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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WolfGrey

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@rasterror Sounds good, i might have to get my friend to get it.Drunk people falling over is great lol.Biorifle forever.Though people hate me for for being really skilled with it.To UT players its the ultimate shame.

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rasterror

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WolfGrey I agree. You need to play Resort. Watch a bunch of drunk people play the sword fighting game, really get into it, and see them fall flat on their face is money justified. I still play the original UT with some of my old friends.

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WolfGrey

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@rasterror and shadowflame291 Its a beauty to actually see people who understand the wonders of gaming.Hell im still addicted to wii boxing at my friends place.Halo is good for a abit of fun though i prefer unreal tournament 3 to it.Enjoy everything good people of the gaming world.And in case your wondering why im posting so much, its because i dont exactly have all the time in the world on a pc.

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rasterror

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I feel the price cut will comewith the introduction of the slim. Like DarkNeoBahamut said the cost reduction probably came with the new model. I'm just worried about what they cut out of this model. Oh well I will hold onto my 60 gig and if that dies i will hit up ebay for another 60 or 20 gig. Best model period.

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WolfGrey

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@consolemaster98 Finally someone says it lol Thats the basis of it all lol

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rasterror

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Shadowflame291 Amen! PS3 has power and blu-ray and swappable inexpensive HDD. 360 has Live, great backing from publishers, and great game library. Wii has just an all around family experience. I just bought Wii Resort and had a party last night and had mad fun. And this is coming from a guy who loves Infamous, Halo 3, and SFIV. There was this dime there but my 6 year old son had her wrapped around his little finger.

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consolemaster98

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Manufacturing costs down, make more PS3's for less, lower the price, attract people with lower price, sell more PS3's. It's just crazy enough to work!!!!!!!!

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WolfGrey

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@TehEliteElite The 80 gb has bc now look it up.My friend has one with bc.Why do people always complain about this.They have them out there.Just look for them.Not exactly hard to find.

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TehEliteElite

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Still not buying one till there's backwards compatability.

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WolfGrey

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@rasterror Ya unfortunately for them they have had those money cuts.I wonder what the end of the season special will be.Well i just rewatched episode 1 of the 8th season where they try to make a hatchback convertible lol.Lighting a car wash on fire takes skill. @Shadowflame291 Just go back a few pages.You missed it lol.Anyway thats true all the systems are great in their own right.There will eventually be a price cut on the ps3 soon with their lower in cost production of the ps3.So im sure it will be lowered decently.And with its hardware most likely win the system war.At least by fact anyway.We all have our own opinions on our favorite game systems.Keep up the good posts people.

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DarkNeoBahamut

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hey people, he probably was talking about the new PS3 costs (the slim) not about the current version, so stop the bashing.

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sj_nehama

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coffee, anyone?

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Shadowflame291

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Well, it seems like there isn't a huge flame war for once, THANK GOD!!! I'm a PS3 fan myself, but I like the 360 and the Wii too, and I'll admit that the PS3 has flaws, and that the 360 and the Wii do too. Really, the fact that people are fighting over what piece of plastic with circutry inside of it is superior is just pathetic. At least you guys can actually afford a game system, or a computer for that matter.

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Linkman0714

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its great to own a ps3...i dont have to worry about this crap

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rasterror

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WolfGrey Nice point. Season 13 is good but not as great as the past seasons because of the money cuts. Episode 2 is my favorite thus far and they usually the big episode for the last show of the season.

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rasterror

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It's a tough decision either way. Either hope the price drop will increase unit sales and little by little make your money or hope that the current sales with the profits made per unit will be enough. It's tough either way.

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WolfGrey

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I love how people who post something that has nothing to do with the topic or isnt constructive dont get minuses.And all of mine that has so much information or at least worthwhile to post gets minuses.I mean really. @rasterror Hey man im huge Top Gear fan too.Nice avatar.Ya season 13 is turning out great but the last episode that aired was kinda boring.Heres to hoping for another great episode like their special in Vietnam.Poor Jeremy and riding his little scooter.:P

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ShinigamiLink

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@ lowkey That makes perfect sense in a buyer's POV. But if u were sony and lost hundred's of millions of dollars selling their consoles at a loss of money, you wouldn't be saying that.

