Very interesting article, odd that Sony lost a billion in revenue, it doesn't matter a whole lost as long as their expenses didn't put them in the red like the past couple of years and they become profitable.

Now on the other hand software is really interesting, Wii overtakes software as a whole, not really sure how companies can't pay attention to this since Wii sold almost as much software in a year as the PS3 did in 3...

ALL of them are US only because they are based on NPD

1) No it didn't. You're exaggerating the upper cost, the lower cost and the time involved. In 2006 it was estimated it cost $800 per console, not $900. It cost roughly $440 by half way through 2009, which is over two and a half years, not two years.

2)The law of diminishing marginal returns. The more cuts you make, the harder it is to make further cuts in cost.

You are suggesting that between May of 2009 (the time of the link you gave) and the beginning of September they managed to make $100 worth of savings. That is ridiculous.

"Our updated analysis indicates that the initial bill of [production] materials for PS3 could approach $900," read the report. The report said that the production cost of a single Cell processor will be $230 at launch, with the Blu-ray drive setting Sony back $350 per unit. However, the $900 price tag presumably includes a $100 optional hard drive, as a breakdown of component costs in the report totals just $795.

If the $900 estimate is correct, that means the PS3 would have to sell for around $775-$800 to maintain a $100-$125 per-unit loss similar to that of Microsoft's Xbox 360. If the $795 estimate is correct, the console could sell for around $699--within the range recently forecast by a group of analysts and developers polled by CNN/Money.

This week, iSuppli conducted a similar cost-analysis study of the PlayStation 3--with even more shocking results. According to the study, the hardware for the 20-gigabyte PS3 costs $805.85 alone--$306.85 more than the stated list price of $499. The 60GB model hardware costs $840.35, $241.35 more than the console's $599 sticker price

That figure also doesn’t take into consideration the costs of packaging, software, royalties, and marketin Sony has to pay out.

Nov. '06 - Jan '09

2 years and 2 months

Now on to your point 2.... No duh... thats why 100 dollars is a shit load less then 500... and no i'm suggesting from Dec to November 100 dollars is able to be cut.(with a major revamp that wasn't done any other time)

Summation - The ps2 and psp are dead platforms as far as monetary growth and profit drivers are concerned.

Sony is now reliant solely on the ps3 even though it continues to lose money.

Despite being pirated, the xbox 360 has extremely high software sales and the highest attach rate/tie ratio

$795 does not equal $900. Components are what the PS3 has been judged on at all times, are you suggesting that they've made massive savings in software, packaging, royalties and marketing...?

I didn't know Sony released a ps3 without a HDD... my bad.

And no. I'm suggesting that the figures given isnt the full manufacturing costs. Its in one of the links. I've also heard it doesnt include cables and controllers.

Well the slim covers packaging while the psp go covers packaging and software savings and anyways this is US they're loved more by Europe 

It really depends on Europe if Sony made profit last quarter. In EU they probably make profit even from PS3 hardware sales due the strong euro.