Sony is looking to 65nm production to cut costs
Sony considers trimming the price of its new PS3

Sony's PlayStation 3 hasn't even been on the North American market for three months, but the company is already considering a price cut on its new console. Sony trimmed the price of the most basic PS3 in Japan before it even launched and a price cut in North America could help to boost slow initial sales.

"We may look at the price as part of our strategy to expand the market when the timing is right," said Sony Senior Vice President Takao Yuhara at company headquarters. An analyst for Lazard Capital Markets suggests that the price cut could come as early as this year.

Many question, however, if Sony can pull off this feat so early in the game. Sony has seen its Q3 profits fall 5.3% from a year ago along with a $455 USD million USD loss for its games division (compared to a $556 USD million profit a year earlier). Microsoft, in comparison, witnessed a $289 million USD loss for its Entertainment and Devices division.

One must also take into consideration that according to iSuppli, Sony is losing $307 on every 20GB PS3 that it sells and $241 on every 60GB PS3. The bigger loss on the 20GB unit explains why the 60GB unit accounts for 80% of the sales mix in the United States.

A move to 65nm production could ease the pain of trimming costs on the console. Sony has recently stated that it has already started production on a number of 65nm components and has realized a 40% size reduction in comparison to 90nm components. The company is also looking to reduce the number of parts used in the PS3 to lead to even deeper cost reductions.

But what's bad for Sony will likely turn out to be good for the consumer. Most consumers don't really care if Sony is losing money on the PS3 -- all they care about is getting the Blu-ray equipped console for a lower price. If Sony is successful with its bid to lower its own costs on the console, consumers might just get their wish sooner than expected.

"If you can find a PS3 anywhere in North America that's been on shelves for more than five minutes, I'll give you 1,200 bucks for it." -- SCEA President Jack Tretton
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