I see, well the question now is what is the price MS is going for? because if they can't match Sony then they wont have an advantage at all.
Well that's the kicker and the silver lining to the whole thing. The PlayStation 5 probably has a similar BoM if not even more expensive. I think Microsoft did their homework extremely effectively, they knew their storage solution would be more than ample to handle anything that could ever possibly be required of it and with this cost saving they were able to divert those funds into the rest of the compute engineering.
Sony's SSD is without a doubt the most expensive aspect in their system, and given the amount of money poured into that the rest of the system suffered computationally. Their cost offset is likely proportional, the extra money they put into that SSD is the money Microsoft put into their GPU, CPU and memory subsystem.
They can no doubt target exactly the same price, and actually given Microsoft's financial footprint they could possibly even go lower. Mike Ybarra put it best just so you can understand the difference between these companies.
This was directly related to price matching for competition, basically Microsoft could lose money on this and it would be the equivalent of a rounding error, for Sony it would actually have a real financial impact.