According to the researchers at iSuppli, who originally stated that the bill of materials for Sony's expensive PS3 had been around $840, Sony's loss for each PS3 produced has been considerably reduced in the last two years. iSuppli said (as reported by BusinessWeek) that the PS3 now costs $448.73 to build (Sony, as you know, sells the console for $399).
Sony has said over and over again that it's focused on bringing costs down, which is why the company has not instituted another price cut on the PS3, despite Microsoft having slashed its Xbox 360 pricing across three SKUs. The $399 price point has arguably hurt the PS3's chances this holiday season. In the U.S. during November, the console sold just 378K units compared to 836K for the Xbox 360 and over two million for the Wii.
Sony's persistence could pay off, at least in terms of costs. The PS3 could reach the break-even point next year and maybe even begin turning a profit after that (although we would guess that Sony is going to have to slash the price point pretty soon to stay competitive, so that'll hurt the cost savings again). "Every time we do a teardown, it's sort of backward-looking," said iSuppli analyst Andrew Rassweiler. "Sony is one step ahead of us and probably has plans to re-spin the hardware to reduce the costs yet again."
One of the keys for the PS3 has been reducing the number or combining chips in the console. When it launched, the PS3 had 4,048 different parts (including those in the controllers), according to iSuppli. That number, however, has come down by about 30 to 2,820. "At the end of the day the PS3 is doing the same thing it did before, but with two-thirds as many parts," Rassweiler noted.
Importantly, the PS3's heart, the Cell processors, has come down in price from $89 in 2006 to just $46 now. Likewise, the Nvidia graphics chipset has fallen from $126 in 2006 to just $58.
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Sony has said over and over again that it's focused on bringing costs down, which is why the company has not instituted another price cut on the PS3, despite Microsoft having slashed its Xbox 360 pricing across three SKUs. The $399 price point has arguably hurt the PS3's chances this holiday season. In the U.S. during November, the console sold just 378K units compared to 836K for the Xbox 360 and over two million for the Wii.
Sony's persistence could pay off, at least in terms of costs. The PS3 could reach the break-even point next year and maybe even begin turning a profit after that (although we would guess that Sony is going to have to slash the price point pretty soon to stay competitive, so that'll hurt the cost savings again). "Every time we do a teardown, it's sort of backward-looking," said iSuppli analyst Andrew Rassweiler. "Sony is one step ahead of us and probably has plans to re-spin the hardware to reduce the costs yet again."
One of the keys for the PS3 has been reducing the number or combining chips in the console. When it launched, the PS3 had 4,048 different parts (including those in the controllers), according to iSuppli. That number, however, has come down by about 30 to 2,820. "At the end of the day the PS3 is doing the same thing it did before, but with two-thirds as many parts," Rassweiler noted.
Importantly, the PS3's heart, the Cell processors, has come down in price from $89 in 2006 to just $46 now. Likewise, the Nvidia graphics chipset has fallen from $126 in 2006 to just $58.
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