Sony losing $36 per PS3 - Report

iSuppli analysis of redesigned console's innards concludes electronics giant spends $336 making every $299 Slim, the system's lowest loss per unit to date.

Shortly after the PlayStation 3 launched in November of 2006, iSuppli broke the onyx behemoth down to its various components. The hardware research firm determined that it cost Sony more than $840 to produce a single 60GB version of the system, each of which then sold for $599.

An exploded view of the PS3 Slim's innards, courtesy of iSuppli.

After revealing a massive 70 percent reduction in manufacturing costs for the console, Sony debuted the PS3 Slim in September at a trimmed down $299 price point. Now iSuppli has weighed in with its assessment of the new hardware, determining that each Slim is still losing money for Sony, but not nearly as much as its predecessors.

According to iSuppli, the hardware and manufacturing costs for the 120GB PS3 Slim add up to just over $336, making for a loss of more than $36 for each unit sold. Given that iSuppli's analysis doesn't include other expenses, like software and transportation, the actual loss on each PS3 Slim sold in the US is even greater. However, iSuppli noted that the PS3 is more expensive in a number of other countries, and the cost of materials will only fall in the next year.

"In light of these factors, the PlayStation 3 probably is already at or near the tipping point for profitability," iSuppli director and principal analyst Andrew Rassweiler said in a statement.

As for specific improvements under the Slim's hood, iSuppli underscored the benefits of Sony's 65-nanometer and 45-nanometer semiconductor chips. Not only are the chips cheaper than their counterparts in the original PS3, but they also require less power (and thus created less heat) to achieve the same results. That allowed Sony to get by with less expensive cooling solutions and a cheaper 220-watt power supply. The older PS3 models had a 400-watt power supply.

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Discussion

485 comments
metalkid9
metalkid9

If you're a true 360 fanboy, you'd go buy a PS3 asap

kevin8se7en
kevin8se7en

What about the 250gb? It sells for $350 and i know for a fact that hard drive space costs close to nothing for the manufacturer. I doubt the 250gb Hard drive costs $12 more to make than the 120gb one. An extra 130gb probably costs them like $4. They probably lose about $36 on the 120gb, but gain $10 on the 250gb.

KamikazeCanuck
KamikazeCanuck

Not sure why people are not beleiving this article. All consoles are sold at a loss. The idea is to make money on the software. It's not an attack on PS3 fanboys or anything like that. The PS3 was just especially brutal because i was the most expensive system ever to manufactor and purchase for consumers. The real story is how the hell they reduced costs by 70%!

IRISH_VANDAL
IRISH_VANDAL

Why is this any type of surprise? All consoles made these days are not cost efficent, they are living room graphics pc'z. the costs will always out weigh the profit for the first couple of years and slowly it will even out. The first XBox was the proving point of what has become the norm. High cost, low profits, if any. And yes, i own a 360(2 acually) but am a PS lover from day one. Bet you cant guess what I am buying myself this birthday for myself. lol. Lets see how Home is.

BigBigR
BigBigR

Not trying to go against "expert hardware analysts", but since the console is mass produced won't the cost for each individual component be lower when bought in large ammounts? Or does iSuppli include this already in ther calculations? Haven't bothered to check it. Very happy with my PS3, hope 2010 is even better than 2009! GoW3, Heavy Rain (yes you can like different types of games) and many more!

Wuflungdung
Wuflungdung

I would really like to see an itemised list of how much each part of the ps3 costs, cause i highly doubt it costs sony $336 to make a ps3...

oscarsephiroth
oscarsephiroth

sony is stupid all the talk about PS3 hardware and the game support, nothing, i bought a PS3 just for JRPG and MGS4 i am still waiting for jrpgs this gen sucks i am sick of shooters(PS.i will always love my PS2)

blue_francis14
blue_francis14

I think Sony is counting on the dollars made by game developers instead of the console itself. The biggest advantage of Sony is that used BluRay technology. The capacity alone of each disc gives the developers oppurtunity to cram so many content in just one disc. And of course the difficulty of creating pirated copies of games. The money flow doesn't leak out of their pipes. It's like Sony used BluRay to stay ahead of the competition for 5 years. Another thing is that even if people know that the PS3 doesn't play pirated games, they will buy it. Why? Probably because of the games, the coolness factor or just because "I have a PS 1, PS 2, PSP, therefore I must have PS 3" thinking. Also because it's an expensive console, why take the risk of using a pirated game that increases the risk of breaking the unit?

ha2e04
ha2e04

remember that ps3 launch press conference. man that was funny.

madSomnambulist
madSomnambulist

Since when was "according to" and "determining" a proper evaluation? It's just guesstimation gibberish without actual info. A lot of the stuff is in-house Sony components that I'm pretty sure they don't exactly dish out the details on the cost of those. I'm sure they also have crystal balls that show but current and future materials prices. While I'm sure it's close to its selling price, I'm sick of this stuff being published as fact. Grab the "recommended" Sony HDMI cable, bluray remote, second controller and 2 games on your way out of the store? Already $50 in the black per unit. Actually. I'd rather see a story on the profit margins on the DSi, Wii and 360. That'd be far more interesting, to be honest (namely, I'm wondering whether the cost per unit is $5 or $10 to make a 360). If they're not pulling a huge margin on that, something is very very very wrong.

