An applied intelligence company that’s named Isuppli, tracks electronic market information, and they have broken down the costs of Sony’s 20GB and 60GB PS3 systems. It costs Sony $805.85 to make the 20GB PS3, which means they’re selling it for a loss of $306.85, and it costs them $840.35 to make the 60GB PS3, which nets them a loss of $241.35. Check out the breakdown of the costs, part by part for the PS3 at the Isuppli website
This is nothing new – most of the video game companies sell their systems for a loss when they initially come out, and they recoup most of their costs in what they make off each individual game. However, Sony’s banking on starting things off with a very limited release schedule for the system, and with a very small game market as well. There’s also no indication that Blu-Ray technology and the new format will take off. So Sony is potentially backing themselves into a corner with their marketing strategy, where they have to hope that they can pump out enough PS3’s in 2007 and 2008, and sell enough games to just break even. Typically, these kinds of “hail mary” economic marketing strategies don’t always work out – but the payoff, if successful, would be tremendous. Sony will either succeed beyond its wildest dreams, or they’ll crash and burn. Time will tell, although Nintendo and Microsoft do have the initiative in the short term.
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no way is sony close to breaking even expand your thought process and think beyond retail which they lost millions think about r&d money easily over a billion thats a conservative estimate by the way how is that money being recouped it isn't sony was banking on the fact that people will buy it cause it says sony and blu ray taking off like dvd they were 40% right about the former what other company would be forgiven for releasing a sytem devoid of software but like i said alot of people grew up with playstations and got used to that horribly 2 gens ago controller as for blu ray ps3 was supposed to sell it not the other way around remember sony cant afford to lose like that too much longer after all they're not m$ they are also losing share to samsung and other korean competitors on consumer electronics i hope ps3 succeeds but when you think about it it's already a failure as it was hyped to blow everything else away and last 10 yrs whos buying that in 4 years the tech will make all current gen consoles obsolete it's more a question of how long the makers will continue to profit from it before releasing another system those that can afford to anyway
All these analyst assume that Sony/Microsoft/Nintendo buy their parts at the same price that you and I can buy them at NewEgg. This is far from true. If you and I buy a hard drive, we get it for $40. If we offer to buy 2 million hard drives, the price drops down to about half that.
As for assembly costs, it is assured that these guys are just making stuff up. If nothing else, Sony knows how to assemble stuff inexpensively.
Ok ok, so after all that, you say "yeah Bob, but they've got to be losing something". I say "maybe, but why not say "we think they're losing $100-200". Instead we get these "experts" telling us to the penny how much sony is losing when it's clear they have every fact wrong.
I suspect if sony is losing anything, it's less than $50. But it's likely they're breaking even.
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An applied intelligence company that’s named Isuppli, tracks electronic market information, and they have broken down the costs of Sony’s 20GB and 60GB PS3 systems. It costs Sony $805.85 to make the 20GB PS3, which means they’re selling it for a loss of $306.85, and it costs them $840.35 to make the 60GB PS3, which nets them a loss of $241.35. Check out the breakdown of the costs, part by part for the PS3 at the Isuppli website
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