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First year PS3 sales may cost Sony up to $2B
by Punch Jump Crew

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Sony's Playstation 3 will be costly to consumers, but even more expensive for the company to launch.

Goldman Sachs analyst Yuji Fujimori told BusinessWeek that first year PS3 sales may cost Sony as much as $2 billion.

The report estimates that each PS3 unit will cost Sony $750 to manufacture. The retail unit will be sold for $499 with a 20GB hard drive and $599 with a 60GB hard drive.

Game makers frequently incur losses on game consoles and recoup on sales of high margin video games and accessories. However, the PS3's high manufacturing cost will make it an uphill battle for Sony should game sales fall short of expectations.

Games for Microsoft's Xbox 360 have begun to see sharp discounts after eight months at retail. This week, Atari announced that it would introduce a new racing game for the 360 at under $40.

Nintendo's Wii console will rely on more current technology and subsequently cost less for game makers to produce games. The savings are likely to be passed down to the consumer.

Market research firm DFC Intelligence predicts that Sony's current 70% market share could fall from 20 to 50 points in the next console wars.

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