PS3 had a 499 SKU too, remember. It was famous for the 599 US Dollars, but it was cheaper.

The N64 launched at 200 dollars. PS1 at 300.

 I knew about the 499, wasn't sure what price they were using for true.  And I could have sworn the n64 launched higher, but in Canada the prices were always high.  I think the n64 was 400.

The price of a product does not only depend on manufacturing costs. In general,

Manufacturing costs = price of components + assembly + testing + shipping.

Production costs = Manufacturing costs + recouperation of various costs  before manufacturing starts (R&D, plant building costs,hiring people,  prototyping, failed attempts).

Selling price of the PS3 = Production costs + advertising + fixed staff costs - writing off nonrecoverable losses.

In the case of the PS3, manufacturing costs have decreased. While assembly costs have increased, component costs have decreased considerably. Note that component costs in themselves are product costs - most notably the Blu-ray drive (which never cost more than $25 to manufacture, but the cost for the diodes were prohibitive due to production costs).

The price of a product, like a console, is determined by how fast a company wants to recoup the various costs. In the PS3 case, these costs were roughly estimated around $5billion (mostly Blu-ray diodes related). If Sony planned to recoup those $5b selling the first 15million PS3s, every PS3 carried a $350 burden. The original selling price of $599 was not near enough to recoup those $5b, therefore Sony had to write off large amounts of money in the first two years.

The current price of the PS3 reflects the fact that production costs have been written off as losses and have partly been recouped (a blue laser diode is essentially a $1 article now)  - so the product value of a PS3 is close to the manufacturing value now. The current manufacturing cost for a PS3 is probably around $150 - a far cry from original costs.

I think the price is great! Although it won't sell as much as the Wii, day one buy for me!

Kind of shows how gaming is actually cheaper nowadays than the 1980s and 1990s. When you take out inflation though, PS3 becomes the 3rd most expensive console ever!

Some interesting stuff:

• NES (launched roughly 30 years ago) is still Nintendo's MOST EXPENSIVE console ever! Yet it's still cheaper than all Sony consoles bar PS2.
• Nintendo's GC is the CHEAPEST console ever! Dreamcast is 2nd (WOW it was that cheap!!!), Wii is 3rd cheapest, and Wii U will be 6th cheapest.
• Only ONE console from the BIG 3 (PS3) is in the TOP 10 most expensive systems.
• 6 of the 10 LEAST EXPENSIVE consoles are from the BIG 3, all but the X360 (considered expensive) are Nintendo consoles, and none are from Sony.

Another thing to note. Wii, and Wii U increases from their previous gens, and the huge PS3 increase from the PS2 are breaking the general trend (bar a few exceptional consoles ala Saturn) of decreasing hardware costs each gen. That coupled with increasing software prices (50$ ---> 60$ during the past decade) could indicate that prices are rising faster than inflation... In other words, gaming is getting expensive again :/

The $299 basic SKU falls right in line with my original expectations. Not entirely surprised to see a two SKU line up with a premium option for an extra $50.

I still don't have issue with the internal storage, which will be supplemented by SD cards and presumably external USB device support for Wii U formatted drives.

The $150 USD presumed price seems high for a device I estimate to be manufactured for under $100, but until Nintendo and third party publishers start announcing lists of games that utilize 2 tablets, I'm seeing the extra tablets as replacements rather than a required additional cost.

As a consumer, I'm still on the fence about pre-ordering, mainly because there aren't any launch titles (or even announced titles) I feel compelled to buy, so I'll hold my gamer opinions until after I've previewed the hardware for myself later this month.

What I suspect is that the Wii U will be sold out through the holidays, quite possibly well into 2013 depending upon production yields and available inventory. That, more than the immediately available games is what would compel me to pre-order rather than wait until there were titles on the platform I'd buy immediately.

Yup so TRUE, otherwise PS3 would've gone Saturn (~10m) on us :P

This argument about inflation turns imaginary when you become aware of the fact that people today are making the exact same amount of money as they were 10 years ago.  So people literally have no more money to spend, and when applying inflation people are far more broke than they used to be.  So if consoles continue going up in price every generation, then they become less and less affordable.

Businesses need to find a way to adjust to this new economy.  And raising profit margins continuously may not be the way to do it.  When Nintendo charged $50 too much for the 3DS, and gamers weren't buying their cost-to-value ratio, they paid the price.  It's not impossible that the same thing happen to the Wii U, either.  It could have a strong launch, but what if the same thing happens?  $50 less per console tier would've eleviated those concerns, and assured both financial success and customer satisfaction.

I don't get out of bed for less than $500 so happy with that

not good and not bad