The basic and enhanced PS3 consoles are priced at $499 and $599, respectively, much higher than any previous game machines and at least $200 above their next-generation rivals, Microsoft’s Xbox 360 and Nintendo’s Wii.

PS3 is betting a lot of money this time. The Blu-ray Disc high-definition DVD player and the Cell microprocessor, the heart and brain of the PS3, are expensive to make. Analysts at Merrill Lynch calculate that the Cell microprocessor costs $230 to make, and the Blu-ray optical drive about $350. Along with a hard drive, memory chips, and other costs, Merrill Lynch says, Sony’s bill of goods for each PS3 could be more than $715.

If those numbers are correct, and if Sony hits its target of shipping 4m PS3s by the end of the year, it could lose close to $1bn this year on the hardware alone, adding to huge costs for PS3 development and marketing.

Despite the losses, Sony could win big by populating the world with millions of Blu-ray high-definition DVD players, tipping the advantage to it in the battle to establish Blu-ray as the global standard for next-generation DVD systems, over the rival HD-DVD format supported by Toshiba and Microsoft.

Microsoft executives are gleeful at Sony’s delays and high pricing for the PS3. Microsoft’s Bill Gates says his company will have sold 10m Xbox 360 systems by the time the PS3 and Nintendo’s Wii reach store shelves.