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Sony's $89 Cell processor
iSuppli calls the PlayStation 3 an "engineering masterpiece"

While Merrill Lynch may be one of the few firms projecting a win for the Xbox 360 by 2011, a new cost analysis for the PlayStation 3 puts a few more things into perspective with regards to the next generation console battle.

It looks as though Ken Kutaragi was right when he stated that the PS3, which will be priced at $499 and $599 respectively in the United States, is probably "too cheap." According to a new cost analysis by iSuppli, Sony will lose $307 for every 20GB PS3 it sells and $241 for each 60GB version. "With Sony taking a smaller loss on the higher-end model, it's not a surprise the company is steering customers to the 60Gbyte version," said iSuppli. For the United States, 20GB PS3s will account for 20% of the sales mix while the 60GB versions will take the remaining 80%.

Although its initial losses with the PS3 will be large, Sony co-chief operating officer Jack Tretton points out that the original PS and the PS2 became "incredibly" profitable after taking massive losses at launch.

iSuppli summed up it results by stating “While many fret over the high cost and price of the PlayStation 3 compared to the competition, iSuppli believes the console provides more processing power and capability than any consumer electronics device in history. Because of this, the PlayStation 3 is a great bargain, well worth its $599 price and $840.35 cost, iSuppli believes."

Microsoft, which was once seeing red to the tune of $153 per unit sold, is now making a profit of $75.70 on each console before marketing and distribution costs a year after launch.

Nintendo has already stated that it will make a profit on every Wii that it sells. Given that CompUSA lists its cost for the Wii at $237.50, Nintendo's actual costs are likely closer to the $200 mark. That shouldn't be too surprising given that Microsoft's Richard Teversham likened the Wii to a Gamecube with a DVD drive (someone should tell Tevesham that the Wii doesn't actually play DVDs…for now).

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By xsilver on 11/17/2006 12:11:00 AM , Rating: 2
considering that hardly anyone bought any games on the launch ps3's sony is taking an even bigger hit on their bottom line.

they need to get some kickass titles out there ASAP so that they can recoup some of their losses.
none of the launch titles really scream "buy me"

RE: profits
By tuteja1986 on 11/17/2006 12:12:39 AM , Rating: 2
In japan it was even more ;( the 20GB model goes for $430USD or 49500Yen.

RE: profits
By Playto on 11/17/06, Rating: 0
RE: profits
By dgouldin on 11/17/2006 9:45:41 AM , Rating: 2
I assume he meant even more of a loss for Sony, which would be accurate given the lower price.

RE: profits
By Zirconium on 11/17/2006 12:26:48 AM , Rating: 5
I think one reason few people bought any games is because so many people bought the systems just to resell them. Once the systems find their way to their final owners, the game sales should pick up.

RE: profits
By ajfink on 11/17/2006 11:48:49 AM , Rating: 2
I didn't realize the 360 was profitable yet (before the HD-DVD player, anyway). It will be interesting to see if the PS3 can claim the same thing in a year.

RE: profits
By The Sword 88 on 11/17/2006 6:54:37 PM , Rating: 2
I agree they need some killer games say a new FF or something

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