Sony could break even on PS3 in '09, finally get agressive with pricing
by Randy Nelson 
{ Dec 23rd 2008 at 5:45PM }
Back in January, Sony Computer Entertainment president Kaz Hirai told Reuters that he'd very much like the company to turn a profit on PlayStation 3 in early 2009. Going by a new report on the actual manufacturing costs of the system, Hirai may get his wish.
BusinessWeek reports that the PS3 – which cost Sony a whopping $840 to produce in 2006 – has, through a reduction in parts and cost thereof, reached a price of $445 assembled. Sony was losing more than $200 per system sold back in the fall of '06 ... and it has now gotten that figure down to about $45. This was achievable by scaling back its inner-workings from 4,048 parts then to 2,820 today (losing backwards compatibility with PS2 games along the way). Also, the system's Cell processor, which cost Sony $89 at launch, is $46 now.
It's good news for Sony and its shareholders, who have been watching profits sink for some time. It's also good news for gamers; continued cost reduction on the hardware could spell a price drop on both SKUs by summer of 2009 – and potentially even more aggressive pricing this time next year. (Fun fact: although it might seem like the retail price of PS3 isn't dropping as fast as PS2, both systems dropped exactly $100 during their first 24 months on sale.)
BusinessWeek reports that the PS3 – which cost Sony a whopping $840 to produce in 2006 – has, through a reduction in parts and cost thereof, reached a price of $445 assembled. Sony was losing more than $200 per system sold back in the fall of '06 ... and it has now gotten that figure down to about $45. This was achievable by scaling back its inner-workings from 4,048 parts then to 2,820 today (losing backwards compatibility with PS2 games along the way). Also, the system's Cell processor, which cost Sony $89 at launch, is $46 now.
It's good news for Sony and its shareholders, who have been watching profits sink for some time. It's also good news for gamers; continued cost reduction on the hardware could spell a price drop on both SKUs by summer of 2009 – and potentially even more aggressive pricing this time next year. (Fun fact: although it might seem like the retail price of PS3 isn't dropping as fast as PS2, both systems dropped exactly $100 during their first 24 months on sale.)
[Via PS3 Fanboy]
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Reader Comments (Page 1 of 3)
First Gen Bandit @ Dec 23rd 2008 5:55PM
The first time getting a 1st run version of a console has been rewarding..
DigDug @ Dec 24th 2008 5:53AM
why? Yours is full of 1st gen PS3 tech, mine has all the problems ironed out.
Yours has 4000 components to go wrong, my only has 2800.
Sure I lose PS2 compat, SACD and 2 USB ports, but I can gert a hub and card reader for the ports and cards.
My console runs quiet, and the fans can't be heard, yours is noisy.. (it's OK, it's still 1/100 of a 360...)
I sold my launch unit to a rabid PS3 fanboy desperate for PS2 bragging rights. Best console move I have ever made. The latest units are much more refined.
*=Lord Negatron of the XBots=* @ Dec 24th 2008 10:48AM
@ DigDug
Pfft, like the feather weight PSP's which compared to an original "heavy PSP" are not that much slimmer either, if at all. Also they(PsP) do not come with a wrist strap anymore...
Lighter is not better IMO, excluding super heavy
laptops. *bump-nudge, PsP clatters on the floor*
It would be nice if they're were a model(s) that has all the fixings, but at that production cost? L O L
Flame on...
Vegeta (aka Ska Oreo) @ Dec 23rd 2008 5:57PM
Hey if a price drop happens, I may be interested in purchasing a ps3.
Dr Jeckyl and Mr ESC. @ Dec 23rd 2008 7:40PM
I want a Ps3 for Christmas Yo,Cuz I'm Harcore (Anyone remeber this,lol)
Well the price of a Ps3 here is really effign expensive so if they lower the price I might get it next year.I really wanted one for this year Christmas but is so expensive here and I already decimated my cash in a lot of expensive stuff and videogames.
Hyams @ Dec 23rd 2008 6:00PM
I believe they're meant to be introducing a new, smaller chip the begining of next year too, which would further bring down costs.
I'm still betting on a March price cut, yo.
Marty @ Dec 23rd 2008 7:06PM
I can't wait for when it actually happens, and then you spend another half-day on Joystiq posting about how awesome you are for predicting it.
sam @ Dec 23rd 2008 7:13PM
Not sure if it applies any more given their sales position (i.e. third out of three), but certainly they were intending to actually start making a profit on these things.
