Sony has recognized that the $600 price tag is way too high, but I think this price cut (before it's even shipping) is a sign of two things: reality, and desperation. Here's the important bit from the story:

Sony will cut the domestic price of its basic PlayStation 3 model to 47,600 yen, or about $410, from an originally planned 59,800 yen, or $515. That puts the PlayStation 3 in the same range as the combined basic Xbox 360 and HD DVD player in Japan, where the duo will sell for 49,600 yen, or $427.

We knew Sony was going to be losing money on each console shipped at $600 - possibly as much as $400 (and that was just based on manufacturing costs - never mind what channel costs are larding on). This slaps an additional $200 loss onto each console sold. The bottom line - they are going to be bleeding like a hemophiliac when the PS3 ships. Mind you, this is a limited desperation move - the prices are (thus far) unchanged in the US. I wonder how long that differentiation will last.

Yes, MS is bleeding on each XBox 360 sale, but a lot less - and note that Nintendo will be making money on each console. I can't even begin to understand the business model where you plan to lose money hand over fist for years, with no hope of breaking even on the horizon.

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