PlayStation 3 to cost Sony $900 per unit

The Playstation 3 will cost Sony $900 per unit to build at launch, according to component cost estimates done by investment firm Merrill Lynch. The figures, released in a research report Friday, show that the majority of the costs come from the Cell processor and Blu-Ray drive, which account for $580 alone. Merrill Lynch estimates that the console's cost after 3 years could drop to $320. A complete list of components can be found below.

"We wrote last November that Sony's design choices for the PS3 had resulted in an expensive and difficult-to-manufacture product, and we think that we're seeing the consequences of those choices play out now," the firm said. "In particular, Sony's decision to implement an ambitious new processor architecture -- the Cell -- not only took a great deal of design effort, but also has resulted in a processor that we think will cost Sony at least $230 per unit initially. Leaving development costs aside, the Cell itself looks like it’s going to be expensive to manufacture."

"The Blu-Ray drive also looks expensive at an estimated $350, and Sony will not be able to leverage off additional Blu-Ray shipments in DVD players because the standard is still so new," Merrill Lynch added. "The specialty XDR memory is unique to PS3 and likely to be expensive initially. Overall, as the BOM analysis below indicates, we think that PS3 will cost about $900 initially to manufacture. We note that shifting Cell to 65nm manufacturing should help, as will scaling Blu-Ray drive volume in other device -- both of those changes should hit in 2007, and we think that the BOM could be down to $320 three years after launch."