If the cost to make it is really *still* more than the cost it sells for (before you even count distribution etc) - not sure I believe that, but anyhow - then the new chip would probably only bring them toward break-even.
If it isn't and they will be making a tiny profit after that, their business model would suggest they hold off on a price drop for as long as they can... certainly that's what they've said before.
I'm definitely not saying there won't be a price drop though. Obviously if the thing still isn't significantly catching up on 360, they may do something about it regardless of profit (or lack of). But I'm not sure that really depends on whether they manage to shave another $30 off the build cost between now and next March.
Hyams @ Dec 23rd 2008 7:27PM
Oh Marty, what's the point of being right if you can't spam everybody about it? XD
Bowser Rogozhin @ Dec 23rd 2008 6:09PM
But with a library made up of Hollywood shlock, well too akin to the 360, so much of a departure from the incredible PS2, it doesn't matter. Sony mismanagement has destroyed the Playstation brand, and that same management is trying to sabotage the PSP, by far their best performing platform this generation. The PSP Christmas release schedule makes the Wii look like a pair of 36DDs.
It's like Sony replaced the higher echelons of management with utter shitheads.
Levi @ Dec 23rd 2008 6:10PM
It's like you've replaced meaningful insight with utter fanboy shit
Hyams @ Dec 23rd 2008 6:14PM
It's okay. He's a Wii fan who just called the PS3's and 360's library of games 'shlock'.
Give it 5 minutes and there'll be loads of witty and cutting retorts, and his post will be nega-nuked into pale oblivion.
tmacairjordan87 @ Dec 23rd 2008 6:29PM
"He's a Wii fan who just called the PS3's and 360's library of games 'shlock'."
That's all that really needs to be said about his comment. Nothing more needs to be said since the stupidity speaks for itself.
The Fatass of Kickassness @ Dec 23rd 2008 6:42PM
Yo, Bowser. If you've been around here for even a month then you probably know that I'm one of the only remaining Nintendo Defenders around here.
With that said, to compare anything Sony is putting out right now to the Wii is fucking dumb. Yeah, the Wii has had a bit of creative and new shit.
So has the PS3/360 (quite a bit more, in fact) and if you'd get your head out of your ass, you'd see that plenty of games on that Triple/Tree Sitty are innovative, or stylish, or push narrative in ways that haven't been seen before... and those that aren't, typically work to better the formula that they were based on.
Of course, I could pull out a list, but I won't. Why? Because, instead of actually doing any research or playing the games I pull out, you'll just look at the genres or the names of the games and base your opinions on them alone. "Oh it can't possibly be a good game, it's an FPS!"
Oh, and, uh, Tmac. Your head is probably going to explode when I say this, but guess what.
I've got a PS3.
Add me, PSN ID is XtaLarge. Since I haven't been able to virtually beat yo ass over Joystiq, I'mma give it a shot in Resistance 2.
tmacairjordan87 @ Dec 23rd 2008 6:47PM
Will do fatass, but there's a slight problem....I don't have any ps3 games right now :(
I am mulling over getting resistance 2 though depending on how my x-mas goes gift card wise.
The Fatass of Kickassness @ Dec 23rd 2008 6:52PM
Do it!
First fifteen minutes of the campaign are boring as snot but the second you get out into the open and get to check out Chimera-occupied San Fransisco... lemme tell ya, it hit me just as hard as anything else this generation. Hell, even CoD4's nuke scene didn't compare. Not to mention the online, which is really fun and completely lag free.
Hyams @ Dec 23rd 2008 6:53PM
tmac, you have no PS3 games?
That's it. Hand over your PS3 fanboi card right away.
The Fatass of Kickassness @ Dec 23rd 2008 6:53PM
"Hand over your PS3 fanboi card right away."
Hand it to me, I need one.
Hyams @ Dec 23rd 2008 6:59PM
Yeah, you can have it, just for your response to Bowser.
tmacairjordan87 @ Dec 23rd 2008 7:48PM
Nope I haven't bought a ps3 game since mgs 4, and I've only had maybe 20 ps3 games since the launch. I've had around 50-60 360 games but I traded most of them in along with my ps3 games. I only have 9 current gen games total right now :(
Haggard @ Dec 24th 2008 8:26AM
I find Bowser's opinions refreshing in a world of sequelitis and generic-itude.
On the other hand, I enjoy all the games he hates.
Levi @ Dec 23rd 2008 6:10PM
Anybody want to start a pool? I'm betting $50 price cut in February.
