effects bla bla bla that the 10M sales would be a better position than the 7M sales even though it nets the same profit so thats the way they would go.

LMAO!! Thanks for the laugh man! I meant to say the most expensive system is never the most successful. If it was, that is proof times are changing; but times are getting worse.

Yes...amidst a worldwide recession. Yes...keep the sales up. The third parties obviously want to make games for the PS3, but Sony seeing that as a threat. Putting Blu Ray in the PS3 was a threat to their system. The quality is not the in the video game system in an objective manner, but only in the subjective. The objective is for the system to gather quality games. Forget the specs.

You know you don't have to give praise without saying anything so much that it gives you a reputation. You're the guy that makes posts like this, several people have mentioned it to me.

I have been saying Sony needs to focus on just what he said since the PS3 launched. Put somuch software and services on PS3 that consumers can not ignore the value. Then push marketing to show people that the PS3 is everything you will ever need. Apple has done this with iPod, and iPhone, and Sony is in the best position to do it with a console.

Sony is kind of trapped between losing money and losing customers. Being Jack Tretton and then opening your mouth is probably hell right now.

But I think this quote is 100% perfect, amazing, and hilarious, because he is actually confirming that their pricing has made their console irrelevant to the majority of consumers. I can't believe they finally said it themselves. It was so honest it kinda hurt me a little. Kudos to Jack.