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This is the first major console launch in many years where the console itself is being sold at a profit - previous launches have sold the hardware at a loss, and clawed back the profits on software. I believe this is true of the PS1, PS2, PS3, 360 and original xbox.

The headline could be 'PS4 not being sold at a loss!' instead of 'PS4 is only just scraping a profit'.

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The Wii was sold at a profit. Also I believe they are still making a loss, since the component breakdown doesn't include costs of marketing/development etc.

It's still not being sold at a profit. Software engineering, marketing, etc. are not figured into the price.

He's referring to "COGS", meaning "cost of goods sold" which only includes costs directly related to the actual production and sale of the products sold. Indirect costs, such as R&D and marketing, are not usually included in COGS under US standard accounting practices (but are in some non-US accounting practices).

Under standard accounting practices (GAAP), COGS is the only common above-the-line expense item used to determine gross revenue (aka gross income). Essentially all other expenses are deducted from gross income to determine net income (i.e., profit or loss).

So sunk costs don't matter? How does that work out in the long run?

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