Yeah...Sony has reached profitability faster than all expected, on the ps3!

I don't think there is much lost opportunity cost.  Unless Sony was going to lower the cost of Uncharted to $30, Sony wasn't gonna sell a boatload more copies of the game.  Sony have have even made too many copies and may be cleaning storage space by bundling the game.

Or Sony could be giving away Uncharted to promote Uncharted 2. More potential Uncharted 2 buyers if more people play the first

I totaly agree. Sony has already sold enough copies of PAIN and Uncharted to cover development costs, and since they are first party titles, they can pack in uncharted for only packaging cost, and PAIN at absolutly nothing. That leaves only the bigger HDD which as ssj12 said, only cost about 10 more at the most.

So with all that said I think Sony are doing even better than ssj. I figure the 160GB would cost about 460 to manufacture and ship, with Sony selling to reatail at about 480 - 485. Thus leaving about 20 to 25 dollars of profit per unit sold.

The 160 GB model is obviously much better for Sony's wallet, and I agree with that part of the analysis.

However I wouldn't take those iSuppli numbers too seriously, especially since they don't show us the impact of exchange rates on production cost. They also don't show us the price at which Sony sells consoles to retailers, or the price of all the cables, controller etc which is added onto the console, packaging, shipping... So many small things have to add up to something.

Except Sony sells at wholesale prices, not RRP
Plus exchange rates are playing against Sony big time as that US$499 doesn't get Sony anywhere near as much as it used to
It may be break even, but that's as close as it would be IMO

I'm sure that they're making a bit of profit on the 160 GB model, but Uncharted would cost them more than $1.00 because there are more cost to a game than just the disc (even if they have covered development cost already)...but you're right, they're still making a decent profit on it almost certainly.

 they also buy for cheaper too.

What do Sony buy from the US?

I was under the impression that that was merely the component cost: It doesn't take into account the costs of actually putting the machines together, which could be quite high, as well as shipping, leases on warehouses, and retailer fees.

Secondly, I would be amazed if the retail markup was less than $50. Traditionally, retailers sell at double their cost: retail markup is 100%. A $50 markup would be around 10%