Report: Sony losing hundreds on each PS3

iSuppli breakdown pegs cost of manufacturing $499 20GB console at $805, $599 60GB console at $840.

When the Xbox 360 went on sale last year, BusinessWeek commissioned tech researcher iSuppli to take apart the console and estimate how much it cost to manufacture. The firm concluded that, including all pack-in accessories (hard drive, controller, cables, and so on), each premium 360 set Microsoft back some $126. Before labor, just the parts it took to make the console cost $470--$71 more than the full-fledged system's $399 price tag.

This week, iSuppli conducted a similar cost-analysis study of the PlayStation 3--with even more shocking results. According to the study, the hardware for the 20-gigabyte PS3 costs $805.85 alone--$306.85 more than the stated list price of $499. The 60GB model hardware costs $840.35, $241.35 more than the console's $599 sticker price.

Neither of the iSuppli estimates includes the cost of the A/V cables, power cord, or Sixaxis controller that come bundled with both models of the PS3. The initial launch shipment will also come with a Blu-ray disc copy of the Will Ferrell comedy Talledega Nights. "The size of Sony's loss per unit is remarkable, even for the videogame console business," read the iSuppli report.

However, despite the steep price, iSuppli still thinks the PS3 delivers plenty of bang for a buyer's buck. "The reason why the PlayStation 3 is so costly to produce is because it has incredible processing power," said Andrew Rassweiler, teardown services manager and senior analyst for iSuppli. "If someone had shown me the PlayStation 3 motherboard from afar without telling me what it was, I would have assumed it was for a network switch or an enterprise server."

Though it had no breakdown of the Wii, this week's iSuppli study did comment on the cost of another next-gen console. Thanks to streamlined processes and ample component supplies, iSuppli estimates that Microsoft now makes $75.70 per Xbox 360 console.

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Discussion

354 comments
shawise
shawise

[This message was deleted at the request of the original poster]

all-star16
all-star16

Sony needs to get some good games for the PS3.

Ryo-Hazuki
Ryo-Hazuki

I'd love to see educated Smigity tell us what computer has a CPU with 3 cores running at 3.2 GHz each.

Smigity
Smigity

gee I see its a ps3 article and Sony fans still wanna trash the Wii because they fear it will beat the mighty PS3.Oh you dont think that? then STFU about it and play ur overpriced blu ray player.Iamyellow you might want to get a clue as to what next gen truely is. The stuff inside the PS3 and 360 is just as obsolete as anything in the Wii. Maybe if u got out from Sony A$$ long enough to look around at PC's you would already know this

jACkaTacK1107
jACkaTacK1107

NEWSFLASH...PS3 SUCKS! GO WIIIIIIIIIIIIIIIII

Bansheesdie
Bansheesdie

Thats funny. Poor Sony, they loose all that money and people just sell the that box. :lol:

imayellowfellow
imayellowfellow

HenduKnight I wonder how much Nintendo makes for every Wii they sell. Its gotta cost them about an even 200 or 250 to make, hee hee (read, hii hii) err i dont think so i think it costs Nintendo pennies to make their Wii's i mean the technology isnt exactly revolutionary (i could say NIntento REVOLUTIONary heh little pun there) i mean i guess it has more RAM then then the ps3 but the rest of the stuff is sort of outdated (in the exclusion of the controller which really doesnt feel like its even that Nintendo REVOLUTIONary).

HenduKnight
HenduKnight

I wonder how much Nintendo makes for every Wii they sell. Its gotta cost them about an even 200 or 250 to make, hee hee (read, hii hii)

_Sam_
_Sam_

Wow, I didn't realize how much they were loosing

glitch303
glitch303

lol @ funkybar88s comment. Every company thinks and hopes they will make a profit from what they build. That doesn't mean it will happen, look at gaming companies like 3D0 and Neo Geo. Even the great Nintendo failed in the past with there redscope.

funkybar88
funkybar88

Nobody here is physic, so lets no act like it. Sony wouldn't build a machine if they didn't they it would turn a profit.

maxjc
maxjc

First off, Sony is losing a lot of money right now because their efficiencies of scale haven't kicked in yet because they haven't produced and sold enough consoles. That's why Microsoft also was losing money in the beginning. With Sony, this is heightened even mor by the face that bluray and cell are new technologies. Sony's loss doesn't even include the several million spent to build a new factory to produce cell chips. As far as what position Sony is in, not a good one. From a neutral perspective, adding blueray to their console MAY have but them in a very bad position. I say may because it's gonna come down to how many people buy the ps3. Right now Sony is already behind microsoft and will be behind Nintendo too since they won't have a steady flow of consoles available until probably march. This means the holiday season is open for the other two to pull ahead even more. This may be disasterous since that's the biggest selling time for consoles. Now as far as how many consoles Sony will sell, because they're already behind and will have a much more expensive system, they may not be able to regain their loss ground. Even if you buy the $500 version after tax and one game, you're already at $600 bucks. This isn't even including more games or an extra controller, or the new tv you'll probably need to take advantage of the ps3 graphics power. My guess is that most gamers won't want to pay that much money for a game system. With microsoft probably dropping the price of their console in the next few months, and a $250 dollar alternative with Nintendo, Sony's future doesn't look good.

