Is Sony even really going to break even at $300? I really doubt it. First, it's got a huge, gorgeous screen. It really is one of the most clear, vibrant screens to grace a handheld device.
Do sony make their own? If not, fair point
Second, it's extremely powerful.
Based on PS2 tech, power != high cost - thats already been recouped. All you are paying for is rework, which isn't that expensive.
Third, it's packed all that power into a tiny space.
At first glance, its expensive. But it might not be tiny, just small.
I.e. most of the system on one chip is actually cheaper to produce than PS2 (the old one anyway), and makes it smaller. Real miniaturisation like cell phones is expensive, but there is a mid-ground where you just pack normal efficient tech into as small a space as it will take up, without engineering complex and expensive solutions.
Fourth, a lot of the technology is proprietary to Sony and not off-the-shelf like Nintendo's components are.
Mostly dev costs already recouped from PS2 tech, so probably cheaper than off the shelf stuff - less license fees to pay. Plus Sony has its own fabs (don't know if Nintendo do?)
Fifth, it has a more complicated medium-reading mechanism since it uses discs.
Fair point