PS3 pegged at $500 ?

The prediction is in line with a Nov. 2 Merrill Lynch report that estimates the PS3 hardware to cost $495 to manufacture.

Sony has yet to make an official announcement on price or the release date of the Playstation 3 successor.

The system was a no-show at the recent Consumer Electronics Show in Las Vegas and the company has backed away from its spring 2006 release date on press releases.

A $499 price point would be an all-time high for the Playstation brand, which has sold at launch for $299 since its debut in 1995.

The culprit for the pricey hardware lies in the PS3's complex CELL processor and its Blu-ray Disc drive that will play high-definition media.

The $499 is not the only price point that analysts and developers suggest. Several say that the cost could reach $600-$700, while others believe that the electronics giant will match the Xbox 360's premium price of $399.

Historically, Sony has sold its hardware at a loss to recoup on software and accessory sales that offer a higher premium.

Prior to the Playstation 2 launch, analysts suggested that the system may sell for as high as $500. Sony surprised press and analysts with a $299 price tag at an annual video games convention.

Sony may be willing to take a substantial loss to push the Playstation brand and its Blu-ray Disc media, which is in competition against Toshiba's HD DVD high-definition format.

Blu-ray Disc has enough backers to become the market's next de factor disc format for multimedia and is an important strategy to fuel Sony's music, movie, and gaming divisions.

Rival Microsoft said it will offer an external HD DVD drive to Xbox 360 owners sometime in 2006.