PS3 to sell for $399, cost $494 to make

Merrill Lynch Japan predicts Sony will lose more than $1 billion on hardware during its next-gen console’s first year on the market–a sum it may not be able to recoup.

According to the latest issue of Japanese magazine Toyo Keizai, Merrill Lynch Japan Securities has recently calculated an analysis that the production of a single PlayStation 3 console will cost Sony approximately 54,000 yen to make ($494), as of its initial release in 2006.

Merrill Lynch Japan estimates that the machine’s main components–namely its Cell chip, RSX, and BD-ROM drive–will cost about 11,000 yen ($101) each. After adding the other electronics that will be used in the PS3, the machine’s production cost goes up to 54,000 yen.

Amazing what Microsoft can make you do. If it was just Nintendo in the arena I have no doubts that Sony wouldn’t have a problem selling their console for $499 or up.

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