That's one thing. The other is price. Consoles can be sold at a loss, particularly early in their 10-year cycle, when early on the loss is high, but close to the end of the cycle the loss is minimal, and so they appear much cheaper.
Oh, for sure! It's not getting any better with PC part prices lately either...
I've never considered that my old 360 was probably sold at a loss, knowing I'd buy LIVE and all the games they take a cut/license fee off of, but that makes complete sense to me
This cycle is different. Prices have increased for both Sony and Microsoft’s consoles and no higher efficiency versions have been released (ala the PS3, X360).
Given recent price rises for console hardware I think they're struggling with that too though. The model doesn't work as well if the components get more expensive over time and not less?