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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