This may be more general production reductions (i.e. for Microsoft as well) but newer manufacturing procedures have found ways to cut the costs of producing the PS3 console.
This is performed by combining chips into tighter spaces (scaling down the size) and reducing the complexity of the manufacturing process. By using smaller chips of cheaper cost means better prices...for who?
At this stage, Sony. Sony is losing roughly $250.00 on each sale and cost reduction will not push them into the positive (maybe saving $40.00 or so?). Will they reduce the cost of the product anyway or just try to recover from the hemorrhage of cash already present in the product?
The magic will fall into the hands of the game release list. The high cost product can stay high cost if Sony can find a game (insert Killzone 2 rumor here) that will increase sales of the hardware.
source: beyond3d.com
