CNet gets to the meat of the issue:

The estimated total bill of materials for Sony's next-generation game console will be between $725 and $905, according to various estimates. In comparison, the Xbox 360 from Microsoft comes with a component bill between $501 and $525.

Though Sony hasn't disclosed the price of the PS3, analysts figure it will have to be in the ballpark of $299 to $399--the price for the two versions of the Xbox 360. PS3 pricing speculation has heated up in recent days, along with rumors that the long-awaited game console could be delayed for up to a year.

The current price for the 360 is the one that matters. Sony cannot price much (if any) higher than that, so the question that remains is this: how much damage will they take with each sale? If the PS3 is delayed, MS will likely be able to reduce the price of their console (admittedly, some of the pricier components in the PS3 could drop in price during that interval as well).

The big questions are going to be asked in Sony's boardroom. The company is not performing that well at the moment, and hemorrhaging from the game division could easily attract negative attention.