backtop


Print 66 comment(s) - last by XtremeM3.. on Nov 21 at 8:12 AM


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).



Comments     Threshold


This article is over a month old, voting and posting comments is disabled

RE: money lost
By Spivonious on 11/17/2006 10:53:15 AM , Rating: 2
Just to clarify I used this equation:

money lost = (.8 * 240 + .2 * 300) * 500,000


RE: money lost
By stromgald on 11/17/2006 11:37:52 AM , Rating: 2
The 'money lost per console' is dependent on the number of consoles sold. Currently, Sony is losing money on each console because the people doing the math are factoring in R&D costs on each console. As more are sold, that cost becomes less and less of a factor for each unit, and eventually they will break even and start making money on each unit.

The main difference between Sony and Microsoft is that Sony is putting themselves in a bigger hole (~$240-300 vs. $153), so they need to sell more before they break even. They're depending more on their sales volume to turn profit than Microsoft is. IMO, thats pretty risky especially if you're arriving on the market a full year after your competition, but I guess Sony is confident their product will sell quickly.


"Nowadays you can buy a CPU cheaper than the CPU fan." -- Unnamed AMD executive

Related Articles













botimage
Copyright 2014 DailyTech LLC. - RSS Feed | Advertise | About Us | Ethics | FAQ | Terms, Conditions & Privacy Information | Kristopher Kubicki