McTabish
McTabish

@Bashers79. I agree that we shouldn't be console 'fan boys'. We're all on this website because we love games! So why dont we stop all this console wars stuff and all get behind games in general. And then maybe complain about things like politicians trying to censor games or trying to advertise political party policies on Xbox for example!!!!!

KingOfTheNubeis
KingOfTheNubeis

Pure speculation.I don't think their making "Big Bucks" but I suspect its closer to break even or even slight profit. I work in Electrical Wholesaling,& Sony prob'ly get massive rebates at the end of the tax year after guaranteeing fixed contracts to manufactors & fabricators.These things are confidential and hidden. I wouldn't tell the "whole truth" either if I was Sony.That would only make more pressure to drop the price even further by retailers,press and consumers. Which they could ill afford since the margins are that slim.

mschwind
mschwind

"...the cost of materials will only fall in the next year." Somebody doesn't work in the construction industry, or with petroleum or other non-renewable resource materials like copper piping or wiring. Prices have only been going up. I'm just thankful the cost of games didn't go up this year.

Yuck_Too
Yuck_Too

To still be losing money at this point is abysmal. It's no wonder why at the Sony share-holders meeting Stringer said they may not recoup the losses on the PS3.

solidstein
solidstein

all you gotta do is buy one game and a controller and your console has broke even and buy a sony game and thats even better or by a wireless headset. you guys cant forget that every dev pays money to be able to make a game on sonys console and then first party games and accesories is where they make the bulk of there money

Shehryar_89
Shehryar_89

@Vegeta-sama what is "Valhalla" plz explain? Integrating CPU and GPU chip into one chip [just like sony did it with their PS2 SLIM in 2005 by integrating EE+GS chip] (heating probs are reduced to none means RROD free XBOX 360...basically Valhalla is the upcoming mobo for 360 after Jasper due in 2010)...

kamizuka
kamizuka

@Vegeta-sama what is "Valhalla" plz explain?

Vegeta-sama
Vegeta-sama

but they still sell tons less software than Microsoft jubeio and Microsoft is probably at the point that they are making money on their units certainlly they will when the Valhalla project is complete (gpu on cpu)

jubeio
jubeio

thats not so bad cos end oif the day they spend very little on making the game disks, once a game is made all the money they make on a game cud come above the break even point, seem as though PS3 has loads of games now abnd more people are itnerested in it, sony may be saved :)

MooMooChicken
MooMooChicken

It now makes sense why my friend who works for Best Buy told me that they would never do a package deal/discount on the PS3. He said that Best Buy doesn't make any profit on the system itself. I miss the times when the origional Playstation was around when everything was cheaper.

maverick_76
maverick_76

It is not surprising that this is the case, also I'm glad to hear that the whole system runs cooler, because that was the flaw in the older first gen 20/60 GB systems which gave people (including me) the YLOD.

Frost71
Frost71

Almost every company loses money on every system sold, they make the cash up through extra devices and games. It's very rare that a company really makes much profit at all off of the console although that may change since these next gen systems are being pushed to have a much longer life then we have ever seen before on a console.

Algolagnia
Algolagnia

@dwd-27 - You mean they are going to be adding a sixth game to that five game montage video in their commercial? Wow, truly epic. :) It's apparent when you enter any gamestop which system has more games, as half the damn store will be dedicated to 360/PS2 with a tiny section for PS3/Wii. They've also lost a ton of money on patent lawsuits, since the majority of tech that makes the thing work was stolen. @VMaven - PS3 controllers on average cost more than a 360 controller(except when it comes to wired controllers then they are the same).

dwd_27
dwd_27

Wow that's a lot of money if they sold 3 million ps3 in japan but look to the brighter side it is 1 of the best consoles and they've still got loads of cracking games to be realesed

humado
humado

it will change in the future

Shehryar_89
Shehryar_89

this article is totally useless...SONY is already making profit on every PS3 sold since Oct 2008...sony has stated this in a statement by themselves...and by the way manufacturing costs of PS3 is under $250 not $336

VMaven
VMaven

They don't make money off the system but the controllers are a different story, they're pretty cheaply made and I have gone through about 10 of them in the last couple years, I do have kids though. At least they've gone down a bit, I remember paying $55 + tax when they first came out

MagicOneUp
MagicOneUp

@GBPackersrule excuse me? yes i do paid for my hard earn console. Its my second wife... i probably adore and play with it more than my actual real life partner. You gave MS or sony a bad name cos you don't actually like either so they don't know what the hell to put out there. i still say 360 is better than ps3

