PS3 “Almost Breaking Even”

ps3-slim-2_0

Analysts are reporting the PS3, each unit of which has famously sold at a substantial loss since its release, may be approaching the point at which Sony is actually making money on hardware sales.

Industry analysts report the cost of the PS3 Slim’s hardware components have now dropped to $336, though the units sell for $299.

ps3-slim-cost-breakdown

At launch the console was estimated to cost Sony $805, selling for a maximum of $599, and by 2008 the $399 console was thought to be losing $50 per unit.

They explain:

“Since the introduction of the PlayStation 3 in late 2006, Sony has subsidized the price of every console sold, a deficit the company has made up for with game sales and royalties.

However, with each new revision of the game console hardware, Sony has aggressively designed out costs to reach the hardware and manufacturing breakeven point as quickly as possible.

The latest version of the PlayStation 3 manages to further reduce the loss, even with the U.S. price of the console having fallen by $100 during the past year.”

They even hold out the possibility of Sony actually making money on the console with continuing reductions in component cost:

“In light of these factors, the PlayStation 3 probably is already at or near the tipping point for profitability,”

Marketing and distribution costs, as well as the razor thin profit margins enjoyed on base units, are not included in these calculations, although selling hardware at a loss to recoup profits on media sales is far from poor business sense.

In comparison, the rather more basic hardware of the Wii has supposedly been selling at a profit throughout its history, whilst the Xbox 360 has apparently been sold at close to break-even, apparently at the expense of reliability

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99 Comments

  • Hmm… Kinda hoping they remain stuck making losses so sales price would be forced to go down, but then I might be wrong. Heck, I’m no business bloke.

    I might be contradicting myself here – The latest model is a lot different from the very first one mainly due to removal of many features and different (cheaper) hardware components. It might even be safe to say that hence, it got inferior as a side effect of countering production-to-sales losses.

    So, for a cheap product, I’ll be getting an equally cheap quality item? Wonder if [url=http://www.sankakucomplex.com/2009/08/18/xbox-360-failure-rate-54/]Xbox360’s somewhat legendary reliability[/url] is a tell-tale sign for [url=http://www.sankakucomplex.com/2009/08/25/ms-on-54-rrod-we-have-a-good-warranty-so-its-ok/]things to come[/url]….

  • So manufacturing and testing is only $9.81.

    If the PS3 was made in the US or Japan instead it would not be $200 but instead a mere $40 at most.
    In a first would country there would be less man hours of labor due to use of robotics.
    Or manufacture it in Mexico as it would be just $28 more even without robots.
    BTW Mexico does make quality products the IBM PS/2s were made in Mexico and those things were tanks.
    I’d gladly pay an extra $30 without a complaint to have it not be made in China.
    BTW if they did the plastics casting and PCB layout via automation in the US and had them assembled in Mexico they’d actually be even cheaper over all.
    Partly because all the parts would be riding trains which use less fuel then any other method of transport.
    Bad part they won’t be falling apart for 20 years like Atari 2600s.

  • Just to educate everybody…the “point” of the PS3 for Sony was not exactly to produce a fantastic gaming console (to say nothing of the competition, which is also great).

    Instead, the purpose was to ensure the victory of Blu-ray. The licenses for CD and DVD have been worth multi-multi-multi-billions over the years. You would have to be really dumb to let go of that revenue stream.

    • ChaosAngelZero says:

      Lol yeah, of course, that’s Sony’s trademark “forward thinking” alright.

      They saw the CD was getting replaced by the MP3 format/players, so they go and manufacture the very first (and only, to my knowledge) portable player that doesn’t play .mp3 files. Then they saw high definition contents and thought “physical media!” in a world essentially bursting with digital contents and distribution, something that Microsoft leads and they laughably “follow” with the half-assed, proprietary, publisher-repellent corporative embarrassment they call PSPgo.

      But hey, good luck with that! “It only does everything”… lol.

  • Well thats some good news for sony, I mean it’s about time but like you lot are saying the new ps3 model is seriously stripped out to reach that price. My ps3 is the 60gb version that also plays ps2 and ps1 games i mean they must have made a huge loss on them.

  • I’m not a techie. I have zero interest in all the “potential” applications and I’d be lying if i said I even knew what they were.