Either way, it's good news. More profit for Sony leads to less speculation of the platform dying off, as well as price cuts, which leads to more people buying the system, which leads to more developers and publishers starting their projects for the PS3... maybe wel'l actually see some games besides Killzone that utilize the Cell!
Wheeeeeeeeee!!
Hyams @ Dec 23rd 2008 6:12PM
March would work better. It's the start of a new fiscal year, and would drop alongside Killzone 2 and Resident Evil 5.
aj @ Dec 23rd 2008 6:12PM
The PS2 is 50$ used and PS2 games are 4$ to 20$ used.
Why do I need a PS3 again?
Hyams @ Dec 23rd 2008 6:15PM
MGS4 and LBP.
aj @ Dec 23rd 2008 6:26PM
Correction: Why do I need a PS3 right now when I know for a fact that if I wait a bit that the PS3 will be 50$ and the games will be 4 to 20 dollars in a few years, and in the mean time I have plenty of entertainment?
Also, I realize that this may sound trollish. I'm really drunk right now, and I have a moral objection to paying 500$ for a console to begin with. I shouldn't use the computer with half a bottle of Irish in me.
Hyams @ Dec 23rd 2008 6:32PM
Your spelling and grammar is very impressive for a drunk. If I ever try to type whilst drunk, it never ends well.
Your maths, however, appears to just sort of die when you're drunk. The PS3 is $400, not $500. ^_^
Hala Madrid!! (Somebody get me a tie! And it sure as hell better be red!) @ Dec 23rd 2008 6:37PM
Double Correction!
160GB is 499.99
80GB is 399.99
aj @ Dec 23rd 2008 6:38PM
My writing ability actually improves the more drunk I get. If I ever get up the nerve to spend a significant amount of money on booze, I'll probably win a Nobel prize for literature. As it stands, I am stuck drinking the bargain bin stuff. (Lucky, lucky me that the shop on my block sells Irish on the cheap.)
Is the PS3 400$ now? I did not realize. I still can't wrap my head around that. Though to be fair I live in the most absurdly capitalistic place in the entire world, and I am personally a bit of a radical leftist. So it just hurts, you know?
Bowser Rogozhin @ Dec 23rd 2008 6:56PM
Aj sounds like my sort of fella.
To sambuca (or whatever is tickles your palette).
Mitch @ Dec 23rd 2008 7:04PM
I'm in the same boat as you AJ. Until the ps3 drops to a price I find reasonable (~250), I'm just going to go through the crapload of games I missed this last generation. Same goes for the 360 (system, HDD, and wifi for ~250)
The Fatass of Kickassness @ Dec 23rd 2008 7:37PM
Well, you might not need the PS3, but I've already played the fuck outta almost all of the PS2's greats.
Now, see, my logic was that I have this nice ass HDTV sitting here, and not a single system that took advantage of it. Blu-Ray is nice (a definite jump in sound and video quality) and I thought it'd be nice to have a more intuitive, seamless media center (I had been using my PC as one).
Not only that, but since (as I just said) I've played almost all of the good PS2 games out there (and considering that I was already used to getting good games left and right on the PS2, owning just a Wii simply wasn't cutting it), I was looking forward to playing some of the PS3's better games. So far, I haven't been disappointed with the purchase - all of my music/downloaded movies can be played at the touch of a button, and I have a whole new list of games to buy and enjoy.
My reason for needing a PS3. Take it as you will.
MikeO. @ Dec 23rd 2008 10:58PM
$50 for a PS2? Damn, the PS2 Slims are going at my Gamestop for $20. Maybe I should be scalping those instead of Wiis!
(I kid, I don't actually scalp, but damn, I bet they're getting away with murder on console resales)
The Fatass of Kickassness @ Dec 23rd 2008 11:22PM
"Damn, the PS2 Slims are going at my Gamestop for $20."
uh, excuse me
WHAT
WHAAAAAAT
My PS2 broke (just after I beat P4, thank god). Joly hell man. Is that deal YMMV? If not I'll be at Gamestop first thing tomorrow morning. I don't care if there's a Christmas rush, $20 PS2? Fuck yeah.
MikeO. @ Dec 23rd 2008 11:57PM
@Fatass
I wouldn't get your hopes up too much, this may be something just locally.
We just always have an assload of PS2's, Gamecubes and other last gen things.
But given the price I can get them, you would have to have a horrible excuse not to own one.
PSN: Aggie_CEO @ Dec 24th 2008 7:50AM
A Few Years???
Try the PS3 will $150 Used in 5-6 years........and games will be $25 on average.........
you DO Realize the PS2 has been out damn near 9 years now right???
