Selling your console for less than it costs to make doesn't come cheap. Sony should know - they lost USD 2.16 billion on PS3 in 2007, and a further USD 1.16 billion this year.
The PS3 allegedly cost USD 800 to manufacture when it launched in 2006, but was sold for USD 500 - 600.
Now the company has warned investors that " the large-scale investment required during the development and introductory period of a new gaming platform may not be fully recovered".
Sony said it has spent loads on research and development of components, including semiconductors for PS3. These kind of expenditures don't get recouped if consoles "fail to achieve such favourable market penetration... Resulting in a significant negative impact on Sony's profitability".
Still, at least the game division's sales are on the up. They rose by 26.3 per cent in the 2008 financial year to reach USD 2.5 billion, although operating loss stood at USD 1.2 billion.
More than 9.2 million PS3 consoles were sold last year, up by 5.63 million over the year before. Game sales rose by 44.6 million and reached 57.9 million.
PSP sales hit 13.89 million (up by 4.36 million). The number of games sold for the handheld rose by just 0.8 million to reach 55.5 million.
Sales of PS2 consoles fell by just under a million to stand at 13.73 million. Game sales were also down by 39.5 million, but still came in at a healthy 154 million.
In other words - PS3 came out on top with regard to the rate of increase in hardware and software sales. But more PSP hardware was sold overall. And PS2 beat the pair of them in terms of software, with nearly three times the amount of games shifted.
Sony has previously said it expects the profitability of its games division to improve as the cost of manufacturing comes down and the number of games available for PS3 goes up.