Does anyone know the current production cost of any PS3 model?

[blu-rayfan101]

I was wondering what is the current production cost of any PS3 model is . The reason I am wondering is because I remember when Sony did there first price cost they were selling at a loss, but are they still selling at a loss? Thanks in advance.

[Kyzer the Medic]

I can speak of past systems in that, while going thru school, I was the store manager at an Electronics Boutique (ebgames/gamestop). I quit shortly after the PS2 was lowered in price the first time. What I was told was that no matter how low they actually sell the units for, they are always selling the units at a loss. Retailers buy the systems from Sony/Nintendo etc for the same price they sell them for. As a matter of fact, at the time I worked there, if you purchased a game system with no games and used an American Express card, the store would actually LOSE money on the sale, because of the cost of using AMEX and no profit on the systems. With the new 399 pricepointed 40 gig system, I would assume that sony is still taking a 150-200 dollar hit per system. Of course, we all know what happens when you assume.

[blu2]

Originally Posted by blu-rayfan101

I was wondering what is the current production cost of any PS3 model is . The reason I am wondering is because I remember when Sony did there first price cost they were selling at a loss, but are they still selling at a loss? Thanks in advance.

Don't know the answer... The Sony gaming division did much better last year, but was still in the red for Fiscal Year 2007 (ended March 31). The following slide attributes the improvement partially to PS3 cost reductions.

http://www.sony.net/SonyInfo/IR/fina.../14_slide.html

[Riff Magnum]

If true, this would really blow my mind. Do they spend that much on research and development, because i would guess the actual production and assembly is pretty cheap. So their bread and butter is actually coming from the games and accessories? Huh.

[Kyzer the Medic]

when it comes to systems, yes, 100 % of the profit comes from games, controllers, remotes etc..

[ussrelativity]

I do know that earlier this year, it was stated that the costs were down to $400 per unit. They might be a tad lower now, but later on this year, and eventually when they get down to the 45nm process, the costs will be even lower than that. Currently, for the 40GB model, things are about even.

I'd like to see a new PS3 model with full backwards compatibility and a good hard drive, manufactured with newer chip processes for a low price someday.

[Anthony P]

If true, this would really blow my mind. Do they spend that much on research and development, because i would guess the actual production and assembly is pretty cheap. So their bread and butter is actually coming from the games and accessories? Huh.

it depends on the cycle. Early on the tech is always real advanced and the units sold smaller, so most lose or barely brake even on production (They need to be relatively inexpensive and create a market) they also know that the guy that needs it the first day or the first week or the first year most likely will buy many games. At the end of a consoles life they usually make money on it because the parts are out of date and old. They need to sell a lot of consoles so that game developers will have an incentive to make games for it. It is a bit like the cell phone companies buy a cell phone for cheap (or free) if you sign a three year contract.

[Kyzer the Medic]

Same with most electronics, companies make very little from the actual hardware, which is why when you go to Best Buy or Circuit City etc to buy your bluray player, they throw monster cables at you and make you believe you need them. Are they better ? Hell no, but when your gross margin on the bluray player is 3% and your gross margin on Monster Cable is 75%, thats where all your profit comes from

[Anthony P]

Same with most electronics, companies make very little from the actual hardware, which is why when you go to Best Buy or Circuit City etc to buy your bluray player, they throw monster cables at you and make you believe you need them. Are they better ? Hell no, but when your gross margin on the bluray player is 3% and your gross margin on Monster Cable is 75%, thats where all your profit comes from

that is retail level not manufacturers. Panasonic does not make money if you buy Monster cables with their BD player but Sony (or MS or Nintendo) make money if you buy a game for your console.

[tron3]

I dare adventure to say that PS3's of today are at least a little cheaper to produce overall than the first units to hit the assembly lines. Doesn't mean the savings is passed along when you are already losing money with each sale.

A product like this is expected to have a shelf life of many years as a sellable item. They are always looking for ways to reduce components, or design single chips to take place of discreet circuits or multiple chips. I'm certain you can find changes on the motherboard or revision changes on the chips themselves.

Now when it comes to items like standalone players, they become smaller and cheaper each year because they can basically improve upon that first basic design over and over. Who cares if features change? It's a new model! Gaming systems don't have as much wiggle room for change except in the user updateable firmware. They need to remain more consistant.

[WickyWoo]

They're always consolidating chips on the board, that sort of thing

They sell the PS3 at or under current actual cost of production of the unit (not counting R&D). The first systems ran north of $800 each to produce, now it's between $4-500 depending on which one you get

It's safe to say the 80GB makes a little money while the 40 loses a little money

[Elandyll]

Stinger has publicly said that the PS3 is no longer on "life support", which would hint at it being in the black.

[brett_day]

i would guess that sony is making a tiny profit on the systems these day. As companies get better and more efficient at making products, their production costs go down.

IMHO Sony never really set out to make a profit from the machine....they put all their eggs into one basket and hoped that blu ray would take off and they were hoping to make all their profit from the sales of Blu's. I think that gamble worked out pretty well for them. Also the profit margin for them from sales of peripherals is through the roof as well.

If they do or are making a profit from the ps3, that will just be the cherry on top of the cake for them!

[Clark Kent]

It has to do with the way companies handle the accounting of the situation. Just based on the current raw costs to manufacture a single PS3 Sony is probably breaking even or even in the black. But Sony still hasn't broken even considering the enormous investment they've made in assembly lines, R&D, etc.