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Sony Has Cut PS3 Production Costs By 70 Percent

| 31 Jul 2009 22:03
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Sony has made huge strides in cutting down on the manufacturing costs for the PlayStation 3, CFO Nobuyuki Oneda revealed during an earnings call yesterday.

Common wisdom has it that the components to manufacture the PS3 are so expensive that Sony has literally been losing money on every console sold. That's not just hearsay or conjecture - Sony CEO Howard Stringer has joked himself that he "loses money on every PlayStation I make - how's that for logic?"

Stringer's finances might be getting a tad more logical if recent remarks from Sony CFO Noboyuki Oneda are to be believed. "The cost reductions since we introduced the PS3 are very substantial and on schedule," Oneda said during an earnings call yesterday. "We don't disclose how much of the PS3 cost reduction was specifically achieved during the past two years. But that is on schedule."

What exactly does that mean? Oneda says that they've cut manufacturing costs by "about 70 percent, roughly speaking."

So does that mean that Sony isn't losing dough every time they pump out a PS3? Oneda doesn't give any exact numbers, but as GameSpot theorizes, if iSuppli's numbers are to be believed, and in 2006 it cost $840.35 to produce a unit, then it costs around $242.10 to produce a PS3 presently. The PS3 base model costs $399 nowadays, which would figure a $146.90 profit per system sold, without factoring other costs (which could very well take a hefty chunk of that).

In any case, if Oneda isn't fibbing, it's good news for Sony's investors and supporters - a 2/3 drop in production cost is a good thing. But what's brought about such a dramatic decrease? Is it just Sony's brilliance when it comes to streamlining hardware production, or could Oneda's words reflect the existence of a PS3 that's much cheaper to make? One that's smaller and thus cheaper? One that's, I don't know, Slim?

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