Itís no secret that, in the gaming hardware business, companies usually sell their consoles at loss and make back on that through licensing Ė that is except for Nintendo, which has a significant profit margin on each Wii sold. Last year, Sonyís game division lost around $2.1 billion largely because of the price on PS3 components such as Cell processors and Blu-ray drives.

But according to Nikko Citigroup analyst Kota Ezawa, Sonyís efforts to tweak the PS3ís design have allowed the company to drop production costs from $800 to around $400 per unit. While this wonít likely have any impact on gamers in the short term, the drop in production costs could allow Sony to eventually be a lot more aggressive against Nintendo and Microsoft with its price point.

The company still has to make up for a lot of lost ground since the PS3 launch. So, considering they were initially losing between $240 and $310 on every system it sold, it is not out of the realm of possibility that the company could sell a PS3 that cost them $400 to make, at a price point of $300 (or less) sometime in 2008.