Report: Sony has halved PS3 costs

<i>Business Week</i> estimates that manufacturing costs of Sony's flagship console have gone down 50 percent since launch.

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Historically, console manufacturers have made a loss on the hardware itself and recouped their losses on the resulting software sales. Although Nintendo has claimed that the Wii has been making money since day one, the PlayStation 3 costs Sony money for every unit sold.

However, according to a report in Business Week, the Japanese manufacturer has managed to halve the cost of making the console since launch. The PlayStation 3 launched in the US in November 2006, and during March 2007 in Europe.

The article quotes Nikko Citigroup analyst Kota Ezawa, who believes that each PlayStation 3 now costs approximately $400 to make, as opposed to $800 at its US launch. He puts this reduction down to a number of factors, including Sony's tweaking of the design as well as the shrinking of the internal chips. Ezawa did not specify whether he was referring to the recently introduced 40GB SKU or Sony's flagship 80GB SKU, neither of which was available at launch in the US.

Ezawa said, "We think the biggest factor here is that simplification has become possible through a reduction in the parts count, leading to a reduction in costs."

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