    I barely use 25 percent of my PS3. I play games and watch blu ray movies. And I’m one of the cheap bastards who heldout for years waiting for this price drop that hit in september. Then again I did the same thing with Xbox.

    I feel petty good, and I’m glad sony is doing pretty good.
    Now if only North America gets Vesperia on PS3 I’ll be gold.

  • Of course, they removed a lot of features along the way to reach that price too.
    Current PS3 models are crap compared to the original one, which even had a EE+GS processor (basically a full PS2 system inside). You can’t even install a Linux distro on the current models.

  • ChaosAngelZero says:

    Good news, for Sony at least: the PS3 Slim sells in Japan for ¥29,980, that’s approximately 339 dollars (they’re doing a very small profit out of each Japanese console), and for £244.69 in the UK, approximately 398 dollars.

    Looking pretty good, if you ask me.

  • How badly uninformed some are is quite surprising seeing the love for their console.

    Industry analysts report the cost of the PS3 Slim’s hardware components have now dropped to $336, though the units sell for $299

    So no, no profit is being made, it’s still being sold at a loss although a smaller loss than ever before. Also note the title ALMOST breaking even..

    Yes the PS3 had some pretty innovative plans, it wasn’t even supposed to have a videocard.. but they put it out in a rush (probably due to the xbox360 already being out for a while). The plan wasn’t to even include a videocard and let the Cell processor do all the work, but due to doing it in a rush they just threw a videocard (oh hello additional hardware costs) to get it done in time.

    Personally I don’t give at rats ass about either console as they’re holding back the PC market which can have graphically superior games.. but 99% are badly programmed console ports that don’t even run properly on superior hardware and have strange console based controls (combination of keys instead of simply assigning another key – keyboards have a few more keys on them than a gamepad)

    • CC is that really you???(the CC i remember was kinder…)
      all and all it has come a long way from day one and im(g)o(i’ll just go and save anon the time) thats what really matters.
      but you’re right PC is the best and it’s a damn shame she has to wait months for crapy ports of crapy games.

  • while Sony is working on reducing the cost of the Ps3 i haven’t heard anything from the M$ camp claiming they’re even close to breaking even on x360 although they should makeup the difference with the halo fanboy’s money

    • Quite the opposite, actually, especially Nvidia. Note that they’re only selling the chip, they’ve reduced material cost by shrinking from 90nm to 65nm last year, and that they’re manufacturing based on a 2-generation-old architecture.

  • inb4 RRoD BETA TESTER FAGS GETTING TOLD.

    …you’re not saying anything, Mysterious Voice.

    Mysterious Voice: “I’ll wait until you say something stupid before I say anything, and you haven’t said anything stupid yet. Which is a welcome rarity.”

  • well, somebody has to push the technology, the wii, and sexbox used old technology, and will have to come out with a new console “just” to catch up to the ps3. so i prase sony for taking chances and pushing boundrys.. also doesn’t hurt that the ps3 won them the format war with blueray… Marketing Genius!

    • If Microsoft (not sure about Nintendo, given the Wii) came out with a new console, Sony would very likely have to do the same just to keep up with the times. You really shouldn’t buy into the hype and spin.

      Furthermore, no game console will ever be “pushing boundaries” or “pushing the technology” so long as PCs exist. Regardless of what you think the best console is as far as technology goes, the best PCs are still years ahead.

      • you should be sure that if nintendo came out with a new console ps3 would still beat its behind. because nintendo isn’t about being on the edge of technology which is required to actually compete straight up against sony or microsoft.

        • Erm, Nintendo actually has more disposable income than Sony. The reason Nintendo doesn’t bother with eating losses on hardware isn’t because it’s a financial risk – it’s because it’s a poor business move.

          The Wii will end up making more money than the PS1 and PS2 combined.

        • what anon 15:33 meant is that Nintendo couldn’t put out a console that sold at a loss like sony. Nintendo doesn’t have tons of disposable income. So they positioned themselves with a low powered console that would draw people in with the new way of interacting with games. The fact that it is so popular isn’t because its that great but more along the line that the wii became a status symbol to own, partially. there are more reasons why games have sold so well but it has little to do with how good the system really is.

