Yeah you read that right. Based upon a Merrill Lynch analysis, Sony is going to lose one billion dollars on hardware sales in the first year of the PlayStation 3’s release. Based upon the analysis, each console will cost Sony about $500 to produce while it’s widely expected that the machine will retail for $399 - so that’s around a loss of about one Benjamen per machine. Oh and Microsoft? Supposedly the company’s loosing $126 on each machine sold. Ouch. Console manufacturers are willing to take these losses though because they expect to make up the loss, and produce profits, through software and accessories.

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