Nick the Hero of Canton @ Dec 23rd 2008 6:18PM
How would you rate the PS3's blu ray disc player in comparison to other standalone players?
ice~ @ Dec 23rd 2008 6:20PM
It's one of the best you can get. That i know of.
Mike T. @ Dec 23rd 2008 6:31PM
When you look at the overall value of the features you get vs. the price, the PS3 is far and away the best Blu-ray player on the market right now. True, if you want to JUST play movies on it, there are cheaper options, even for Porfile 2 players. But, if you have any desire at all to play any of the PS3-exclusive games (LBP FTW!), then it's definitely the way to go.
jorojoserojas @ Dec 23rd 2008 7:01PM
I believe that the PS3 is, in fact, the BEST Blu-ray player on the market.
The Fatass of Kickassness @ Dec 23rd 2008 7:42PM
Uh, why are these posts being downvoted?
Nothing flammatory was said by these guys. Is this the result of sore fanboys?
The fact of the matter is that the PS3 remains competitive in terms of pricing with the rest of the Blu-Ray player market, yet has so many more features than the rest of them that it would seem crazy not to just go with the PS3. This much is indisputable, and even if you disagreed, wouldn't it have made more sense to post that you disagreed instead of voting down two posts that really didn't need to be downvoted?
buh buh buh dey leik da ps3 so i have ta vot dem down befor i get bak to playing hlao 3
Arnon @ Dec 23rd 2008 10:33PM
I believe he was wondering if it's worth getting a PS3 for Blu-Ray rather than a stand-alone player.. and honestly? Stand-alone > PS3.
1. The Stand-Alone player can rip blu-ray and dvd.
2. The Stand Alone player is now going for $199.99
unboring @ Dec 24th 2008 2:13AM
Aaron you mook. What are you talking about.
1. ? what bluray player available in NA is ripping Bluray movies? I just bought an expensive burner for my computer but I work in electronic sales and I can tell you for a fact they are not even in the market on this continent.
2. The dirt cheap 199.99 bluray players are garbage. They are slow and unresponsive, generally they are older firmware and lack BD Live Functionality. Even alot of the 300 dollar ones lack DTS HD and Dolby True HD playback.
3. PS3 is the best value bluray player in the market bar none, cnnmoney as well as sound and vision and cnet all rate it as thee best option for value and functionality in the bluray world.
4. if you don't know what your talking about , don't say anything at all.
199.99 standalone bluray ripping burners? pshhhah, can I have one??? moron.
NOT ME @ Dec 23rd 2008 6:28PM
seriously u cant compare ps2 w ps3 at all. and i mean that in a good way. only thing besides playing average games (Im sorry but the 1st 2yrs of ps2 werent that interesting game wise). It played dvd's for cheap. most of the great games didnt come until after the 1st two years. thats why im sick of hearing about how great ps2 was. As if it flew out the gate with greatness. Most people didnt really jump onbard until GTA3 came out and that was after a yr of it being out. online wasnt even rumored about yet.
aj @ Dec 23rd 2008 6:33PM
Dude. The English language isn't that hard.
Ethan @ Dec 23rd 2008 7:46PM
NOT FOR ME
PSN: Aggie_CEO @ Dec 24th 2008 9:20AM
he has a point........
If the PS3 is following in the footsteps of the PS2 then year 3 and on will only get better in terms of sales and Software.......fanboys fail to realize this tho........to eay to point out the NOW when Sony has always been about Longevity......
CJLopez @ Dec 24th 2008 12:58PM
Actually that sounded more in the case of the Wii rather than the PS3
Yeah, PS2 recieved a lot of garbage (just checked a couple of games and found many shovelware on the PS2 library) but still, PS2 took the last war by a lot!!!!
Thats why i got a PS2 instead of a cube or a xbox. Now, i'm keeping my ps2, got a ps3 (but mostly for sequels and maybe one or to new games that get my attention and aren't FPS) and got a Wii for the sequels and new games to come
Moorio - XBL: peacebyanymeans @ Dec 23rd 2008 6:35PM
Maybe I'll finally be able to afford one. :) I want to play Uncharted, I'm a huge Naughty Dog buff, and grew up with PlayStation and Crash Bandicoot. The PS1 and PS2 were my first systems of their respective generations, but it seems Microsoft stole my heart this round...
Noshino @ Dec 23rd 2008 6:46PM
There is always hope! always! Believe!
PS: You should really play the first Uncharted before the second one arrives!