I dunno about the cost estimates. I’ve seen claims that Sony initially lost over $100 on each PS3 at launch. That seems insane, but apparently the costs related to the Cell architecture dropped quickly over the following months.
I guess my take comes from the “after you Gaston” stuff on picking an MSRP between Sony and Microsoft. If they wanted their flagships to launch at $500, I don’t understand why they would be so hesitant. Adjusted for inflation, the PS2 launched at just over $500 and it did great numbers. Other successful consoles have launched for nearly that much.
So my uninformed guess is that both companies really, really want to launch their flagships at either $550 or $600. Too much red ink at $500. But the only thing worse than red ink is getting undercut by the other guy saying “$499!”
It’s no wonder Nintendo cannot play this game any more, apples to apples. Their revenue is a pittance compared to Sony, an insignificance compared to Microsoft.