PS3 costs less than half to make than it did a year ago

Ever since the launch of the PlayStation 3, those who took exception to the console’s relatively high price criticized Sony’s decision to include an expensive Blu-ray Disc drive.

While developers such David Jaffe (God of War, Twisted Metal) wanted to do without the drive, Sony itself has said that the decision to include Blu-ray Disc hardware is the smartest decision it has ever made.

Now with the Blu-ray Disc format looking stronger than ever with the support of Warner Bros., the PlayStation 3 appears very well positioned as multimedia machine that appeals to more than just the gaming market.

Along with consumers, Sony felt the pain of its high console price at the time of the PlayStation 3 launch in November 2006. iSuppli estimated that the initial cost of manufacture for the console was $840.35 for the 60GB model.

Since then, however, Sony has managed to close the gap considerably on its loss on every unit sold. Nikko Citigroup’s Kota Ezawa, quoted by BusinessWeek, says that each PS3 costs Sony around $400 to manufacture. Ezawa estimates that SCEI will lose $1.4 billion this fiscal year, following last year's $2.1 billion loss.

The falling price of PlayStation 3 components is thanks to the increase in yield and supply of blue-violet laser diodes used in the high-definition optical drive in the console. Another large help in reducing costs was the Cell Broadband Engine chip’s shrink to 65nm.

SCEI chief Kazuo Hirai at CES told the media that the PlayStation division of the company aims to be profitable starting next fiscal year.

"People Don't Respect Confidentiality in This Industry" -- Sony Computer Entertainment of America President and CEO Jack Tretton

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