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PS3 production cost halved?

When a new console hits the market it generally sells for a loss and makes up the losses through software and other peripherals. Up until recently the PS3 had been selling at a estimated $200 US loss with every console sold. But now with it's new redesign Sony have halved the PS3's production cost from $800US to $400US.
It's a general way of doing business in the gaming hardware marketplace, you sell your console at loss and make back on that through licensing. That is except for Nintendo that is who is able to make something for every unit sold from the get go. Some companies take a bigger hit than others, take the PlayStation 3 for example. For each console that Sony sold, they were taking a close to $200US loss despite the high RRP and when you consider the amount of units assembled, that's a considerable hit to the company's bottom line.

With Sony experiencing what can only be described as disappointing financial reports for quite some time surrounding the launch of the PlayStation 3, it's understandable that they would feel compelled to reduce the loss made by each console sold. Nikko Citigroup has reported that by shrinking the chip sizes, re-evaluating parts (ie removing the Emotion Engine) and various other design tweaks, Sony has been able to bring the production cost of each console down to $400US from what was pre-November pre-40Gb model, $800US.

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  • 1 thumbs!
    tallteen86 | January 12, 2008
    $800 US (production cost) - $200 US (supposed 'loss') = $600 console? The console hasn't been $600 US for some time >_>

    Still, this is good for the future...could lead to more price drops eventually (though Sony will likely use this to absorb the monstrous costs put into this machine)...

    But I think the $ values are a bit off though...or outdated anyhow >_>
    • -1 thumbs!
      Capn Droid | January 12, 2008
      It's that when they sell the item, I believe they actually lose $200 on the deal. Not sure if the selling price is cut, but this means that Sony will instead gain $200 each sale.
  • 0 thumbs!
    Linkin Park Fan | January 12, 2008
    So now everytime they sell a 40GB, they aren't losing or gaining anything? Or is that for the 80GB too?
  • 0 thumbs!
    Subzer0 | January 12, 2008
    I find it hard to believe they haven't gained anything so far.
    • 0 thumbs!
      iLLmatic | January 12, 2008
      Why is that so hard to believe? Do you know how much it costs to make every PS3?
  • -2 thumbs!
    Red 9 | January 12, 2008
    I absolutely love how everyone has so much fun making the PS3's financial first year sound like crap. It's not like Sony wasn't expecting this to happen; they even told us that they foresaw this happening since launch.

    But this is still good news for Sony. Halving the production costs should help, but they still need work snagging developer support.
  • -2 thumbs!
    Evanster 69 | January 13, 2008
    Hope this lowers the overall sell price of the console. But if it drops to near 300$ then I might consider buying one when I get a job.
  • -2 thumbs!
    StarJet | January 13, 2008
    What the??? They aren't gaining anything with the 40gig?

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