ItalianIc3
ItalianIc3

oh boo hoo, they usually don't make money on the hardware, but the software and all accessories, (stuff on the marketplace for 360) etc...

fastpunk
fastpunk

I don't think Sony is going down, they got the resources to bounce back, but the PS3 will never be profitable.

Xeroshift
Xeroshift

[This message was deleted at the request of a moderator or administrator]

rouguesquadron
rouguesquadron

Yes. I always said that the PS3 was Sony's big mistake, and now it looks like I'm right.

kampz1
kampz1

dgqman, what does "lose a lot more money on profit" mean? Maybe proofread your flacid post next time.

dgqman
dgqman

Sony is very smart. Look at this way. When you buy the PS3 you get the system. If you buy the accessories you making up for the lost . See no one was thinking of it that way. See if Sony sold all the accessories then they would lose a lot more money on profit. So in a since they are making more. Hope this put a little light in you minds.

tr00pa_26
tr00pa_26

sony did it to itself....will the powerful console its hard to carry it all around

Cloud737
Cloud737

Thinking about this a bit more, I suddenly got an idea. Why doesn`t Sony release the console for $3000 (or even $5000) in the first place (there will be lots of idiots to buy them), and after 2 months, after all the chaos has gone, lower the price to $500 or $600? That way they can sell the consoles AND make a profit ($3000-$800 manufacturing costs=$2200) and not take a loss for each console. And there`s one more thing this brings: there will be less eBay auctions as scalpers don`t have that much money to spend, even if they plan to sell it later for profit. Just imagine how someone will feel if they bought 3 ps3s at $5000 each. That sums it up to $15000, and will make them feel uneasy because there is a not-so-slight possibility that they`ll be stuck with the consoles (especially after 2-3 months after the prices fall). What I wouldn`t give to see them crying in this situation.

ApeEscapeExpert
ApeEscapeExpert

Ouch, I hope Sony can get back on track for the sales of the PS3. I can't wait for that new Ape Escape title coming up for the PS3!

GrimBee
GrimBee

"This story prove what PS3 fans have been saying all along for the price the machine is a great bargin. We get everything we need for a slighty higer price" Excuse me, I dont NEED a movie player.. i need a games machine. If bluray was seperate and a ps3 was avaliable with a bluray-less (for example) version for the same as a 360 premium.. basically I would go for that. But Sony are clever, they are using the ps3 as a means to front their bluray format. Its like the board of directors said "playstation AND new format equals lots of money!". If they were so confident about their media format, they wouldnt need to include it in ps3 as standard. But they are using the popularity of the playstation brand to make it popular. Im not too sold on that idea. The psp is failing purely because of UMD, if it was more versatile and actually UNIVERSAL then it would be something at least. But because they push that memory stick pro duo format, and have you either purchase a UMD OR an expensive memory card (to watch movies..) you have to pay out the butt either way... I like Nintendo's strategy, especially with the DS. You stick in a game and you play games, great games. If sony said "here is the psp, it plays games right off memorysticks!" which cost the same as a normal game, we would all appreciate the longer battery life, the far quicker loading times etc... the psp could even be made slimmer! But because they want to make money from the UMD format, and using movies to front the format to others so they can reap the royalties... this bogs the psp down to what it is now. If the ps3 doesnt become mainstream, you can bet that only ps3 exclusive games will use the bluray space, as most games will be made for the wii and the 360 in mind. This means that If the ps3 doesnt have the mainstream market, this means bluray wont commercialize and it will remain an expensive format (like umd is still). I don't like the idea of forcing media formats especially with consoles. It was different with cartridge based systems, but each cartridge was about the same size between all consoles of the 16bit era, maybe some subtle differences etc.. but more cost more because it wasn't mainstream. My prediction is that the wii will dominate, the 360 will be second and the ps3 will slowly creep up. When the ps3 finally starts to show us what its all about, the xbox 3 will be out aswell as a new console... which is why Im not sold on the whole "future proofing" of the sony console. I want a ps3 to play mgs 4, not watch movies.

SnakeVenom3000
SnakeVenom3000

Simplay stated, this sucks for SONY. SONY had to take a huge price cut to get it out and people but it and sell it online for $2500-$5000. Also, you DO get nickle and dimed for accessories. No HD cables included, parts of games cost alot of money that should be part of a normal game. There is not 1 accessory you have to buy for the XBOX360. If you get the XBOX360 premium bundle, it comes with everything you need. It is up to you whether or not you want to buy the other accessories that are totally optional.

