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PS3 Will Cost $494 to Make?

Merrill Lynch Japan has a crystal ball. A crystal ball that works quite well, it appears, and gives answers with authority. Recently they’ve had to polish it a bit because it’s been steaming up with all those Merrill Lynch people gazing at it too closely. But it gave forth some of its knowledge, and it goes like this:

1. The cost of manufacturing a PS3 will be $494.
2. Sony will sell the PS3 for $399.
3. Therefore Sony will lose $95 on every PS3 sold.
4. Sony will lose $1.18 billion during the first year of the PS3’s release.

My question is, what will the Merrill Lynch people due when they discover that the crystal ball has been giving less than crystalline answers? You don’t think it’s right, do you? For surely, it is highly unlikely that predictions as precise as these will actually end up being accurate. So what will Merrill Lynch due with a useless crystal ball? Maybe they can lend it to Microsoft, since I don’t think they forsaw that they’d still be in the red on the Xbox today.

Link: GamespotReport: PS3 to sell for $399, cost $494 to make