According to Merrill Lynch, because of the cost of hardware components, the PS3 may cost twice as much as the Xbox 360 by the end of 2006. The report includes estimated breakdown of hardware costs by component at the time of launch and 3 years from now.

The new figures show that the majority of the cost are from the Blu-Ray drive, and the Cell processor which total $580 alone. After three years, the manufacturing cost of the two will drop to $180 total.

Several months ago the same team released data which compared the cost of the PS3 to the Xbox 360 (see below). As you can see, the estimated costs of Blu-Ray and the Cell Process have increased dramatically.

On the cost of goods side, Merrill Lynch believes that the Cell processor will initially cost $230 to make which is more than the Xenon CPU which currently rings in at $100.

Though price reduction will eventually drop to approximately $30, both the Nividia