The thing is, if you look at international exchange rates, a $450 PS3 launch would actually be about the same as the $300 PS2 launch was. The consumer might not see it that way, but from the perspective of the Japanese manufacturer US dollars just aren't worth what they once were, and since they're not manufacturing the consoles here they either need to raise the price or eat the cost difference. Microsoft in all liklihood will just eat the cost (since they've subsidized the hell out of their hardware from day one), Nintendo always manages to keep their costs to a minimum anyhow (and was actually somehow able to manufacture Cubes for less than the $99 they retail for). Sony's not in the same position, and I think the arrogance of being the leader for two generations combined with having the best visuals might lead them to believe they can justify the higher price.