its the razor and razor blade example. give away the razor, and the customer will have to buy the replacement blades. in the long run sony will make money on the PS3, especially if blue-ray becomes the new HD standard. Sony is looking long term, and they are still actively working on making the ps3 even cheaper, so they will continue to drop prices at they streamline the manufacturing process. Sony has even stated that they expect to lose money on the PS3 for a few years, they expect the PS3 to be used for roughly 7-10 years before PS4 is introduce so if they lose money on the PS3 unit for 2-3 years of the 7-10 year life span, its really not a big deal in the long run. Sony will be fine, and they will eventually catch up as the price of the technology on the PS3 drops.