iSuppli Estimates PS3 Selling At $240 to $306 Loss

iSuppli Estimates PS3 Selling At $240 to $306 Loss

After pulling apart the console and pricing out the individual components, iSupply has found that the PS3 is selling at a staggering loss.

"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. All that power comes at a cost for Sony, according to the company. The $499 20GB console is selling at a loss of $306.85 US, while the 60GB version is losing $241.35 US per sale.

Given that the lower cost PS3 model is costing Sony more money to sell, it's no surprise that the recent Japanese launch saw fewer 20GB models. According to Famitsu, the 20GB model shipped 33,800 units while the 60GB model sold 54,600 units. "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."

iSupply has also updated their findings on the Xbox 360 unit cost, claiming that Microsoft is now selling at a $75.70 profit for the premium system.

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I'm curious - Has anybody heard any good PS3 news since they released? All I've heard on every front has been bad. While I'm pretty certain Sony missed their mark, I'm curious what things they DID do well. Losing money for a company with financial troubles is not a good thing.

If we assume the above numbers are accurate. the following is also true.

Assuming 100% profit of game's sold the PS3 must sell 5 games per unit at full original price to break even for the company. We all know for a fact that 100% profit is NOT going to happen. In the food service industry profit is normally about 10% of the total retail cost of an item. (accounts for everything from repairs and maintenance through rent through food cost and labor) I'm going to assume that the video game industry is going to somehow manage twice that in ultimate profit. 20%.

That means to me that they need to sell at $60 25 video games per console. I don't know if I'm in the minority here. But if you need 25 games sold to break even on your hardware. Things are not good for you. Even 10 games to break even isnt a good thing. And if they're making 50% profit then the industry isn't half as hard as I think it is.

Thoughts anyone?

I had an afterthought - The price of the PS3 is expected to go down in it's lifespan. So it may be that towards the end of it they may even be breaking even on consoles and making a profit on games then. (The XBox360 certainly didn't make a profit when it first was released.)

 

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