PS3 manufacturing costs down around 70%

CFO Nobuyuki Oneda tells analysts Sony has cut console-making expenses by over two-thirds since 2006; unofficial iSuppli estimates point to $252 production price, resparking PS3 Slim speculation.

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Yesterday, Sony issued a dispiriting April-June earnings report, which showed quarterly PlayStation 3 sales fell from 1.6 million to 1.1 million. The PS3's slowdown is ironic, as it appears to have come just as Sony got its console manufacturing house in order. In an English-language conference call following the earnings report, Sony CFO Nobuyuki Oneda was asked by an analyst to "give a sense of how much you've reduced the [PS3] cost to build since inception."

Sony CFO Nobuyuki Oneda
Sony CFO Nobuyuki Oneda

Oneda's response was vague--at first. "The cost reductions since we introduced the PS3 are very substantial and on schedule," explained the executive. "We don't disclose how much of the PS3 cost reduction was specifically achieved during the past two years. But that is on schedule."

Then, Oneda decided to throw a number out. "About 70 percent, roughly speaking," he said.

As its CFO indicated, Sony does not give out an exact production cost for the PS3. However, a hardware research firm has offered unofficial estimates on a regular basis for several years. Last December, iSuppli estimated that Sony spent $448.73 in parts and labor to make each $399 80GB PlayStation 3. The number was down from an estimated production cost of the now-discontinued 60GB PS3 model, which had backwards compatibility with PS2 games. iSuppli estimated that model cost $690.23 to make in mid-2007, when it was priced at $499, and $840.35 to make at its November 2006 launch, when it cost $599.

If Oneda's 70 percent figure is applied to iSuppli's $840.35-per unit launch-cost estimate for the PS3 (which has not been confirmed by Sony), the savings are a substantial $588.25 per unit. By that calculus, Sony would spend $252.10 to make each new PS3, the base model of which sells for $399. Theoretically, that would generate a $146.90 profit per console, not including packaging, transportation, and other costs.

While the combination of iSuppli estimates and Oneda's comments are interesting, they are by no means official. Indeed, earlier this month, Sony CEO Sir Howard Stringer appeared to scoff at the idea that PS3 hardware was currently profitable. In response to Activision CEO Bobby Kotick's call for a price cut for the console, the Wales-born Stringer quipped, "I lose money on every PlayStation I make--how's that for logic?" Furthermore, the newly formed division that contains Sony Computer Entertainment lost ¥39.5 billion ($415.6 million) last quarter--more than Sony's overall loss of ¥37.1 billion ($390.3 million)

The photo that launched 1,000 PS3 Slim rumors.
The photo that launched 1,000 PS3 Slim rumors.

However, there's a good chance that Oneda was referring to PS3s Sony is making right now, not last quarter. And one possible reason for the "substantial" PS3 production savings could be a reduction in materials resulting from a shrinking of the console's form factor--which has already been widely rumored. Sparked by an apparent photo leak in May, the past few months have seen widespread, repeated speculation about a 120GB "PS3 Slim," similar to the slimline PlayStation 2 introduced in late 2004. Though Sony offered no comment on the photos, a mysterious Taiwanese law firm sent cease-and-desist letters to several online news outlets that posted them.

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sj_nehama

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i think a price cut is almost guaranteed. But will it affect the current "fat" model or the new models alone? i have read also that the slim will probably ship with firmware 3.0 featuring cross game chat, somewhere in www.n4g.com

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13ALUCARD13

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so does this mean that there's a price cut coming to the ps3?

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Johnnyb437

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In a perfect world, there would be no console wars going on..but is this a perfect world? Absolutely not. People are going to think that either Sony or Microsoft is better. What we can't realize is that those companies want it this way. They are pretty much brainwashing all of those who are loyal to either side and will fight till the end. This guarantees them loyalty in whatever decision they make. You guys are just pathetic to bash each other about something as stupid as a gaming console. Now let's see how many neg thumbs I get..lol

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Irve

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I know it's a big if, and i know many people don't like the currnet look of the PS3 ... but personally i much prefer the original to these Slim pictures ... if they are real i do hope i'm still able to get an original one when sony finally lower the price

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Deathmobarez

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Me and my Solid Snake picture will always salute to the PS3. ;)

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Irve

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@ravensong you do know that 1080p has NOTHING to do with disk formats right ? you can put 1080p content on a CD if you really wanted to. games that say they are 1080p ARE 1080p the machine doesn't do any upscaling at all it's the game engine that decides the output.

