Just some rough numbers (New losses, not including the current losses)

year 1 $200 x 15M units sold = $3Billion  (next 12 months)

year 2 $150 x 15M units sold =  $2.25Billion (following manufacture reductions & 50 price drop to 350)

year 3 $50  x 15M units sold = $0.75Billion (following manufacture reduction)

total over 3 years if dropped to $400USD = 6Billion, so its not 1 billion it 6 Billion!!!!!!!!!!!

to lose 1B more @ the same sales estimates

 year 1 $40 x 15M units sold = 0.6Billion  @560USD

 year 2 $20 x 15M units sold = 0.3Billion @ 560-20 - 50(extra manufacture savings) = $490USD

year 3 $6.66 x 15M units sold =  0.1Billion @490-6.66 - 50(extra manufacture savings) =$433.34USD

@Nidan

yEA And they will just be loosing money its like games at $59.99 dont help them at all. Or psp sales. 1 billion wont hurt them too much.

You're ignoring the amount of money they'll make from ps2/psp hardware, ps2/psp/ps3 software, and Blu-Ray movies.

Also, a $1 bil. loss is worth it right now if they win the format war.

This is true to a degree....

How much is sony worth? Not in the eyes of investors but in Capital? How much money and assests do they have to blow away another billion dollars? If they do not have 1 billion dollars in excess cash then they are going to have to sell of more assets... selling off more assets Is going to hurt the company more then it would if they had the money spare.

The money they have gotten from the sale of assets so far has already been spent. Do they have a further billion dollars somewhere that they can blow without selling off more assets? If so then yes, it will not hurt them much but if they have to sell more assets to get this going, then yes it can hurt them quite a bit.

It all comes down to if they will be required to sell more assets off or will they be able to keep away from this by selling the $3 Billion in excess PS3 Stock fast enough (As well as to continue manufacturing at a loss), without the need for more drastic measures?

//EDIT -

Don't forget, they are producing aprox 800,000 units every month. @ $600 a pop, that's $480,000,000 in PS3 units a month. Can they make enough money back from PS3 sales to continue to produce $480,000,000 worth of PS3's a month?? ATM no they are only bringing back  $120,000,000 a month so currently that is a $360,000,000 offset every month.

Now with a PS3 Price Drop (Ignoring Holidays) will the sales increase enough and stabalise to decrese this offset?  Only the announcements this month will give us a clearer picture. 

What are you saying that they spen all the money they made from the ps1 and the ps2?

No your wrong to that degree. It is worth the drop, more ps3's= more software sold. Which equals less of a loss in the long term. Not only that but it will drasticly increase there role in this generation of gaming consoles.

 Did you not here about this?

 Yes, I took that into consideration already.  That was to offset the $3 Billion in excess PS3's already produced.  What more money have they got to spend?

@Loe_J - True that I did ignore Software sales there. HOWEVER, on your PS1/PS2 money... they MUST have spent all of that money.....  Why would you take out a loan of $1 billion + if you have money spare...... why would you sell assets to raise money too???  They HAVE spent all of their spare excess cash... now how much more have they got left over from this 2.7 billion dollar sale... Is it enough to take another $1 billion dollar hit or will they need to sell more assets? 

+1 for shams (overall thread)

Sorry Engelos but no unproven IP's

"Ratchet, UT3, Haze, Uncharted, Assains, Rock Band, CoD4"

Ratchet, UT3, CoD4

Why make a drop of $200/ unit when it is not needed? Current sales are good enough at this point in its lifecycle

 I don’t think that its a move that’s needed yet, rather they need good AA titles and a compelling reason to buy one.

BR does add another factor into the equation, and Sony does want that format to succeed