"The initial manufacturing costs for the PlayStation 3 are suspected to be around $494 USD.

A recent report estimates that the launch costs for the three main components of the system are the RSX graphics chip, Blu-Ray disc drive, and the Cell processor. The cost is $101 USD each. In an attempt to beat Sony's new PS3 system price, Microsoft Xbox 360 could cut the $299 launch price even lower. Sony PlayStation 3 hardware will initially retail for $410 USD.

Sony has traditionally taken large losses on its new hardware to gain a market share advantage, however, it may face a disadvantage if forced into a price war, as Microsoft and Nintendo are each making more conservative choices when it comes to hardware: Microsoft is using the currently-existing DVD spec for its own media, while Nintendo has eschewed support for high-definition video, in the interest of maintaining its own history of turning a profit with each console unit sold.

Furthermore, Sony is currently still taking losses on its PlayStation Portable hardware in a continued, not yet successful attempt to beat the Nintendo DS and Game Boy Advance in the handheld game marketplace. The PlayStation 3 is currently expected to result in losses of over $1 billion in its first year of sales, in addition to the $1.83 billion already invested in R&D for the Cell chip, co-produced by IBM and Toshiba.

Bring on the discounts."