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lowkey254

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if costs are down prices should go down point blank. and slim is too soon by the way.

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rasterror

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Anybody gonna say anything or are they too scared or really don't have anything good to say? I just want an opinion.

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rasterror

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That's what I thought. Little p@$$y.

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ShinigamiLink

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Seriously, why would they cut down the price? Think about it, they still don't have a real profit since the ps3 started cuz they spent way more making the ps3's then they did selling them. Now that they apparantly can make up for all that lost money it's unlikely they would cut prices. If they lowered it to 300 they would only make $48 per ps3 made as opposed to $148. Take into account the packaging costs among other things and that's even less. If you want a good deal on a ps3, just get one online at bestbuy, even though their customer service is crap they do have good deals ($400 for either, A: an 80gig ps3 with Wall-E and Little Big Planet, or the much better deal B: an 80gig ps3 with Killzone 2 and MGS4). Either way your better off getting this bundle and some hdmi cables from ebay if u want to save money, just don't expect any price cuts,

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rasterror

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Okay I mention a website for great media and I get thumbs down? I dare the person say why they did that right now. If you don't speak up then I guess you're a little punk.

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rasterror

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Currently watching Hokuto no Ken Raoh Gaiden and it is tight. Fist of the North Star has always been my favorite anime and this new one is dope. Please for those that love anime and any type of videos check out ovguide. This is no BS advertisement. I am just trying to share the wealth and save everyone some money.

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Dgalmun

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Fools...

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rasterror

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goldeneye_basic Schuey isn't really The Stig. They announced it in episode 2, which was hilarious. Go to OVguide.com and that is where I watch all of my top gear. They usually have the new episode up the day after. It's also the best site for every other tv show and movie and it's all free!

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SS4Link432

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wait if the production price is down doesn't that mean they could lower the price? they should lower the price. the only reason the ps3 doesnt sell much is because their lowest model cost 400 bucks. and there are a lot of great games for it which will make sales skyrocket.

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goldeneye_basic

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rasterror "Some say that his politics are terrifying, and that he once punched a horse to the ground... all we know is, he's called the Stig. " Yeah, I have only seen episode one from season 13 because I had to stream it from a website. That is the one where they "reveal" the Stig is Michael Schumacher. I don't know why BBC America takes so long to broadcast them in the U.S. Sometimes they wait almost a year to do so.

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rasterror

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goldeneye_basic Some say he was forged out of steel and fire in the devil’s own pit garage, or that he trickled to the surface of an oil pocket deep in the Earth’s crust. All we know is, he’s called the Stig. Season 13 is awesome.

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ccclout

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Yes, if the price is around $300, I will get 1 for sure. Blue-ray + PS3, why not?

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rasterror

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Mike3825 Hah1 I am with you on that one.I have a ? for you and everybody else. Apple builds the most expensive pieces of crap and expect you to pay when your unit catches on fire and try to make you feel like you should be glad to be privileged just to be able to have own their crap. My brother took his company Mac book to the genius, wrong name for the workers their, to have his 2 month old crap book and they told him that they could discard of it for free if he buys one fo $1799. He told him the Indians that work for MS didn't give him that much crap.

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X-7

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If they drop the price I would definitely get one for christmas. The PS3 finally has some good exclusive support and the BR player would be nice too. If they drop the price to $300 I think they could sell a heck of a lot of consoles.

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ChAoS_UNLEASHD

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idiots

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TWilliamz

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I'm getting tired of rumors about a price drop and PS3 slim, so let's hope this news is actually leading to something, but it wouldn't surprise me a bit if Sony drops the price of the PS3s already out and then charge $399-499(depending on HDD space) for the slim

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goldeneye_basic

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@rasterror Props to your Stig picture.

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Mike3825

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@ rasterror O god the ipod i was ready to hand out a great many colombian neck-ties due to that god awful tool.

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goldeneye_basic

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If iSuppli's numbers are correct, than a cost change from $448.73 last December to today's "70%" price of $252.10 would be a substantial 44% drop. I find that hard to believe that costs would drop that much in 7 months. Either Oneda's 70% is not correct or iSuppli's estimates are not correct. Stringer's comment about losing money on every console is probably the most trustworthy of the three different sources. Plus, what is with Tor explaining the difference between Oneda's and Stringer's comments were that the CFO's referred to right now instead of last quarter? The CEO made his losing money on every console comment July 8th. That is less than a month ago and still this quarter. Also, 70% of $840.35 is $252.11 because 0.5 of a cent should be rounded up.

