It's no secret that when the PlayStation 3 first launched two years ago it was sold at a significant loss by Sony in order to get consumers to buy the system and then spend money on games. This has changed dramatically over time, and while Sony is yet to reach break-even point with its console, prices have come down significantly from $840 in 2006 to about $448 today.
Revisions to the internal hardware including graphics and the cell processor have contributed to the cost reduction, and though they were forced to get rid of backwards compatibility for PS2 games, Sony considers this a fair trade-off that allowed them to boost sales with a price cut. The company is expected to achieve break-even point between cost and sales in 2009, according to market research iSuppli, and eventually start making a profit on each console sold in late 2009 - though a further price cut down the road might be necessary to compete with the Xbox 360 and Wii.