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If it cost them $400 to make a 40GB PS3 they are still losing money on each unit sold. With the MSRP being $399.99, retailers probably pay around $380 for each 40GB unit they stock. Thats assumming the $400 cost estimate includes the actual manufacturing and shipping cost. If its only component costs, then the losses would be much steeper. The quarterly report from Sony will give us an indication of what the costs of the 40GB model is.