Sony Still Loses Money on PS3 Despite Massive Cost Reduction

Sony has trimmed down the costs of manufacturing its next-generation PlayStation 3 gaming consoles by 35 percent, to $448.73, according to a recent reports by the analyst company iSuppli.

According to the tear down report from iSuppli, the original manufacturing cost of PlayStation 3 is $690.23, excluding the costs of box contents, royalty expenses, and software prices.

Despite such a significant cut, Sony is still suffering losses over the devices, as the price tag of PS3 gaming consoles in US sits around $399.

However, the losses with the revised manufacturing costs would be far less than that of before, and along the same line, iSuppli’s analyst Andrew Rassweiler said, “With its new-generation PS3, Sony has come closer to breaking even, although it probably hasn’t quite reached that mark yet”.

Along with some key hardware modifications, Sony could well reach the breakeven position in the upcoming year, the analyst firm added.

Sony has saved significantly over the Cell Processor from IBM that has been replaced by Cell Broadband Engine from IBM, which priced around $46.46, 28 percent lower than cost of the first-generation hardware.

Apparently, such reduction is unlikely to boost PS3 sales, which is struggling hard in the lights of Microsoft Xbox 360 and Nintendo Wii.

Furthermore, analysts have purported that the fading sheen of PS3 consoles is primarily attributed to high price tag of the device, and with global economy is in real turmoil, the road doesn’t seem to be smooth for Sony.

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Our Comments

Sony's PS3 gaming console is an expensive piece of kit, albeit a very powerful one. The PS3 is currently lagging behind the Wii and the Xbox 360 and, even with the steep reduction in price, is still bleeding money. Hats off to the Nintendo Wii though, not only for selling the most consoles, but also for being the only company amongst the three to turn a profit on each Wii sold.

Related Links

Sony PS3 Costs Less To Make, But Still A Money Loser

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Report: PS3 manufacturing costs drop 35 percent

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Sony Cuts PlayStation 3 Costs; Will It Matter?

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Why Sony needs to (but can't) drop the price of the PS3

(CNet)

Sony Can Make the PS3 for Less, but Does It Matter?

(Tech News World)

Breaking Down the Dropping Parts Cost for Sony's PS3

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Sony Cuts PlayStation 3 Component Costs by 35 Percent

(PC World)

iSuppli releases BOM report on PlayStation 3 costs

(After Dawn)

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