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Sony PlayStation 3 game console is finally released and analysts say that the game console offers performance of a supercomputer, however, dissection of the console reveals that Sony Computer Entertainment Inc. loses over $300 on each one and the machine is still very expensive to build.

“With the PlayStation 3, you are getting the performance of a supercomputer at the price of an entry-level PC,” said Andrew Rassweiler, teardown services manager and senior analyst for iSuppli research company.

The analyst firm claims that its preliminary estimates the combined materials and manufacturing costs of the PlayStation 3 is $805.85 for the model equipped with a 20GB hard disk drive (HDD), and $840.35 for the 60GB HDD version. The estimates do not include additional costs for elements including the controller, cables, packaging, freight as well as profit for resellers, such as BestBuy..

iSuppli believes that Sony is encouraging customers to acquire more expensive 60GB models as Sony is taking $306.85 loss on every 20GB PlayStation 3 sold, whereas the loss on every 60GB version totals $241.35, according to teardown analysis.

The most expensive component of the PlayStation 3 is claimed to be Nvidia’s RSX graphics processor, which, according to iSupply, costs $129. However, given that the RSX graphics sub-system integrates a graphics processor and four memory chips, the cost of the GPU itself should be much lower. Blu-ray optical drive costs $125, being the second most expensive component, according to iSuppli’s teardown analysis. The Cell processor, which was expected to cost hundreds of dollars, actually costs Sony about $89, the research firm believes.

It is ordinary for game console makers to lose money on hardware, and make up for the loss via video game-title sales. Still, the size of Sony’s loss per unit is remarkable, even for the video-game console business, iSuppli says.

“The reason why the PlayStation 3 is so costly to produce is because it has incredible processing power,” Rassweiler said. “If someone had shown me the PlayStation 3 motherboard from afar without telling me what it was, I would have assumed it was for a network switch or an enterprise server.”

Discussion

Comments currently: 11
Discussion started: 11/17/06 01:12:48 PM
Latest comment: 11/21/06 12:40:45 PM

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1. 
It's still very expansive for $499, the price should $300 consider the low memory for 20GB no worth to buy
0 1 [Posted by:  | Date: 11/17/06 03:15:37 PM]
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2. 
Why spend all that crazy money on PS3, XBoX360 is King. Check the link; http://uk.media.xbox360.ign.com/articles/617/617951/imgs_1.html
0 1 [Posted by:  | Date: 11/18/06 09:15:42 AM]
Reply

3. 
What a load of crap this is. This is supposed to be a breakdown of the MANUFACTURING costs. I see a number of items on this list that are produced by Sony. Any ICs listed cost pennies to make in quantity. Oh, did anyone actually believe that DVD players actually cost hundreds of dollars to manufacture when they first hit the market? No, the real cost in these items is R&D, which third party manufacturers try to recover with an inflated price. Now that the demand is low, such items as DVD players are on the market at a price close to manufacturing cost.

So, let's assume that the third party costs are the same as listed. The real cost breakdown for the 20gb model looks a little more like this:
Third party components:
Nvidia, IBM and others: $309.00
Sony: ~$100.00 (and I'm generous with this)

Total cost: $409.00

Looks to me like a $90.00 profit.
0 1 [Posted by:  | Date: 11/20/06 05:54:36 AM]
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