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sj_nehama

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snake289 wrote, way down on that sh*t pipe : PS3 is great,The 360 is great leave it at that fanboys. And got 4 neg thumbs....because he didnt bash either one?

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anik786

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Finnally a ps3 price cut may actuuaally be in place. I won't count on it though. The amount of times people got hyped up about a price cut from anyalist is unbalivable. However this is the first time where there is OFFICAL news about a price cut.

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sj_nehama

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if you guys just could turn every metal you touch into gold with the same ability you turn every piece of news containing "PS3" or "XBOX" into a flame war... The news says PS3 manufacturing costs are down 70% and you guys managed, somehow get to discussing framerates and resolutions...... Just amazing

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Vasot

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The place is full with Sony loyal sheep and with their stupid theories about their "almighty" ps3. This news section has become pathetic from the fanboys. I had enough reading their cr*p. And by the way that stupid theory from ravensong that X360 does not do native 1080p is a bunch of BS made up from his head. Both consoles provide the exact 1080p quality. The Xbox 360 has the necessary internal bandwidth between CPUs and graphics processors for a full 1080p image.

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salxis

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@MOBS Killzone 2 = 30 FPS vs Halo 3 = 60 FPS Not saying which one's graphically better (personally I prefer Killzone's art style) but just pointing out facts. 2: Storage space =/= better graphics, a 500 GB computer with no graphics card would never out perform a PS3 (Graphic wise), while a 10 GB computer with a GeForce GTX 295 would simply destroy the PS3 . (Above assumes enough memories etc.) Also, as stated by Bioshock 1+ 2 level designer JP (something, he appeared in one of the earlier Hotspot), storage size is not as important as it was in PS vs N64 days, what the would prefer now is more RAM.

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ravensong

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Why can't we all be just gamers? Why is it that when some little tidbit of info regarding one system or the other results in a war? Games are games, no matter which system they are on. Play them. Love them. And some info for the lot of you that are throwing out resolutions on the 360... The 360 DOES NOT do 1080P. It's maximum is 720P (it's standard DVD technology, scientifically impossible to do more) and it uses hardware emulation to upscale to 1080P. Blu-ray (I did NOT say PS3, though it is capable, I said Blu-ray) is the ONLY technology, currently, capable of a native 1080P. Look it up. It's a fact that even MS admits openly. The 360 does not have a single game running at 1080P. Not one. They are ALL at 720P or below and the hardware "upscales" the images to 1080P. Upscaling a resolution is nowhere near the same thing as a native resolution. Compare an upscaled DVD movie to the same movie in Blu-ray and you will see what I mean and CLEARLY see it. This was not a PS3 is better than 360 post. This was just some info regarding resolutions.

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thekey

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@joevit Well As far as NVIDIA is concerned the ATI chip in the 360 is not more powerful than the PS3's NVIDIA, just look at the way the 360 does water, it's terrible.(Compared to the XBOX 1's way of doing water when the X1 had an NVIDIA chip inside it.) And using Blu-ray discs inside the PS3 was a smart move, because 1. Sony won the HD format war. 2. Games like Killzone 2, MLB 09 the show, Heavenly sword, and Uncharted, look AMAZING! More amazing than anything out on the 360. Also with up and coming games like Uncharted 2, heavy rain, and God of war 3 are going to blow away 360 games graphically. I said it before and I'll say it again, the PS3 is far more superior than the 360 in every way. Games, graphics, sound, design, durability, dsic format, HD requirement, bluetooth tec, built -in wireless intertnet conection, free online gaming etc.

