By shrinking the chip size, improving yield rates and reducing number of parts, we're going to cut down the manufacturing cost of PS3. We'll get rid of our back spread in the second half of next year." says Nobuyuki Oneda, CFO of Sony. Actually, Sony Computer Entertainment (SCE) is promoting the cut down project, which is led by Ken Kutaragi, Chairman of SCE. So there is a possibility of Sony succeeding in cutting their manufacturing costs by 50% in the second half of this year. They're expecting the cut down and software sales expand to lead their game division to a balanced budget in next year.
However, if Microsoft massively drops the price of the 360, Sony's plot will fail in no time. Industry analysts of major securities companies are forecasting that Sony's game division keeps making a loss which will be more than 100 billion yen in next fiscal year, supposing that Sony will drop the price of PS3.