Sony has managed to cut the cost of making a PS3 by 35%, and in the process cut the loss it incurs with every machine sold from $290 to $48.
Market research firm iSuppli has reported that based on October component prices, the PS3 console now costs $448.73, rather than the $690.23 it cost in mid-2007.
Sony's PS3 sells for around $400 in the States, and iSuppli thinks that the company could even start to break even on consoles in 2009 with further hardware revisions.
Apparently Sony managed to cut its material costs in the second-generation PS3 by using more advanced components. This has in turn led to a lowering of the console's power consumption, which has meant Sony can also use a less expensive power supply.
Whether a lower manufacturing cost will see a drop in shelf prices remains to be seen, but you probably shouldn't hold your breath just yet.