PS3 Loss Down to Just Eighteen Bucks

 Pages 1 2 3 NEXT
 

PS3 Loss Down to Just Eighteen Bucks

image

Sony is very close to breaking even with PS3 manufacturing costs, with the loss now down to less than twenty dollars.

The bad news for Sony is that the company is still losing money on every PlayStation 3, they good news, however, is that that amount is getting smaller all the time. In December, the loss on each unit was $37, but now, just a few months later, it's down to just $18, less than half of the December total. Considering the loss at launch was rumored to be in the hundreds of dollars, that's a very impressive reduction indeed.

The aggressive cost-cutting that Sony instituted after suffering huge losses during the economic downturn seems to be paying off as the company posted an operation profit for the quarter of 146.1 billion yen ($1.6 billion)

"We think we've bottomed out and we can do fairly well going forward," Sony Chief Financial Officer Nobuyuki Oneda told the Wall Street Journal. Sales of the PS3 are up, at 33.5 million units, and are closing the gap with the Xbox 360. Sony is now estimating it will turn a profit on the PS3 by 2011.

Source: VG247

Permalink

Well that's decent I suppose. Halving your loss on sales in less than three months is pretty impressive.

Just have to hope people keep buying PS3s in the future.

Yay! Things are getting close between Sony and Microsoft, and good competition leads to good progress (most of the time. Actually, it's just going to be more bitching).

I don't really see how it helps, I purchased my 360 a year ago because it was far far cheaper then a PS3, and other then a tiny amount of games that look interesting that are only out on the PS3 I have no incentive to spend more money on another console, I think a lot of people would feel similarly.

Don't call me a fanboy, if the PS3 had been cheaper and had the games I wanted when I made my purchase I'd of likely got that, but it was much more expensive, and now that it's down in price, I've already got my 360, got a ton of games, and everything I want is coming out on the 360 as well, so why would I buy another console?

I raise my glass to you, Sony.

*raises glass filled with soda*

*drinks soda*

Mmm, that's good soda.

I guess they can make that back on sales of games

kool grats to sony for the epic comeback

well this is good. :D

Excuse me but to what does the 18 $ refer? The total production and development costs minus the revenues from sales? per piece?

I can read between the lines that it is good news; i got that but I do not get what "a loss of 18$" is supposed to be.

Crazy_Bird:
Excuse me but to what does the 18 $ refer? The total production and development costs minus the revenues from sales? per piece?

I can read between the lines that it is good news; i got that but I do not get what "a loss of 18$" is supposed to be.

They are selling it for 18 dollars less than it costs to make it.

Congratulations to Sorny! Maybe I will throw a party for them with chips and dip and one of those salsa platters.

On second thought, maybe not.

Ok, thanks then it is referring to the contribution margin.

Yet they must use some pretty awkward calculation for their financial success calculation.
Probably they use the contribution of the already sold PS3s to reduce the operating cost of the single PS3 which will be sold there after.

Oooh...2011.
Hell I'd buy a PS3 if I wasn't so ridiculously bad with joystick aim.

Gratz too sony, they need too make up for the poor start

All they need is to make people pay for psn and they are golden :P

outcast_within:
All they need is to make people pay for psn and they are golden :P

If they made people pay for PSN I think one of their major selling points would die.

Truthfully, I think their current success has come at the cost of nessicary features like backwards compadibility. Sure, they reduced the cost of the units, but also made them far less worth having.

Amnestic:
Well that's decent I suppose. Halving your loss on sales in less than three months is pretty impressive.

Just have to hope people keep buying PS3s in the future.

You know what's more impressive? Selling a product that's profitable to begin with.

cobra_ky:

Amnestic:
Well that's decent I suppose. Halving your loss on sales in less than three months is pretty impressive.

Just have to hope people keep buying PS3s in the future.

You know what's more impressive? Selling a product that's profitable to begin with.

Yes, because the Wii is truly an impressive gaming console.

That was sarcasm. I don't think the Wii is impressive.

Wasder:
Things are getting close between Sony and Microsoft, and good competition leads to good progress (most of the time. Actually, it's just going to be more bitching).

w0t R U tlaking abo0t. 0nly fags buy teh GAYstation 3! LOLOLOLOL! buy a xbox 360! tis teh L33T!!!111

seriously, the closer that the ps3 and 360 get to each other, the more heated the console wars are gonna be. i look forward to seeing the threads on gamespot.

cobra_ky:

Amnestic:
Well that's decent I suppose. Halving your loss on sales in less than three months is pretty impressive.

Just have to hope people keep buying PS3s in the future.

You know what's more impressive? Selling a product that's profitable to begin with.

I think that rarely happens in the electronics industry actually, few components like TVs and whatnot sell at a gain nowadays. Isn't the 360 still selling at somewhat of a loss, or has it jumped over that now?

e2density:
Oooh...2011.
Hell I'd buy a PS3 if I wasn't so ridiculously bad with joystick aim.

Got 'I Chose The Impossible' in Bioshock on the PS3. If you are a good FPS player in general, you will not have a really big problem.

18$? Wow. In less than a quarter? Crikey, they are really getting back on their feet. Can't wait for more competition, cause that's where video games shine.

Well, I suppose Sony will be happy with that at least. Means they are slowly clawing it all back

tkioz:
I don't really see how it helps, I purchased my 360 a year ago because it was far far cheaper then a PS3, and other then a tiny amount of games that look interesting that are only out on the PS3 I have no incentive to spend more money on another console, I think a lot of people would feel similarly.

