Although the price is already subsidized, $500 or $600 is high but I think people who want one will find a way to pay for it. It is, however, the investment risk for a $500-600 console. Typically, launch/early consoles haven't had the best track record for reliability.
With low launch numbers and the blu ray laser as a manufacturing bottleneck, one cannot help but to think that maybe Sony relaxed quality control to allow more machines to enter the market. The possibility of a premature laser burnout, among other possible defects, is a big deterrent to pick up a PS3 , should it repeat the history of its predecessor.