Sony still taking financial hit on every PS3 sold

By Justin Mann on December 14, 2009, 7:00 PM
Everyone knows that the money for console manufacturers is in games and accessories, not the console itself. Still, it is surprising to learn that Sony is still losing cash every time a PS3 is sold, despite the rig going through numerous hardware refreshes and cost cuttings. A modern PS3 costs about $336 to manufacture and is sold at $299, losing at least $37 with each sale.

Spanning over millions of consoles, that's a substantial amount. In the pioneer days of the PS3, Sony intended for it to break even early on. Streamlined manufacturing and other improvements gave them cost savings, but not enough to beat the market. To compete with Nintendo and Microsoft, Sony was forced to cut the PS3 price down back in August.

Sony is still third in current-gen console sales, trailing Microsoft by upwards of 7 million units -- though, the gap is slowly closing with Sony's price cuts.




User Comments: 16

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CodePhoeniX said:

Software licensing for Sony off sets those costs.

Xclusiveitalian Xclusiveitalian said:

I think now that ps3 is getting way more games including way better exclusives is going to be more of a selling point for the ps3. There selling more consoles then ever these days, and no matter what, that means money, money from DLC, accessories you name it, especially with the boom this holiday season i believe sony is going to be very happy. $_$

Tekkaraiden Tekkaraiden said:

Better than the $150+ they were losing originally. I'm sure they'll be able to get costs down a bit more to finally turn a profit.

raybay said:

I am curious as to the source of this information... Sony denies it, of course.

Staff
Matthew Matthew, TechSpot Staff, said:

I am curious as to the source of this information... Sony denies it, of course.

[link]

Puiu Puiu said:

They shouldn't complain. The PS3 is doing extremely well now compared to 2008 and it will beat xbox360 in 2010. In therm of profit they are well withing the green.

If only they could improve their online services to better compete with xbox's (but being free is still a bonus for me, but others just can't stop comparing the two)

Guest said:

im from Australia, and they go for $500 here, so thats a profit i guess. the australian is at about 90 us cent

hynesy hynesy said:

Us aussies cop a bit of a raw deal when it comes to electronics prices, especially when compared to the US at an almost equal exchange rate

ET3D, TechSpot Paladin, said:

This loss doesn't even take into consideration the steps between manufacturing and getting the console into the gamer's hands. Shipping would cost. Do the stores make anything from these sales? I'd suppose so (even if very little).

Richy2k9 said:

hello ...

well i'm quite confident this issue will be settled after the release of God of War 3 & GT5

SONY must concentrate also on other countries, because there is a market, emerging yet working. To every 10 friends, at least 6 had a PS2, now it's a 1/5 for the PS3...

the population is only 1.2 million in Mauritius, with at least 200,000 ADSL subscribers, there must be like 20000 - 150000 SONY consoles & around 15000 MS ones. this is not official, i may even be wrong but that what it seems.

whatever happens our country will hardly reach a 500,000 unit sold but who knows, there's still room for it.

So if SONY would do a big campaign in MU, will work fine.

btw for pricing issues a PS3 is around Rs 14000 (452US$) & the Xbox360 is Rs 16,000 (517 US$), a PS3 game may cost from Rs 900 - Rs 3700 (29 - 120 US$) - not CE. Xbox360 games goes at Rs 1200 - Rs 2500 (38 - 81 US$) if some are not pirated where copies are found on torrents or at Rs 200(7 US$)/unit on some black market ...

Note also that MS is highly present in the country, while the SONY representative is one of the worst gaming side, they don't even know how to service or repair a console .. thanks god we have a lot of freelance technician.

I don't have an Xbox360, i'm no SONY fanboy, i'm just a God of War fanboy & i import all my games at 40 - 52 US$ or less ...

cheers!

Guest said:

Well within the green? Sony's Game division has shown a significant loss since the PS3 was introduced, as much as a billion $ a year. Game sales havent come close to making up the loss on console sales.

compdata compdata, TechSpot Paladin, said:

Guest said:

Well within the green? Sony's Game division has shown a significant loss since the PS3 was introduced, as much as a billion $ a year. Game sales havent come close to making up the loss on console sales.

Yeah, I am not sure games are the only reason. Another reason for sony to push the PS3 was to get Blue-Ray adopted as the next HD standard as well. If Blue-Ray picks up steam it come be a major cash cow for Sony with almost no continued investment.

EXCellR8 EXCellR8, The Conservative, said:

I'm finding it hard to believe that every console costs over $300 to make, especially since you are paying for a controller and all the accessories as well when you buy the console for $299. How much does the DS3 cost to make, $60? I guess the most expensive components are the motherboard and processor but I'd figure Sony to be the exception to msrp since they manufacture millions of consoles a month. The majority, if not all, PS3 consoles are assembled in China so either they are spending too much on assembly (most likely) or they are getting ripped off on components.

pkww2 said:

If $336.27 is the real cost of Sony, they will lost much more @$299 MSRP.

Distributor mark up min. 2%, retail will mark up between 6% to 8% min. on the console to sell. In that case Sony selling price will be around $269. However, I really doubit it $336.27 is the true BOM cost + overhead!!

Tekkaraiden Tekkaraiden said:

pkww2 said:

If $336.27 is the real cost of Sony, they will lost much more @$299 MSRP.

Distributor mark up min. 2%, retail will mark up between 6% to 8% min. on the console to sell. In that case Sony selling price will be around $269. However, I really doubit it $336.27 is the true BOM cost + overhead!!

You'd be wrong with your assumption. Sony has there own distribution network and the retailers sell them at a loss ie no mark up. That's why they try to get to buy accessories and extended warranties.

I worked at eb a bit in the last generation and once had a conversation with a Bestbuy employee who had the great idea of buying xbox's for cost and then reselling them. He gave up the idea when he found that cost was more than retail.

Guest said:

Hey Jowga here,

Sony is still making PS3s for us....... who really cares about all this negativity?.....lets focus on how they are actually progressing from were there when they first came out.....and this great 2009 year for gaming!!!!!!....Sony said things would get better slowly but surely guess what they were correct so far......quit B%#@ so much about how much they are losing will ya?.

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