Make up for it in volume!

According to this article on Slashdot, Gamespot claims that the Playstation 3 will cost $494 to make, but sell for $399. I’m curious. Does it really make sense to spand a billion dollars to try to win this race? Holy crap. That’s not chump change.

Ultimately, Sony (and presumably Microsoft as well) is banking that decreases in manufacturing costs as well as licensing fees will make up for this initial investment. I’m left wondering: isn’t it possible to make a game system which results in a more cash neutral position, and doesn’t rely so heavily on licensing? Could we actually have a real user friendly machine that encouraged individual creativity and experimentation?

Nintendo? Are you listening?