CPC writes: "On the console side of things, Rahul reasons, it's not the customer but the companies - well, Microsoft and Sony - that can't afford to create any more machines along the lines of the Xbox 360 and the PS3. Their business model is to sell the console itself at a loss, and make a profit on the add-ons, games and licensing agreements.
I certainly think he's right about the PS3; all the sales data points to it being convincingly outsold by the 360 (with the pair of them being crushed by the Wii). Yet despite bleak numbers, Sony can't afford to cut the price, because even at $400/£299, Sony still doesn't make money on each unit sold. The high price then contributes to the slow sales, and the slow sales mean that the PS3 platform isn't generating enough revenue to subsidise a price cut, or to fund a next-gen console. Microsoft's position doesn't look quite as bleak - the cheapest Xbox 360 can be had for £130, and sales are brisk - but then it did have to write off over $1 billion thanks to the high failure rate of the hardware."