Investment firm Merrill Lynch has come up with an estimation of the cost of PS 3 by breaking down the components one by one. All the components added it would cost $800 (and not $900 as it says in the memo).

In any case, that's a huge amount of money considering that it is a console designed for individuals and not for a public utility service.
Is it going to lose out to Xbox 360 purely on this basis? Though, Sony will have no option but to sell the consoles at a lower price than the cost of production as MS did with the Xbox 360, still the question remains, how much?