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rasterror

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zlyrikal10 Sony wanted me to pay $160 the second time I sent my PS3 in because it bricked due to their firmware update and they held my system hostage for 2 and a half months. MS fixed my system for free, gave me 6 months of Live free, $20 in free points, and took only 10 days to get back. I went through 3 bad PS2's also. At least MS acknowledged the problem and paid out of pocket for them. Then there were my iPods....

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Mike3825

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@wolfgrey Is trolling really that fun?........................

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lostinseganet

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Every since the deathof dreamcast I hoped that sony would go under...,but now I do not want a "world of wii360"

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zlyrikal10

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WolfGrey Posted Aug 1, 2009 4:07 pm PT @izmickey Thats one of the funniest points for the 360.With it breaking down so much and having to send it in, wouldnt be cheaper in the long run to buy a ps3? Yet they do not and keep having them breakdown and have to buy new ones or keep sending in.It doesnt make sense whatsoever to keep doing that, i have heard that some people have even lost 7 or more 360s, give up if they are having that many problems.If no problems then good for you, enjoy your system.After all they are all great in some way or another." Ok but why would we buy a new 360 if microsoft has a 3 year warranty? I know I don't pay for things when I don't have to. Bottem line is I went with the 360 because of the 4 ps2's I had break and sony not even acknowledging their was a problem. I had to come out of pocket for each one, except the fourth wich i traded for my 360. At Least Microsoft replaces theirs free of charge

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rasterror

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so why isn't there a price drop?

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faceman420

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I've been holding out the past few months b/c they have to release a slim. I

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buffdaddy69

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@ acsam12304 You're an idiot if you truly believe Microsoft has hatched some conspircy to make millions of dollars for putting hardware that fails exactly one year into the systems life. You know what its really called? punk ass little kids who dont know how to treat their system by abusing it and killing it for 5+ hours.

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Elbar9423

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Does this mean the PS3 Slim is not going to be as good as the older one?

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wopchop10

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who cares?...

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buffdaddy69

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@ swamptick, Thats the only thing PS3 has over the 360. The PS3 has the hardware to produce a game of Advent Children graphics to run flawlessly. Second, It doesnt take five minutes to load a new act in Metal Gear Solid 4. It only takes two at the most. I'd rather wait for the whole level to be installed, so I dont see glitches and having buildings and bad guys popping up instantly from the glitchy ninja invisibilty, Then actually deal with all that stuff crammed into one disc that plauged games on the PS1 PS2 Dreamcast, Gamecube and The Original Xbox, PS3 has power the 360 doesnt, and thats the truth. GAmes get better looking and better gameplay as the consoles life goes on, its called unlocking the systes full potential. See, all 360 owners arent *****

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WolfGrey

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@izmickey Thats one of the funniest points for the 360.With it breaking down so much and having to send it in, wouldnt be cheaper in the long run to buy a ps3? Yet they do not and keep having them breakdown and have to buy new ones or keep sending in.It doesnt make sense whatsoever to keep doing that, i have heard that some people have even lost 7 or more 360s, give up if they are having that many problems.If no problems then good for you, enjoy your system.After all they are all great in some way or another.

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WolfGrey

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@shinchy Speaking that i play Demon's Souls very often ps3 has it better for me.Valkyrie Chronicles also says it for me.Persona 4 and 3.Oblivion also seems to run better on the ps3.Then all the rpgs from the ps2 i have.Not to mention when Persona 5 comes out(when it does) it will most likely be a ps3 exclusive.Also Tales of Vesparia is now coming to the ps3 as well, with more content.So far the ps3 just has it better for a rpg gamer like me.Mass Effect was a big one for 360 and a better version can be bought for PC so that doesnt really count for the 360 lol.Sadly the PC version is quite superior and corrects alot of problems it had.More streamline and smooth in gameplay also. Im also a big adventure or action/adventure gamer so ps3 is still my choice.

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