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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 marvdmartian on 11/17/2006 9:37:03 AM , Rating: 2
Maybe he meant he could build something that could play current games better than the PS3?? Comparing the cpu's is a waste of time, if the PS3 doesn't use a computer-style cpu. The blue-ray drive is going to be good for future-proofing the system, but isn't really necessary at this point in time, is it? Honestly, how many games are available on blue-ray, versus dvd?? With new graphics cards coming out all the time, "yesterdays" video cards, while still kicking some serious butt, are dropping in price pretty quickly (as always). Hard drive prices have dropped in the past year too.

Really, the only place where it could potentially hurt you by building a similar performing pc would be in buying the ram, which went up pretty high in price in recent months. And by the time you need blue-ray drives, the price of those should drop pretty considerably (or the technology will have been bypassed by something newer/better).

So if you compare the performance, versus the technology, the OP is probably close to the truth. Doesn't matter anyways, as once Sony builds more of these things, the price will start to plummet for them, and their profit margin will go "into the black" for the remainder of this game system's life cycle.

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