Don't call me a fanboy, if the PS3 had been cheaper and had the games I wanted when I made my purchase I'd of likely got that, but it was much more expensive, and now that it's down in price, I've already got my 360, got a ton of games, and everything I want is coming out on the 360 as well, so why would I buy another console?

this article was not trying to sell you the console

Hows the power draw on the new refined version compared to console 1.0?

will they outsource more? or how will they lower the loss of the other ps3s? and where does an Asian company outsource to?.

businesses tend to confuse me, but yay for sony, the ps3 really is a nice machine (or i know the slim is at least).

this is crazy. i cant believe all this time we were complaining about how much Sony was selling there ps3 for. Cant believe that they were giving us a deal.

Hmm, figures like loss of $37 "Per console" and the with no hardware revision I has gone down to "$18 per console" does beg the question of how much it actually cost "per console". I mean the console itself is mostly a pile of plastic, silicone and a trace amount of other metals, there is the time taken to make each one but that is mostly automated.

I think it is pretty poor economics to get too worked up about cost "per console" and seems to me like a fallacy.

I mean there are costs... and then there is revenue. You can't just divide the cost by the number of consoles to get the cost per console, it doesn't work like that.

What the "cost" is is buying or renting the machines that MANUFACTURE the PS3s and hire or employ the technical experts to get the job done. Then there is a labyrinth of other costs like warranty, legal, future R&D (playstation 4 won't come out of nowhere), distribution, PR, marketing, networking, production studios.

I think we should just forget about the idea of cost per console... it just has too many abstractions to have any relevance.

The only question that matters is "is Sony making enough money to cover their costs" and that comes from ALL sources, games and movie studios even. Because if they make a loss for too long and show no sign of ever making a profit, THAT is when we should care as that is the point either prices go up... or the company goes the way of Sega and their Dreamcast (not the case here) but that is the point where gamers should care.

We need to keep an eye on the general health of a company, not just obsess about the one aspect that we gamers are most interested in, the console, which is the most important, yes, but so many other invisible components are linked to that.

Treblaine:
Hmm, figures like loss of $37 "Per console" and the with no hardware revision I has gone down to "$18 per console" does beg the question of how much it actually cost "per console". I mean the console itself is mostly a pile of plastic, silicone and a trace amount of other metals, there is the time taken to make each one but that is mostly automated.

I think it is pretty poor economics to get too worked up about cost "per console" and seems to me like a fallacy.

I mean there are costs... and then there is revenue. You can't just divide the cost by the number of consoles to get the cost per console, it doesn't work like that.

Yes it does. That is exactly how it works. It's called Average Cost (AC) and it is as important to microeconomics as TC (what you are proposing Sony go by).

HA. Hahahahahahahahahahaha!
With any luck this bit of info will kill this stupid argument in the incredibly stupid console wars.
A guy can dream yes?

ahlycks:
this is crazy. i cant believe all this time we were complaining about how much Sony was selling there ps3 for. Cant believe that they were giving us a deal.

I think one of the early jokes about the PS3 was "Microsoft's new strategy for taking down the PS3 after finding out that Sony was making them at a $120 loss is to buy all of the PS3s"

Sounds good on this end.

If they catch up there will be quite a good competition in the console market. And of course that means better games.

Had a I realised Sony released a console they were actually making a loss on, I would have spent much more time making fun of them.

Yes it's reasonably impressive that they've managed to cut just how much money they're losing on this thing, but really, releasing something you're making a loss on? I'm not a business whiz but that doesn't sound like the best strategy.

I'm curious...Sony says they have sold something like 33mil units: Where have the majority of these consoles been purchased? I would have thought that it was something like 3:2 Japan:USA. Does anyone have any ideas on where I could get those sorts of figures?

MelasZepheos:
Had a I realised Sony released a console they were actually making a loss on, I would have spent much more time making fun of them.

Yes it's reasonably impressive that they've managed to cut just how much money they're losing on this thing, but really, releasing something you're making a loss on? I'm not a business whiz but that doesn't sound like the best strategy.

It's more of a long-term strategy.

http://en.wikipedia.org/wiki/Loss_leader

They earn money from the games that are sold for PS3. Also, by planting a Blu-Ray player in 33.5 million homes they're getting royalties off of every Blu-Ray disc purchased by those customers. They most likely would also profit off of extra controllers and other Sony accessories.

wasalp:

tkioz:
I don't really see how it helps, I purchased my 360 a year ago because it was far far cheaper then a PS3, and other then a tiny amount of games that look interesting that are only out on the PS3 I have no incentive to spend more money on another console, I think a lot of people would feel similarly.

Don't call me a fanboy, if the PS3 had been cheaper and had the games I wanted when I made my purchase I'd of likely got that, but it was much more expensive, and now that it's down in price, I've already got my 360, got a ton of games, and everything I want is coming out on the 360 as well, so why would I buy another console?

this article was not trying to sell you the console

well... duh... I was simply pointing out that making loosing less money on each console wont be enough to get over the hurdle they set up by pricing themselves right out of the market, the thing was more expensive then some cars I've owned when it first came out.

 Pages 1 2 3 NEXT

Reply to Thread

Log in or Register to Comment
Have an account? Login below:
With Facebook:Login With Facebook
or
Username:  
Password:  
  
Not registered? To sign up for an account with The Escapist:
Register With Facebook
Register With Facebook
or
Register for a free account here