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A game costs about $5 to manufacture, after the packaging, manual, disc, etc are all included. A 160GB HDD costs about $3 more to make than a 80GB one.

So yes, Sony is retailing the 160GB bundle for $100 more, while it only costs them about $8 more.  They are almost certainly profiting considerably from it.  iSupply's number is way off, I think.  I think they are overestimating the cost of the 80GB (to Sony) considerably.