GameSpot is reporting that analysts at Merril Lynch Japan are estimating that it will cost Sony $494 (54,000 Yen) for every PlayStation 3 console built for launch.  If Sony launches the console at the same price that they have launched their previous consoles at ($399 in the US, 44,800 Yen in Japan), Sony will lose roughly $1.2 Billion at launch.

Losing money on game console hardware is nothing new, and has been considered to be status quo for many years.  Typically, the console manufacturer will take a loss on the hardware in order to get a compelling feature set into homes, and then make up the difference on the royalties from the manufacture of the game software, which can be significant.

The only significant spoiler in this business is Nintendo, who rarely loses much (if any) money on their console hardware.  It is estimated that Nintendo only lost $3 per unit sold at the launch of GameCube, and through manufacturing modifications and optimizations, had eliminated that loss in under six months.  Sony was still losing significant money on the PlayStation 2 hardware (as was Microsoft on its Xbox console) up until last year.

If you’re looking for a hot deal on a game console and want to really get more than your money’s worth, you can’t do better than buying a console at launch, when the cost is being largely subsidized by the manufacturer.

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