        • What are you on about? Nintendo can’t “compete straight up against sony or microsoft?” The Wii sales blow sony and microsoft away! It is sony and microsoft that cannot compete with nintendo.

    • the wii used old technology including the wiimote. The diffence is wii packaged it as somethin new. It is “new” simply because no one ever put it in a console before. but the sexbox really didn’t use old technology it kinda went in between old and new technology. the processor in the sexbox is the unfinished cell with higher a higher clock and gpu was ati

      • and gpu was ati’s unreleased chipset optimized for microsoft’s wants. The old in it is the dvd rom drive which is still some capable of putting up with blu ray. Just because blu-ray is the future doesn’t mean dvd is dead yet. They are still working on new compression methods to fit more onto 360 disks.

    • Sony is doing just fine. Nintendo might be making money with each console but because there gamers are casuals and there game library small they don’t sell that much games. Sony gets a lot more money from game sales.
      Also if we take in to account the people who bought X-Box because they can play pirate games(not to mention those who bought second and third after it broke) then you will realize that Microsoft actual sales are a lot less(No profit from a guy who bought a console but never bought any original games).
      Also Sony risked selling on loss to win the HD disc war. And now that she made it, Sony will get even more profits.

      • What you posted is complete nonsense.

        I suggest you take a look at some of these companies’ financial reports. It shows Sony’s game division losing over 4 billion dollars in the past 3 years, while Nintendo has made over 12 billion (can’t remember exactly).

        The PS3 is selling the least amount of software out of the three consoles. That’s a fact, no anecdotal evidence will change it.

        • Hey am glad they can make profit. I don’t want them to disappear. I love Nintendo. I still have my Nes with the big Mario Bros tape.
          It’s also good for the competition. But the Wii for me is a product that deceives it’s buyers.
          The whole controller thing seems nice but you get bored of it very easily except if you are a 10 year old that loves jumping up and down all day and there are no good games to buy except from very few exceptions.

        • Yah but those are from third parties, so in the end its all more money for nintendo, you can criticize them all you want, but in the end nintendo is making a wonderful profit from both, consoles and games.

        • When you have only ten games worth buying off course they are gonna make big sales especially when so many have the console, but i wonder how much sales to they get from all the other games?
          I know what am talking about. I bought the Wii because i thought the idea looked cool like every other idiot around and i bought a few of those games but after 2 months i couldn’t find any other decent game and i got tired of jumping around and i preferred sitting with my conventional controller. So the Wii ended eating dust in the closet until i got ridden of it. And you will be surprised how many can share a similar story.

        • not only that. look at the new exclusives for the ps3. the only thing i hear that xbox has is natal. sony may be losing cash but i bet theyre smiling at the future to come. also sony has been in the gaming biz longer that microsoft. and within that time they destroyed thier competitors. theyll find a way to overcome. ps3 aint quittin yet. oh yea. nintendo kicks ass.

  • BlackEpsilon says:

    Finally the PS3 is starting to make some cash. They deserve it too. The PS3 isn’t for the feint of heart, and it’s definitely for the hardcore players. You don’t hear about people being reported or getting banned. And there’s a ton of cheaters too. Have you seen the MW2 leaderboards? Jesus Christ. But no one ever cares. We play to kill, talk shit, and then that’s it. If you don’t like someone you put them on the naughty list and you never hear from them again. On the 360, you report they guy, rate the guy, then ignore the guy. What the fuck man? PS3: Fuck you buddy. And then ignore them. I mean come on. The 360 even has those gamer things with the Pro, the Underground, etc. Not even sure what those were for.

    TL;DR version: PS3 is for us douchebags that make fun of your mom, then your gaming skills. And then if there’s time, your voice for sounding like a kid.

    • It’s class of AI match ups for online versus.

      Supposedly if you say underground (hardcore) whatever when seachinng for a partty or a game it first searches for other underground players and then works down the list.

      Later I heard they abandoned that AI system and just use it as a way for noobs to know if the person they ar challenging is basically capable of handing their ass to them.

  • Microsoft don’t need to breakeven. They got Bill Gates. (Just because he retired, doesn’t mean he still owns part, or lot, of it)

    That being said, I do wonder to myself, how much money did they made from purely console sale on older gen consoles?