Hardknock:
I actually just wrote a lengthy reply addressing nearly each and every sentance of yours but decided to write it all up again, since it really wouldn't help this thread much. In short, you're points are inaccurate on so many levels, I don't even know where to beginn.
Lets just say, you're comparing apples to oranges when you're comparing a console that launched in 2000 with a target price of $299 and a console that launched in late 2001 with a target price of $199. The point being, both had very different targets, one of which also influenced transistor budget which is a larger factor in console pricing/costs.
To make it short: PS2 launched on a very large process and with the very large chips as a result, naturally, PS2 was very expensive initially. I never[/i] disagreed with nor did I ever state otherwise. What I did state however is that I am quite convinced that at the moment with PStwo on Sony's latest process is probably equal the GameCube's cost or cheaper to produce. This is obviously something Sony planned from the beginning when they decided to invest in fabs and launch a very large EE+GS back in 2000. The result was obviously massive losses initially which quickly turned into profits at a later time when they were able to shrink the process and later go onto 90nm and merge the EE and the GS into one single LSI.
In short, had Nintendo launched back in 2000 as Sony did with equal cost/pricing targets, GameCube would have been weaker - substantially - given the process would have been less advanced and the chips larger and thus costing more. It's only obvious that Nintendo decided to launch over a year later and benefit from more advanced processes in fabbing and thus more powerful hardware only comes naturally. Xbox is no different. You can also scale it the other way around: What if Sony had launched a year later using the latest processes as well? The result would be obviously more powerful hardware or equal hardware at a reduced costs - or simply slightly more powerful with still reduced costs - which is where I'd put GameCube.
Now, I obviously compared Sony's advantage of having their own fabs with PS3 with Xbox360 because they are both going for very similar targets: The CPUs and GPUs have roughly the same transistor budgets and they're using the same processes as well. Because Sony has their own fabs though, as I said, I do expect them to be in a very good position later on when they can successfully move on to a smaller process and have direct control over their costs/prices without any middleman wanting to earn money. Microsoft doesn't have this luxory - the vendors that are supplying them with the necessary chips do want to make a profit as well - and thus, each and every chip comes at a cost. On the other hand, as you said, they don't need to worry about risks, fab maintenance or effectively making the most out of fabs which is where Sony is spending money (in other words investing). If Sony can successfully use these fabs to their full capacity, they will have an advantage - and with PS2 being fabbed internally, PSP and soon to be PS3 - I'm sure they will have an advantage somewhere down the line. Obviously, if they hadn't and could get the chips cheaper from say IBM, they obviously would. They aren't, so I'm assuming they are for reasons we can only assume to be in their advantage. Simple logic, isn't it?
As for the rest you posted about GC and PS2 hardware: You forgot to factor in that Sony is apart of the DVD forum, dvd-movie licencing is peanuts, GameCube has a drive as well (same mechanics, same laser), the PSone chips (it's only 1 chip!) are not simply wasted for backwards-compatibilty but is recycled in the way that it is used as an Input-Output-Chip - something the GameCube has too! Also EE & GS R&D did not cost billions - what cost billions were fab investments that Sony Group as a whole is going to use to their advantage as is PS2, PStwo, PSP and soon to be PS3.
Anyway, as I said - no one is arguing that PS2 was cheaper to manufacure than GameCube, what I did say is that PStwo in its last incarnation on the 90nm process with a merged EE+GS as a single chip is most likely cheaper than GameCube.
