The PlayStation 3 may be an expensive system – although far less expensive now than it was at launch – but then again, it's an expensive system to manufacture. Even with the lower price point, Sony still takes close to a $200 hit on every PS3 sold, which obviously won't help to turn a profit. However, with some excellent software out already and the biggest titles scheduled for the near future, plus the apparently imminent Blu-Ray victory, sales are climbing. Sony pushed 1.2 million PS3 units during the nine-week holiday season, and that's just the beginning.
In even better news, Australian gaming site MyGen.com reports that Nikko Citigroup has been able to reduce the production cost of the 40GB PS3 from around $800 to about $400. They achieved this reduction by "shrinking the chip sizes," reevaluating parts (like removing the Emotion Engine that allows for backwards compatibility with PS2 titles), and undertaking some small design changes. Recently, Sony boss Kaz Hirai stated that the PS3 might turn a profit in 2008, so this manufacturing cost drop is right in line with expectations.
We imagine it'd be a whole lot easier to make money with a product when it suddenly costs half as much to manufacture and produce. Furthermore, you've made the consumers happy (or happier, anyway) with the recent price cuts, so everything seems to be going along swimmingly.