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anarchist4eva

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Funny thing we don't hear about the problems @ Microsuck with everything other than the 360. Which lets face it is no spring chicken with system failures abundant. Sony just puts everthing out there like cannon fodder for the jr execs @ Gamespot to digest and pick apart. Gotta like the fact that they keep taking chances on new IP's even if they lose money. As for brand x, well they hang their hat on Halo and the next big shooter. And lets not forget the game guru himself, Steven Spielberg!

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WolfGrey

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@joevit I think you have no clue lol.Ps3s hardware and there is no way around it, is more powerful.As i have mentioned before ps3s get used as university computers.Xbox isnt that versatile nor could it take it.MS is notorious for being cheap but askingfor the most money.The one time purchase of a ps3 is well worth its money.Then the great games,Home, and wonderful PSN service more than make up for its cost.The many exclusives on its way for ps3 also easily surpass anything on the 360.Especially as mentioned, MAG.The 360 could never, ever be able to run this.

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Irve

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@MOBS i think you'll find Halo's gimped res is simply down to them trying to get 4 player split screen working why not compare GTA4 running on a lower res on PS3 to 360 with less cars ? fact is that each game is made by people that may take shortcuts or not know the hardware as well as they should if either machine is more powerful than the other it's not signifficant personally i think COD4 looks better on PS3 and 360 than Killzone 2 .. but that's just me .. currently the best looking game i've seen this gen is the demo of uncharted 2 .. as to it being better looking than anything that will ever come to 360 .. i couldn't say .. but for now it's got my vote.

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flyingteddy

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Sony are amazing, if they manage to produce PS3 slim for christmas at a reduced price I will be truly impressed. I choose Sony because they are always trying to improve and don't mind heavy investment to do so. PS3 will be here for the long run.

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MOBS

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@ JOEVIT If The "360 ATi chip is ALOT more powerful tha n the PS3 Nvidia chip, ALOT", why is it HALO 3 only runs a a MEASLEY 640p, and KILLZONE 2 runs at 720p with TWICE AS MANY PARTICLE EFFECTS AND FILTERS? If the ATi chip was so much more powerful, HALO 3 would run at 1080p. It isnt and it DOESNT. No game on 360 can touch Killzone Graphically, and thats largely due to the extra storage space on the Bluray disc you mock so much, and the graphics chip and Cell. Due to the 40 gigs that Killzone uses, entirely, the game looks better and is longer than any 360 game. So the money spent on the extra hardware in 360 was well spent. Uncharted 2, Heavy rain and Team Ico project will look better than anything on 360. So will GOD OF WAR 3. So 360 using DVDs only is akin to the dumb move Nintendo made using cartridges for the n64. You have NO CLUE please dont talk if you dont know what youre talking about the CEll isnt being discontinued.

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thekey

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@Vasot "Maybe they should drop PS3 and start making the PS4... By the way i have my X360 for almost 2 years and i never had a problem with it...no rrod and no cd scratching" Thats what I said back in 2006, then all of those things happened a year after that.(ecept the disc scratching)

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fps_d0minat0r

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sony are probably the best company in the world..... they made a loss on PS3's since day 1 and they kept pumping out new exclusives???? wow, i would have thought a company would close down its studios to save money...........oh well the worlds a better place when not every company is like M$. i would easily be persuaded to buy a console worth £100 more as long as it doesnt get RROD, disk scratching and have an endless XBL fee. PS3 is dirt cheap considering all this.

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AlphaCommando

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Give me a PS2 compatibility add-on, and I'll happily pay however much it is (not too much though :P).

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sjohnson69

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Good news and about time! I'm not overly fussed on the price of PS3 in uk, but a lot of people can't afford them and it's a shame. SO lets hope a price cut follows. lmfao @ peeps who think the 360 is more powerful than a PS3.. So is that why 360's can only squeeze out 16 players online? Not 32 with insane graphics like killzone 2 running lag free? Or even 256 coming soon. MGS is quite an old game for PS3 and the 360 still hasn't mustered anything as visually impressive. The 360 is a nice console, it's affordable but that is because the hardware is cheap. The last few years it's looked pretty good. But PS3 owners have some stunning games being released and a bounty of them to look forward to. And i love my Bluray... Diss it all you want while i go enjoy Watchmen in HD and perfect Dolby Digital :) God after a year of dissing fanboys, there i go sounding like one... oops!

