Sure, Sony shrank the PS3 Slim's processor to the 45nm production process, making the console cheaper to produce. But it's still not that cheap.
Because after a $US100 price reduction, Sony exec Kaz Hirai revealed that PS3 "hardware alone" is still losing money. However, he claims that when you look at the whole PlayStation platform (from consoles to peripherals to software to avatar clothing in Home), it's reached a "gross profit" threshold.
Besides, while we could mock Sony's difficulties producing budget-friendly hardware, we've all seen what happens when a console—even a great console—is produced a bit too much on the cheap. [TimesOnline via Kotaku]