According to Merrill Lynch Japan Securities, Sony is set to lose around $100 per PlayStation 3 console, even with a $400 price tag.
Analysts believe that production costs is around $500 (per console), with key components (Cell Processor, RSX and BD ROM drive) averaging over $100 each to make. Merrill Lynch claims that SCE is likely to sell the PS3 at $399 in the US and $410 in Japan, figures that project a loss of around $1.2 billion in the first year the machine is on sale.
By the time the PlayStation 3 launches, Microsoft may have had a year with its Xbox 360 on sale, probably at $299.
PlayStation 3, SCE chief Ken Kutaragi said "Whether consumers think a product is expensive or inexpensive depends on the balance between its appeal and price. Our goal for PlayStation 3 is for consumers to think to themselves, 'I will work more hours to buy one.' We want people to feel that they want it, irrespective of anything else."
Kutaragi continued, "Nintendo was selling its 16-bit machine for $114 and we sold the first PlayStation for $364. The press said that it was too expensive, but it was a huge hit. The story is the same with the PlayStation Portable from last year. The Game Boy Advance is a handheld gaming machine, and it costs $91. The PSP had cost $229. But people queued up overnight to buy it, and it sold out on launch day. It depends whether people want it and naturally I'm confident that the PS3 is a product that people will definitely want."
