How much will the PS3 cost? Well, according to the latest issue of Japanese magazine Toyo Keizai, the new PlayStation 3 console from Sony will go for around $399. However, its looking like the console will cost Sony approximately 54,000 yen ($494) to make! Yes, the first year of PS3's release would be a money loosing affair for Sony, who is expected to sell each PS3 at the price of 44,800 yen ($410) in Japan and $399 in America. This works out at about 130 billion yen ($1.18 billion) in losses for Sony during that year. However, it's common for game companies to take a loss on hardware whenever a new console launches, making everything back in later years when savings are made from mass production and with licensing fees from publishers. But there may be other problems in store.

Merrill Lynch Japan warns that the normal console business cycle may be disrupted if Microsoft cuts the Xbox 360's price when the PlayStation 3 launches. The report goes on to say that such a move could hurt Sony's plans, bringing an additional loss of 80 billion yen ($730 million) in its second year and 50 billion yen ($457 million) in its third year. Thus far, Sony has already invested 200 billion yen ($1.83 billion) into development and production for the Cell chip alone.