I agree with Kolgar about the MS price advantage all generation.
The 360 Core was specifically designed as the entry level model. MS sacrificed a standard HDD specifically for price flexibility. I was surprised Sony went with a HDD standard. As a consumer I like the move, and the necessity is clear due to the BRD speed, and I think microtransactions can offset some of the cost. BUT, as MS learned last generation, unless everyone is on board it will be under utilized. With cross platform games so vital to the industry, and MS having a relevant early market share, a standard HDD looks to be under utilized. Again.
Anyhow, many are proposing the, "What if Sony is artificially keeping prices high for launch and will cut them in mid-2007?" I don't agree (although the Q1 2007 process shrink will be a big help). Just one example of how we can determine that Sony is not artificially inflating the price of the PS3: no HDMI on the PS3-20GB. If Sony was inflating the price due to high demand and low volume, why cut out (a) a relatively cheap component that (b) you have been hyping for the last 12 months. Ditto the extra USB, WiFi, gigabit ethernet (and 3 total ethernet ports), etc.
The more condemning evidence comes from the silicon. There is no magic silicon in the industry. Sony own fabs and what not, but there is always a cost, and in the PS3's case there are a number of additional costs the Xbox 360 does not have.
* Processors. It
seems that Cell is 235mm^2 whereas Xenon is 168mm^2, a 40% difference in die size. I could not find numbers for Xenos, but the parent die appears to be about the same size (give or take... maybe a tad smaller) as Xenon.
G71 is 196mm^2. Xenos also has a daughter die which most likely puts its die size above G71, but has the benefit of 2 smaller dies which may increase yields (especially separating the more dense eDRAM). Xenos is costing more than RSX (unknown amount), but CELL is substantially larger than Xenon. With added size typically comes lower yields (less dies per waffer, more dies with defects).
* HDD standard. HDD's don't scale well in cost as MS learned last generation; it has been stated a number of times the HDD was one of the big reasons MS bleed so badly with the Xbox1, and in turn why there is a 360 Core without the HDD. I understand why Sony made the move they did, but the 20GB HDD in the low end PS3 SKU will always be a factor making the PS3 more expensive.
* Blu Ray Drive. The PS3 gets to cut cornes by using CELL to decode, and the PS3 is sold at a loss instead of a profit like commercial Blu Ray players. But the drives are expensive, they are new technology, and they are not mainstream yet. Prices will drop, but it wont be overnight and this will always be an additional cost for Sony. At the end of the generation in 5 years it may be a minor expense, but right now I don't doubt the rumors of the drives themselves costing more than $100 to produce.
* Memory. Sony is using XDR which has a premium and is not widely used. GDDR3 is used not only by both consoles, but also by GPUs. It may not cost substantially more, but there is an additional cost.
* Online Network. This is often overlooked, but it has a significant start up cost. And since Sony is offering it for free the cost of supporting the network comes out of hardware sales, software sales and royalties, online profits (DLC), and advertising. But intially the cost will be up front and Sony has to balance HW losses and the Network losses at the same time.
The PS3 pretty much users larger, more expensive components across the board (less GPU). CPU, Memory, Optical Media, HDD, Ports, etc. There is a logical reason, from a component perspective, why the PS3 is more expensive. Crudely we see:
Core Console = $299
Core Console + 20GB HDD = $399
Core Console + 20GB HDD + HD Optical Drive = $499
Core Console + 60GB HDD + HD Optical Drive = $599
When people say Sony can drop the PS3-20GB to $299 within 18-24 months, a whopping $200 drop, they are suggesting MS is not only making money on the 360 now (yet we know that is not true, they have projected like 900M in loses I think) but that the 360 Core could reach the $99-$149 price range in the same time period. Why? Because any price reductions Sony can do, MS is capable of reaping similar windfalls. But everything points the opposite direction.
Over a year ago I outlined MS's
Price War strategy and the pricing difference (and my past reasonings for
what I thought the PS3 would cost) have all been pretty close.
Which leads me to agree with Kolgar. The price difference between the Xbox 360 and PS3-20GB will shorten over time. But due to MS's and Sony's design decisions is pretty much a settled MS will have the more affordable console all generation, and in the case of the 360-Core a much cheaper console.
Sony has no choice but to convince consumers they want Blu Ray and that the PS3 has the best games and best gaming value because they wont be able to maintain their market share (i.e. 100M sales in 5 years) on price alone.