Will Sony take a dunking with PS3?

Would you be willing to pay $400 for a Sony PlayStation 3 (PS3)? Sony is hoping so as early estimates by Merrill Lynch Japan reportedly set the hard component costs in the $500 range. Sony has declined to release price information.

With the earlier release of Microsoft’s Xbox 360 for a consumer price estimated to be near $300, the PS3 will be under intense price pressure. Xbitlabs reports that Merrill Lynch Japan is projecting Sony to lose $1.18 billion the first year of the PS3 release, $730 million in year two and $457 million in year three.

Sony is planning the PS3 to be a ten-year machine and is hoping that consumers will see the value in a console with a long life cycle - thus willing to pay more. Look around your life and inventory the items that you own and actually use that are ten years old? (Don’t include those gym socks from high school!) Does Sony's plan make sense?

The game console makers are hoping to become more than just game machines. They are positioning their consoles to be home entertainment centers and more. They are also drawing a crowd. Intel is ramping up its digital home and foraying into the premium movie market. Rumors continue to circulate and grow about Apple expanding its iPod to include video content and perhaps seeking a chokehold on content delivery.

And . . . exactly why did Apple choose Intel? Was that price, product, or some other relationship?

Hat tip to Joe of the Pinehurst Thread for the Xbitlabs link & and the usual suspects for their thoughts.

Photo credit business2blogs.com.