Outsider6342
Outsider6342

I don't know why so many people bash on Playstation 3 i own one now and i don't see anything wrong with it ok so its pricey but if you don't like the price then don't buy it its simple math you want it or you don't plain and simple and i think i paid a decent price for what the blu ray player alone is worth and so many people acted like every single system was a lemon but thats not even the case 25 to 30% were said to be lemons and theres not even that many reports about the system screwing up like people said it would so stop all the ignorant bashing on the system if you don't own one

kornbeaner415
kornbeaner415

This story prove what PS3 fans have been saying all along for the price the machine is a great bargin. We get everything we need for a slighty higer price but we are rarely nickel and dimed for "ACCESSories" that are needed to make the machine run to it's full potential. Does anybody need a HD-DVD drive or a charger for their wireless controller. Sony fans don't it's already included.

coneman1
coneman1

Well I guess this means that it will be another couple years before "SONY" gets out of the" RED" and maybe into the" BLACK" and that's a big maybe . Hell, not even the PSP could pull them out of the "RED"But the good thing is that you'll be able to buy SONY Stock for less than half the price than it is now! Unless this is the final straw and the Big S goes into receivership.

dragkill
dragkill

"And this is news how? With the exception of Microsoft beginning to get back in the black off of each 360 after only a year, this article just states the obvious." Well in the media industry, you need stories, and sometimes, you have to reinstate some old media to get new media. :P

Pete138
Pete138

Tera, its simple. They make money through the games, through the use of blu-ray. thats why its called an "investment." They shove blu-ray down the public's throat. Who makes blu-ray......., Sony. thats who. They sell their dvd's. They sell their online. Stars and stripes around online BTW. And last but not least, with the small amount of systems around, and basically being completely sold out, do you think they lost money. With the controllers and all the other bullsh1t people buy with these things. Man i wish i had a market like sony's market. Then i would be, hmmm.. then i would be sony. The 1 thing that does make me wonder is, Ok yea 599 price tag. But thats retail. I wonder how much they sold their consoles wholesale to all these game stores. Not only eb-gamestop. But all these little independants or whoever. They probably lost more than 200/per unit. I predict sony going down because of blu-ray. I have confidence in them making there money back through the games, but that blu-ray just doesn't cut it. Especially with third party developers now having to make 20, 30, even 40 GB games. Most will just stray away and stick with the 360 "familiar" console. But that blu-ray aint gonna sell to the public. Thats where sony messed up. But hey, an investment is an invesment. I wonder where itll take their CEO Mr. Stringer. Probably to the local titi bar. throw some cash around before his blu-ray backfires and hes working for disney sweeping their park.

TeraTricker
TeraTricker

This is fake, what company sells consoles for less than they have to produce it?! I mean they are actually losing money by selling them... THAT'S RETARDED!!! Just joking, but really... this is a nice move of Sony... but if you enter the business world, practically everything is a good business move. Though PS 3 is gonna rock, I think Wii will be more profitable and therefore more Nintendo stuff... PSWii!!! No, not Wii60... we hate the 360!

peyo6700
peyo6700

best buy offer the 360 with 50 $ off and four games including gear of war!!! (in canada just for today)

Gigatron
Gigatron

lollerskates sony had it coming!

Exeed_Orbit
Exeed_Orbit

Well, that's how Sony kind of bit off more than they could chew. MS produced a system that provides virtually the same graphics, for marginally less. They really shot themselves in the foot with this one.

MasterAsh42
MasterAsh42

And this is news how? With the exception of Microsoft beginning to get back in the black off of each 360 after only a year, this article just states the obvious.

Comply
Comply

Sony will have to own like 40% of the game market to make up for that kind of loss. looks like Nintendo and M$ will do alot better. after all when people see that there is no more PS3's they'l go and buy a Wii or a 360. besides if you can get a fully-loaded 360 for halve the price of a PS3. people will do that.

GrimBee
GrimBee

How much is made on each wii console? Its cool microsoft finally get profit on the xbpx 360, this means they can do some sort of price drop or some nifty bundle to get more users! and what about this ""The reason why the PlayStation 3 is so costly to produce is because it has incredible processing power,"" Oh yeah, I saw that amazing processing power in project 8.... lol And finally "You people think they're losing, but they already said they weren't losing what so ever. They MAKE their own hardware. " LOL!! It cost them money to MAKE it.... sheesh..

undox
undox

if they are charging so much and still losing money, then there is a ridiculous amount of tech under the hood. But it also brings up an interesting question. If they charge about how much the system is really worth, what would people think? Would they still be lining up in droves to buy it? Would there still be system available today? Or would people decide to buy an Xbox 360 or Wii instead? Something to think about, huh?

Cypher_VR
Cypher_VR

serves them right, after all the broken promises they made.

Game-o_O
Game-o_O

You people think they're losing, but they already said they weren't losing what so ever. They MAKE their own hardware.

liquid_brandon
liquid_brandon

This is not new, we've known about it for MONTHS.

pencilpusher69
pencilpusher69

lostn "Can you really blame Sony for wanting to win the format war?" I can. It'd be nice if they focused on winning the games format with their game system, as opposed to trying to trojan horse a new form of movie player into our homes. After all this hype dies down, it's going to be interesting to see if the PS3 follows the same path that the PSP has gone down. Maybe they'll do well, I hope they do, because it'd be a shame if many of you went out and unloaded over 600 bucks for a game system who's real mission is to sell movies.

wutangscatt
wutangscatt

They might lose $306.85 or $241.35 on each system you buy, but they lose $805.85 and $840.35 on each system you don't buy. So if you don't like Sony, don't buy it. Or just buy the system with no peripherals or games and bleed them out slowly.