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Irve

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Ok so i know this is just fuel to the fire of a PS3 price cut but heck I'll bite !! The PS3 could easily get reduced in price to $300 and £200. At this price I would snap one up in an instant and buy at least 4 games and a couple of Blu ray films ... come on sony ... make me a customer !!

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aaronobst

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This is news FTW i mean 70% BBJEBUS also @ LordRaymond I think you'll find its a "Crack" in time not a "Clink"

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joynul

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well thats all good for them to be making a profit now. maybe they should also consider a price cut so that it benefits there customers aswell. i mena if the lower the price by $40 they still will be makin $102 profit for each console and that reduction will get them a lot more sales even though it is no a big reduction $359 sounds a lot better than $399.

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LeoGoBezerk

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The amount of comments is amazing ;) Anyway - really good news! Maybe this is a second chance for ps3 and its popularity.

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joevit

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@Muteki_X. Sony started too add some cool things with PS2. It was cool that they used a DVD player in the PS2. DVD players had been around in the mid too late 1990's so it was smart thing to do in the year 2000 for the PS2. How ever, Sony owns most movie studios to date and when every one seen that more of them went Blu-Ray it was only because sony owned them and they thought they would have the upper hand when they added Blu-Ray. It was not about us, the people who play games, it was about Sony pushing people into blu- so they can make more money. MS did the right thing. Now if MS wants to add Blu-Ray too this gens X box or next gens they can and it will not come with a crazy tag. You can run off to best buy and get a Blu player for under 90 bucks now. Now Sony should have went the way of the 360. Just use a DVD drive. Sony made a big deal out of the cell CPU and now they are going to drop it and use some other kind of CPU. By the way, some of you think Sony came up with Blu-Ray. No, they did not. So yes MS could add Blu-Ray down the road. Sony also shot it's self in the foot when they used a video chip that can not even out run the ATi chip in the 360. I'm a Nvidia guy. Or a Nvidia fanboy. But the chip in the 360 is a lot more powerful than the PS3's. A LOT. They should have put more cash into the video chip, or mem, more pipelines,, just more power in it. I dont wanna sound like a Fanboy here but Sony is put it's self in a bad spot.

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benashley

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when they reach £199 or less I'll consider buying one, I can't justify forking out 300 notes on the few exclusives i'd want to play ( i don't like Japanese RPG's and the MGS series never appealed to me ). When i do get time to play games, I play FPS's and the Xbox has plenty of them to keep me going. I'd like to have a blu-ray player mind, even though there are much cheaper ones available I hear the PS3's player is better.

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LordRaymond

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Sony is cooking up a plan to win it all in the year 2010 starting with their kickass exclusives GOW3, MAG, Uncharted 2, RandC Future:Clink in Time!

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24k_Solid_Gold

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georgebot84-"...The PS3 just costs too much, I could build a great gaming pc for $600." What would your definition of 'great' be? For me, a 'great' gaming pc would cost at least $1000, not to mention taxes. Of course my "dream" pc would probably start at $2500. :D Ya, pc gaming is expensive, but I love it.

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hornetine

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HAHAHAHAHAHAHAHAHA...WOW, somebody, I mean a JABRONI reported my avatar? Are you serious? My avatar is OFFENSIVE to you? Don't matter, gamespot mods can go munch on some pootang pie for all I care. I bet Xbots don't get bothered by their fellow Xbot mods.

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frogfromarz

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Maybe if they lower the price i may consider getting 1 being i already own a 360 and no I had my for 3 years now and it has a flawless record. but I love gaming and want a ps3 but the price is too much 4 my buget.

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OverkillAzault

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Sony mighty have made the best system why slim it down ???? So if ever i buy a PS3 im not actually getting the orginal version of it

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ManginaSORES

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Who would anyone think that playstation is close to dieing... sony is bigger than microsoft... they won with blu ray... I seriously think playstation is the smallest part of the sony plan.

