The processor they use is as powerful as most processor used in PC today. As you all know that process are very expansive, let's set the price for the processor about $150 (reasonable enough?). Next comes the grahpic card, i haven't analyse the spec. for PS3 but from what i heard, the graphic is amazying. so i'm guessing the graphic card would price around $120+. So far with just the processor and grahpic card, that's half of the price for the PC 3. Also, they are going to embed the latest blue-rey disk drive, which will cost alot because it's so new. Let us say it cost around $100 for the disk drive.. that's $370. And another $150 for the other hardwares included in the ps3 (controllers, motherboard, case, ram.. etc. ). And of couse..they have to pay the employees money to develope the system, so it actually adds up to the price.