Gamespot is [url=http://www.gamespot.com/news/2005/06/28/news_6128295.html]reporting[/url] that the magic number for the PS3 is more than likely going to be $399 compared with the expected $299 for the Xbox 360. Everyone knows that $100 price differential will make things very hard on Sony especially with Microsoft’s plans to launch Halo 3 on the day of release for the PS3. Microsoft would also have between 5 and 6 months to streamline their process and lower the price before Sony’s launch.
The problem is that the PS3 has an estimated cost to build of $494. Losing $95 per console would have Sony losing close to $1.18 Billion during the first year of release. This is the same situation Microsoft was in with the Xbox, but the deep pockets of Microsoft made it a necessary loss to enter the market. I highly doubt that Sony could afford such a huge loss without so much as the blink of an eye. Factor in the $2B in R&D for the Cell CPU and Sony may sell a lot of consoles but starting out over $3B in the red is never a good thing.