Sony's PS3 game console is popular among many gamers, but faces significant competition from the Xbox 360 and the Nintendo Wii. Much of the pressure placed on the PS3 by the other two major game consoles is one of price.
One of the reasons that the PS3 is still priced well above some versions of the Xbox 360 and the Nintendo Wii is because the components and technology used in the PS3 make it more expensive to build. It's hard for Sony to cut the price of its console when the system is already being sold at a major loss.
When the PS3 first launched in 2006, iSuppli tore the system down and found that it cost Sony about $840 to build the version of the PS3 selling for $599 at the time, accounting for a loss of around $240 per PS3 sold. Sony expected to make the money up on the backend with game and accessory sales.
The basic PS3 console, which sold for $499 in 2006, cost Sony only slightly less to build at $805 according to iSuppli. After two years of availability, iSuppli has again performed a teardown of the PS3 and found that Sony is still losing money on the console.
The bright light for the electronics giant is that despite still selling at a loss, the PS3 is losing much less money today than it did in 2006. The research firm reports that the PS3 costs Sony about $448 to build and the system sells for $399. The loss Sony is now taking on the PS3 amounts to about $50.
iSuppli analyst Andrew Rassweiler told Business Week, "Every time we do a teardown, it's sort of backward-looking. Sony is one step ahead of us and probably has plans to re-spin the hardware to reduce the costs yet again."
The key to reducing the cost to build the PS3 so significantly for Sony is the combination of what used to take two or more chips on early PS3 models to a single chip for the same tasks on today's PS3. The console has also moved to smaller nanometer scale build processes for the GPU and the Cell processor. The NVIDIA GPU and the Cell processor in early PS3 were built on a 90nm scale; today the parts are built on a 65nm scale making them cheaper to produce. The Cell processor is now estimated to cost $46 compared to the $89 price tag in 2006.
The NVIDIA graphics chip now costs $58 compared to the $129 in 2006. The total number of parts used in the PS3 was 4,048 in 2006 and today the PS3 uses 2,820. Rassweiler says, "At the end of the day the PS3 is doing the same thing it did before, but with two-thirds as many parts."
DailyTech reported in January of 2008 that Sony expected the PS3 to be profitable in 2009. If the components inside the console continue to drop in price as they have since introduction, Sony may well meet that goal in 2009.
quote: Sony expected the PS3 to be profitable in 2009
quote: I assume you are talking about in November, where the 360 sold like 836k units. Well, that's less than half of the 2+ million units that the Wii sold.
quote: ps3 is a quality machine. there is no doubt of that.
quote: Sure, the PS3 is a powerful piece of hardware. But who measures the value of a console in MIPS?
quote: ts just wait and see shall we? im pretty confident even with the catalogue of mistakes sony have made, as soon as its price becomes reasonable it will sell like hot cakes. time and again its proven the main obstruction to ps3 selling well is its price.
quote: Sony is not making a profit on consoles, you are not going to see a pricedrop until the price to manufacter goes down another $50-100 at least.
quote: Its two years into the lifecycle of the console, I really don't follow your logic here. Sony is not making a profit on consoles, you are not going to see a pricedrop until the price to manufacter goes down another $50-100 at least. By then it could be 3 years into a possibly 5-6 year lifecycle, do you really think the PS3 will have enough time to catch up? I don't... And BTW.. I own a PS3.
quote: HOW LONG before it drops
quote: It costs as much as a BluRay player and a 360 combined, and offers slightly less.
quote: ps3 is currently overpriced. this is mind numbingly obvious, but only because 360 has had a price cut.
quote: Sony really needs to stop making proprietary crap
quote: HD-DVD was far more consumer friendly since it was like a third to half the price of blu-ray.
quote: 360 has most of the games that the PS3 has and is half the price.
quote: BTW, you're wrong about the 360 not having HD media playback. It can play HD media just fine, just can't read HD-DVDs or Blu-Rays discs. There is a difference, just so you know.
quote: And since when does someone compare the cost of the components of a system to what the system costs?
quote: 100 million people have PS2s, a huge majority of them moved on to PS3 and never looked back except for God of War 2
quote: Don't forget, 100 million people have PS2s, a huge majority of them moved on to PS3 and never looked back except for God of War 2.
quote: The only thing the PS3 offers over the $199 Xbox360 is Bluray and a harddrive.
quote: and wifi,and free online gaming
quote: $200 = base model Xbox360. NO Hard Drive! And a typical quality Blue-Ray player is $200~300. So, uh... nope on that one. A HD-ADD-0n for xbox360 is now better... $100 for 60GB (compared to the 20GB version) or $140 for the 120GB vs (was $200 not so long ago). Wait, lets add wireless networking since most people don't have network cables next to their Home Theater setup. Okay, that $200 console is $400. Smaller HD. and you lost a USB port since your wireless is external... along with its power brick. Oh - NO (NONE / NADA) Blu-Ray option! HD-DVD - is dead (in case you didn't know), ge, some much for Hi-Def standard, Microsoft. So lets add a good Blu-Ray player... $200. You're up to $600!
quote: The sad thing is, none of this brutal logic and truth will ever be enough to make a sony fanboy admit fault. Facts are nothing more than a moments distraction from days of hate fuelled xbox bashing forum trolling.
quote: Blu ray 2x runs about half the speed of a 6xDVD drive.
quote: Sony is not used to their subjects complaining about the huge turd they're forced to work with.
quote: XboX360 = Plays games, with awesome HD graphicsPS3 = Doesn't know what it is. Says its the ultimate media superbox does-it-all mega game thing but really does nothing of particular note very well, and all things poorly.
quote: nd that Arcade version needs so much stuff to make it even worth it you're nickled and dimed to get it even worth playing with accessories once Microshaft has you in the door.
quote: In the end, individuals interested in certain aspects of each console are better off choosing one or the other.
quote: such as what discounts they get for buying in bulk
quote: Sony's PS3 game console is popular among many gamers...