Sony PlayStation 3 Costs $840 to Manufacture After All

PlayStation 3 – An Engineering Masterpiece, Analysts Say

by Anton Shilov
11/17/2006 | 01:01 PM

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.”