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illmatic87

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seems to me its.on a treadmill going somewhere

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81shoter

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does this mean i can buy a PS 3 without giving them a leg or an arm

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georgebot84

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How about a 360 slimline MS. Or maybe a 360 that doesnot die every three months. I do love the software on the 360 though, but MS should release a more stable model. I wonder how long they'll keep making the PS2 slimline? The PS3 just costs too much, I could build a great gaming pc for $600.

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Paladin_basic

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Makes sense that parts are now cheaper, hardware costs for PC parts drop over time. Needless to say that in the UK at least those cost savings are VERY slow to appear in the shops for consumers though! Sony is hardly going to admit a new slim-form is on the way or sales of existing PS3's will drop through the floor. Unless you're desperate for a PS3 I'd maybe wait till christmas is approaching and see what happens

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zakkess

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im nt a fanboy though i have all 3.. and i have a ps2 also..its funny how most 360 fanboys had a ps2 and prolly nt the original xbox..damn hippocrits

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doublem2

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I'm curious what the total installed base of PS3 and 360 are worldwide. Sony hasn't done as well in the US but has done a lot better in Japan, where there's no love for MS. Lots of people are holding off because of the price, maybe Sony can get some of them with a price drop (and slimline?) before they pick up a Wii or 360.

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UltimateRAGEX

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lol

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TicTac8745

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If Sony can reduce the production cost this low, then surely they should think of putting back at least software emulation for PS2/PS1 game (better yet, put the chip back in)

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Mister__Awesome

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Let's just hope Sony can kickstart themselves to a better 4th Quarter and a 2010 with better games and better prices. I am pulling for them, i wanna see the rivalry of Microsoft and Sony once again..

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Bodboy466

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Well, without bothering to look down to see the console war bashing almost assuredly going on below, I can give a fairly good explanation for WHY the PS3 sales have been down: ECON 101: when people expect the price to go down, they stop buying and wait. Rumors can indeed hurt sales, as you can be sure there are hundreds of Best Buy employees out there saying "The price is going to drop in SeptOcNocember." Sony saying there is going to be a price drop ensures that there sales will drop. The ambiguity is all that's saving them from the fall.

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snake289

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PS3 is great,The 360 is great leave it at that fanboys.

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izmickey

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@mayceV Who cursed at you? i sure didnt. How am i a sony fanboy? I think the xbox360 is a great machine. What i dont like is MS screwing up their own product. If things were reversed, ps3 breaking down and xbox360 not so much then i wouldnt like sony. Both machines have their strong points and weak points. If you prefer xbox360 than thats great, its YOUR preference. What really ticks me off is when people have the xbox360 break down on them more than two times and still praise MS and say ps3 is the worst system. BTW, MS SHOULD fix the RROD for free, 3years is good. What about before they had that policy? all those people with RROD had to buy a new one or get it fixed, i think it was a year warranty or less, not sure. If you like XBOX360 its cool dude. its just i hate it when fanboys go to articles that concern ps3 and bash the ps3 or go to xbox360 article, just to bash the xbox360.

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deuketc

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Ya know even though the PS3 is more exspensive i still went PS3. but if i really couldn't afford it id probably look at the XBOX.... haha nah i wouldn't. PS3 man!! worth every cent!!

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snakes3425

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@warhawk-smakaho It's called being a fanboy. Sony fans slam Microsoft's good news, and Microsoft fans slam Sony's good news. Right now the one thing that can give Sony a boost is to steal some of Microsoft's thunder. Example: Announcing a PS3 port of HALO, Gears of War or Left 4 Dead, since HALO and Gears of War of Microsoft's flagship games and have huge followings and Left 4 Dead also has a large following, and it's sequel is highly anticipated

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warhawk-smakaho

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why is it that if someone makes a positive comments about the PS3, people always hate on it. It's a fantastic console, and I'm glad things are hopefully going to go well for Sony.

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snakes3425

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Even with a price cut it maybe too little too late for Sony to catch up, especially in recouping the looses they've taken. I hate to say this but I don't know how much longer PSN is going to stay free

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