Financial analysts at Merrill Lynch Japan are speculating that the
PlayStation 3 may cost up to $490 dollars to manufacture, according to stories
at Gamespot.com and GamesIndustry.biz.  They also predict that the PS3's
launch price will be $399, and assuming 14 million systems are sold in the first
year, estimated losses for Sony would total 1.18 billion dollars.

Losing money on a console isn't anything new – most companies do it, but
analysts worry that if Microsoft lowers the price of the Xbox 360,which is
expected to start at $299, Sony will be forced to follow, resulting in potential
losses of 1.2 billion during the console's second year.

When the PlayStation 2 was released, Sony took a $460 million loss in the first
year, but that turned into a profit of  $760 million by the end of year
two.

This speculation is somewhat backed up by comments Sony Computer Entertainment
head Ken Kutaragi made to the magazine Toyo Keizai, which were translated and
published by Gamespot. "Whether consumers think a product is expensive or cheap
all depends on the balance between its appeal and price," he said. "Our ideal
[for PS3] is for consumers to think to themselves, 'OK, I'll work more hours and
buy it.' We want people to feel that they want it, no matter what."

Obviously this, coupled with the reports that next-gen games will cost
upwards of $60, isn't good news for gamers on a budget, but keep in mind that at
this point it's all speculation. We'll keep you informed as more information
becomes available.

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