PS3 Losses Predicted
Sony could lose more than one billion over hardware costs.
by Patrick Klepek, 06/30/2005

The video game industry has never been about profiting from hardware sales, but estimated losses in the coming generation continue to climb. An analysis by Merrill Lynch Japan Securities predicts Sony will lose over one billion during the PS3's first year on the market, reports GameSpot from Japanese magazine Toyo Keizai.

Comparatively, Sony only weathered losses of $458 million during the first year of the PlayStation 2. All parts included, Merrill Lynch Japan predicts the PlayStation 3 will cost approximately $494 to manufacture, with the main components (Cell chip, RSX, BD-ROM drive) individually costing $101.

Competition from Xbox 360, however, will likely force the company to bring the price down, though Merrill Lynch Japan predicts a market price of $410 in Japan and $399 here in the US. The situation may worsen if Microsoft decides to slash the price on Xbox 360 when PlayStation 3 launches the following year.