MagicOneUp
MagicOneUp

@ pineapplearmy I find it hard to believe that retailers only making a cent on each console sold. what if its sales time... would you guys be losing money? what if i shopped around, there are at least $10 to $20 different between shops. so you are telling us those shops dont make money too? when i buy games, i dont buy from the same shop. i think most game shops are ripping us off anyway. new release games can be $40 different from shops to shops. i'm sure sony does make money on each consoles

MagicOneUp
MagicOneUp

here in Australia, Sony would be making about $200 on each ps3 cos we are getting gouged dry. we are still paying close to $500 here...

grungeman91
grungeman91

Well I for one chose to pick up a PS3 after all the hype and the exclusives from Sony and after 6 RROD's and 3 lost consoles in the mail, I gave up on Microsoft so don't say it has better hardware or Consumer Service for that matter, it's just so damn popular right now

wiidsduelpack
wiidsduelpack

What are you saying MOBS. / Sony can't make a profit of $55 per game. It has to sell it less to retailers and then sale it to share profits. / 30% has to go to the company who makes the game or its 40%.

pineapplearmy
pineapplearmy

From a retail point of view the profits are in the games. I worked for a major retailer and they only made a cent off 360 and PS3 consoles. A system that retailed for $399.99 cost the retailer $399.98. The profits are in the games. A $60 game yeilds between $5 and $10 for the retailer. They sell systems to sell games. The same is true of the console makers. The money is in games. Don't worry about Sony. They will make money on this console generation. Especially if the generation lasts 10 or more years.

R2C25
R2C25

...tired of the fanboys. Get laid or something, stop polluting this space where real gamers wanna read some good discussion and game news.

left4right
left4right

sony is mocking us the console dosent deserve that much;

GBPackersrule
GBPackersrule

Attention all fanboys! These gaming consoles (PS3, Wii, 360, whatver) are machines! They are not your wives! They are not going to garnish your wages and run off with your kids if they find you playing on another console. Its not like Sony, MS, or Nintendo are going to thank you with money. If somebody likes this console, or likes that console, who cares? Its not like you paid for it. Fanboys give us all a bad name.

chinaguy2003
chinaguy2003

@buft Yeah it seems crazy that console developers do it. But they use something similar to razors and blades model. Sell the razors for cheap and make money selling the replacement blades. In the video-game business, console producers often market games consoles as loss leaders for more lucrative software and licensing fees.

joeborg14
joeborg14

@FoolWaywardLone I'm thinking the same thing.

FoolWaywardLone
FoolWaywardLone

Well here is hoping that PS3 games help bring profit to Sony. I may like Xbox 360 over the PS3 but compition in the market place will bring out the best in both. Yes I own both a PS3 and Xbox 360.

HyruleanLink
HyruleanLink

Ouch! Yet, the recent price drop should and has boosted sales.

gamer082009
gamer082009

Sony still losing money I see..oh boy (what's that 3 years so far?)! This is definitely not good, they've already been losing billions in the department that houses the PS3. Maybe I'll get a PS3 when it's $249 or $199, until then I'll be doing fine with their competitors console.

Seb6554
Seb6554

For the ignorants who say the X306 has terrible graphical capabilities The X360 has an HDMI output, just like the PS3. ( FYI the Wii does'nt) If you play on an X360 with the standard cable that comes with it, you cant even, for example, read the words in Forza 3, but with the HDMI cable (10$ @ HMV), well I wonder how I ever got around the day I didnt have it ( I bought my X360 and my HDMI cable a day apart)

Punjabiking101
Punjabiking101

This is why Sony is the best gaming company, they care about they're gamers. (coming from an all system owner ;))

meateater79
meateater79

I like how Sony improved the PS3 externally (sleeker and less space) as well as internally (energy-efficient). The 360 has also gone thru some changes, but it's mainly to correct for the (prior) hardware failure rate. And that's what pisses me off; as an owner of an older gen 360, I will always have that failure rate looming above my head. Every time I hear some noise from the console or the game freezes, my heart stops. I've had 2 RRoDs and I know that third one is just around corner.

noclover
noclover

The fact that the PS3 has been out for 5 years more or less, and still not making profit sounds like a fail to me. On the comments about the PS3 Vs. 360. People at IBM that developed the innards of both consoles have repeatedly said they do work very differently on the same processing tasks but are ultimately equal in power. The PS3's cell spe's compensate for having a weaker GPU. While the 360 has a weaker CPU and has a more powerful GPU.

WestSideAzn
WestSideAzn

Well, as long as Sony is making money off of their PS2s... I will not be worried.

daniel_droid
daniel_droid

wow People can be jerks why are they hateing Xbox or Ps3 so much are they trying to rewrite the past or something? every one always blames xbox or PS3 for there problems! If you do not like a certain console then do not to bash every thing about it just becouse you own a xbox or PS3! there is a reason why people Buy a Xbox or PS3..... Do not reply!

Jhoalot
Jhoalot

I will believe this when i heard it from Sony.