PlayStation 3: It only does everything (except make a profit)

Sony still losing money on PS3 hardware

According to market intelligence firm iSuppli, Sony Corp is still losing money on PlayStation 3 hardware, despite the recent shift to the "slim" version of the hardware. "Since the introduction of the PlayStation 3 in late 2006, Sony has subsidized the price of every console sold, a deficit the company has made up for with game sales and royalties," said Andrew Rassweiler, director and principal analyst, teardown services, for iSuppli. "However, with each new revision of the game console hardware, Sony has aggressively designed out costs to reach the hardware and manufacturing breakeven point as quickly as possible. The latest version of the PlayStation 3 manages to further reduce the loss, even with the U.S. price of the console having fallen by $100 during the past year."

According to the firm's research, each PlayStation 3 sold in the United States nets the company $31.27 less than its materials and manufacturing costs. According to a source close to Sony, this translates to a need for SCEA to sell as many as five third party games before it starts to make money on an individual hardware sale. This number is drastically reduced for first party games.

This is still a considerable improvement over the costs associated with the hardware at launch. In 2006 it was reported that each unit cost Sony $805 to manufacture. In July Sony's chief financial officer Nobuyuki Oneda said that manufacturing costs had been reduced by 70 percent.

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John Davison

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