Why such significant losses in spite of terrific sales? Pricing of the PS3 hardware: "strategic pricing of PS3 at points lower than its production cost and the increase in PS3-related inventory write-downs recorded during the current quarter compared to the same quarter of the previous year." Sony sells each PS3 system at a loss, and they sold 1.31 million PS3 systems during this quarter. That has undeniably bled Sony's bank. 10.3 million units of PS3 software were also sold this quarter.
Analysts are not very optimistic about the future of PlayStation. "There are still no bright signs for the game business," Seiichiro Iwamoto, a fund manager at Mizuho Asset Management in Tokyo told Bloomberg. "PS3's price is still too high to help Sony regain market share."