HDDs are a lot cheaper now than last year, too. With Sony\'s direct manufacturing contacts, I would imagine they pay very close to cost for these components, and some of their partners might even be willing to take a loss if it means they will make more money in related revenue.
I am still guessing they aim for $399 despite the loss, or $449 tops. At $500 USD, the console takes a big leap to \'out of reach\' of a large number of consumers.