If anything they will try not make a big loss on Series X because the early adopters, hardcore and scalpers will pay for Series X this holiday. MS is already preparing us with 'leaks' from Youtubers' and influencers.

The subsidization will be with the cheaper Series S as it will be most likely be the cheaper all digital model.

I think 599 is possible only if Sony use the same pricing.
Spec/cost wise it makes more sense at 599 but if the ps5 goes for 499 I bet Microsoft are willing to subside to match that price.
Sony are probably in the exact same situation which is probably why both of them still did not reveal pricing.

Xbox One X was almost certainly selling at a small profit at $500 on launch. It released a year after PS4 Pro and still cost $100 more than PS4 Pro did at launch. Also, it got price drops really quickly, MS wouldn't have been able to afford to do price drops that quickly if XB1 X was being sold at a loss on release or even at cost. So, while Xbox Series X almost certainly has a higher bill of materials than XB1 X did, it's also heavily rumored that MS is planning on selling it at a loss.

While it is true that PS5's chipset will be less expensive than Series X's chipset since it has alot less CU's, you have to remember that it has increased costs coming in other areas: 

1. PS5's SSD is going to be substantially more expensive that Series X's SSD. It is custom made and about twice as fast, faster even then comparably sized PC SSD's that are currently selling for like $250 at retail.
2. PS5's case is likely slightly more expensive than Series X's case. It is larger, meaning more plastics and metal will be needed to make it.
3. PS5 almost certainly has multiple fans to help keep it cool, since they are relying so heavily on overclocking their GPU, and each extra fan above Series X's single fan will add to the cost.
4. PS5's controller is chock full of tech that the Series X controller lacks, motors for the impulse triggers, advanced haptic feedback, touchpad, microphone, speaker, internal battery. I'd be willing to bet that the PS5 controller costs at least $15 more to make than the Series X controllers do, and since each system will come bundled with a controller, that adds to the consoles overall bill of materials.

I wouldn't be surprised if the bill of materials for Series X and PS5 are very close to one another. What will matter is if one or both of them is willing to sell at a loss, unlike this gen where both console were sold at cost at launch ($381 BOM for PS4 and $471 BOM for XB1 back in 2013). Rumor is MS is willing to sell at a loss on Series X, which is also why they reportedly delayed their August Xbox announcements into September, they clearly want Sony to announce pricing first so that they can undercut them or at least price match them. Sony meanwhile will likely be willing to sell the discless PS5 at a loss since digital software sales have higher profit margins for them, but I'm not so sure that they will be willing to sell the disc drive PS5 at a loss as well. We could very well see discless PS5 and XSX coming in at the same price, with disc drive PS5 costing $50 more.

It's the most likely scenario but still hope it's not the case as it would be priced CAD/AUD 800$ (unless they're willing to take a loss on canadian/australian markets and price it as CAD/AUD $700?). At this price it better come with a great discount in exchange of an old Xbox one or I'll pass/upgrade my pc instead. 

Yep, both want to announce the highest possible price that is cheaper than the competitor so both are delaying the announcement.

Yeah Aussies and Canadians usually pay more. A bit like us in UK, there is usually quite a big difference in what we pay vs US. Aka getting ripped by taxes and import fees.

I mean thats usually how it goes. Lower end is cheaper and high end more expensive to make up for it. But hopefully that's not the case and both with be around the $500-$550 USD mark.. for all our sakes lol.

Xbox One X, launched at 500$.
Now every part of the Xbox Series X is more expensive, and you expect the same price?
If it happends, its because a loss is taken on each unit sale, thats in the order of probably 50-100$.

I think this is more likely to play out:

Xbox Series X: 549-599$   (50$ loss or breakeven)
Playstation 5 (disc) : 499$  (break even)
Playstation 5 (discless) : 399$ (this will be sold at huge a loss (~70$), digital returns to recoupe some of it)
Xbox Series Y: 299-349$  (breakeven, not quite sure how much cheaper you can get it, by makeing a 4TF model)

*edit: Hell maybe even the discless version is only 50$ cheaper than the PS5. So 449$ instead of 499$.

Best estimates on BOM so far is PS5 about 450 and XSX 480 if I'm not wrong.

At this point I think it is more a battle over not being more expensive rather than a battle to be cheaper.

Microsoft probably does not want to take a loss and Sony probably want to cash in on it's brand recognition.

Funnily enough, if they old back price announcement longer still, they might both end up pricing their console at $499 over fear that the competition would be cheaper while both would actualy have wanted a $599 price tag.

Haven't seen that $480 BOM leak for Series X. I remember a $450 BOM leak for PS5 back in February I think, though there was a later report from that same site that said that PS5's BOM may have been increased since then due to part shortages caused by Covid shutdowns. Around the same time as the $450 PS5 BOM leak, Zhuge said he heard that the XSX BOM was somewhere in the $460-510 range, so a $480 BOM is definitely possible. I definitely don't think either MS or Sony will be willing to sell above $500. So maybe we will see Series X and disc drive PS5 both at $500 with discless at $450. Or maybe MS will be willing to see Series X at a larger loss to price match the discless PS5 instead, which they might have to do with their main system seller delayed.

What makes you believe the Xbox will be more expensive than the Play Station (100$ is a lot...)?

If anything it is probably the opposite. Other than the APU, the rest seems to be more expensive on the Play Station side (box, SSD, Controller...). So maybe we can talk about a tie or very close tie in terms of production cost. But I have high doubts the Xbox will cost more to produce or at least certainly not 100$ difference...  

I expect both console to be at the same price (okay, maybe the second one to announce its price will be 49$ less cause they are both waiting to undercut).

The PS5 was an estimate reported by Forbes, and for the disk version. The XSX one was just something a Twitter insider guessed. He admitted not knowing anything about cost. He also gave a range of $480-$540, or somewhere around there. 

While it being from Forbes doesn't make it 100% true, I believe it's probably more accurate than the XSX guess. I really think we are getting prices like this:

XSS: $299

PS5 DE: $399

PS5: $449-$499

XSX: $549-$599

MS knows damn well they weren't beating the PS5's price point, since their APU is much bigger and they aren't interested in taking a huge lose on HW while they are focusing on streaming/GamePass. It's why we even have a Lockhart launching. And why all the talk of selling less than PS and Nintendo.