Sony losing money on PlayStation pricing
By Dave Hannon -- Purchasing, 11/17/2006 3:04:00 PM
Sony Corp. is losing more than $300 for every new PlayStation 3 it sells. According to a recent teardown analysis by iSuppli, the combined materials and manufacturing cost of the PlayStation 3 is $805.85 for the 20GB version and $840.35 for the 60 GB version. “At these costs, materials and manufacturing costs for the 20 GB model exceed the suggested retail price of $499 by a total of $306.85,” iSuppli said in the report. For the 60 GB version, costs exceed the $599 price by $241.35.
“It’s common for video-game console makers to lose money on hardware, and make up for the loss via video game-title sales,” iSuppli said. “Still, the size of Sony’s loss per unit is remarkable, even for the video-game console business.” At the same time, iSuppli does consider the PlayStation 3 an “engineering masterpiece that sets a new high mark for computing price/performance.” Andrew Rassweiler, teardown services manager and senior analyst for iSuppli, points out, “The reason why the PlayStation 3 is so costly to produce is because it has incredible processing power. If someone had shown me the PlayStation 3 motherboard from afar without telling me what it was, I would have assumed it was for a network switch or an enterprise server.”
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