PlayStation 3 to cost $495?

That's what Merril Lynch is estimating. The key word there is estimating, of course. For instance, I'm not sure how they determined that Bluetooth would cost $10 per unit at launch.

If this were true, my estimate is that I'd end up just geting the presumed-to-be-cheaper Revolution next spring and see the rest of the pack in 2007. I mean, I've already got a line of games the length of my arm to try to finish on the current generation. More than enough digital entertainment for a twelve month cycle. The 360 is already pushing my limits for launch prices, so if Sony busts the $399 barrier, it's unlikely I'll "early adopt", so to speak.

There is no word on what kind of loss Sony might take to reduce the unit cost. Lynch suggests "not much", but I wonder if the chance of putting some mud in Microsoft's eye might not change Sony's mind.

I think Blu Ray might be what tips the scales down the road. If by Christmas 2006 there's sufficient videophile reasons to go high density, then a PS3 might sneak it's way into the living room.