Rumor: PS3 now 70 percent cheaper to manufacture

by Jem Alexander on Jul 31st 2009 11:45AM

If statements made during a Sony international investor conference call are to be believed, the company has managed to cut PS3 manufacturing costs by "about 70%, roughly speaking." Sony Corp CEO Nobuyuki Oneda stated that this was "on schedule." Concrete numbers haven't been revealed, but based on various reports since the PS3's inception, estimates are that the console now costs around $240 (£146) per unit -- way down from the original cost of $800 (£485).

The upshot of all this is that at the current price Sony is guaranteed to be profiting from each machine sold -- and about time too! -- but there's also enough leeway for the company to announce that much-requested $100 price cut and still be profitable. Whether this will happen or not depends on how much Sony values consumer satisfaction and increased userbase over recouping some of those hefty losses the PS3 suffered in the early years.

[Via Edge-Online]

Source

Tags: costs, price-cut, sony

Reader Comments (134)

I guess we'll still be holding our breath for a price cut due to them still having to make up for their earlier heavy losses. But what about that slim PS3 huh?

If they had put me in charge in the first place, I would've been able to make the PS3 slim, have it run on a potato battery, and all for the cost of $199!

And they would get 100% return on it because we don't pay our workers!

I don't think the American consumer would appreciate blood, sweat and tears as a limited edition theme for their new PS3.

And we'd include free foam controllers as well. They don't work, but they won't break either (unless you snap 'm in half).

@Storm eagle
"I don't think the American consumer would appreciate blood, sweat and tears as a limited edition theme for their new PS"

They do when you call it a "limited edition".

Foam controllers full of Megan Fox's bathwater.... A horrible side effect from hiring cheap, disturbed labor...

I'm a little scared by you guys lately, talking about sweatshops, Sam Raimi's blog, Meagan Fox's bathwater, where'd all this memes pop up!?

Wiizer started it (I think). And it's certainly a lot better than flaming each other for hating this system or not liking this game. Not to mention it's been vastly entertaining.

Won't you...join us?!

MUhaahahahah!!....sorry.

I can only take credit for the sweatshop idea...

The rest of it belongs to Mystile... Scary, scary Mystile.

Sweatshop meets Dead Space Girl. All we need is for Sprinkles to join in, and Joystiq's unholy meme trinity will be complete.

Oh, hai guys!

PS3 suxxorz, lol.

Damn. I am failure.

Why didn't it work? =(

???

I love how the press love to spin things. Yesterday it was all about how badly Sony were doing. Now today it seems that Sony are making $200 currently on every PS3 sold.

Now conder than Sony came within 100,000 units of matching Xbox sales last quarter (1.1m Ps3, 1.2m 360), and Microsoft have already had their pricecut, lose money on the cheap models, and don't sell too many of the expensive models, who do you REALLY think is having problems?

As much as all you retards want a pricecut, it 'aint gonna happen, or at least it does not need to happen, as clearly Sony can near on match the 360 sales, and make a tonne of profit, whilst Microsoft make loose change.

Seems to me, Sony have the choice, they can take the respectable sales numbers, and great profit margins, OR do a price cut and get a large boost in sales numbers.. Nice place to be in. Rather that than Microsofts place right now, "did a price cut, and still nearly got spanked by PS3".

It's also worth pointing out that PS3 1.1m was SOLD and Microsoft's 1.2m was SHIPPED! Read the financial statements, Clearly Microsoft are cooking the books...

OMG, SPRINKLES!!!

Guys, before we start throwing rocks, let's just take one shot at befriending him.. one shot!...

*THROWS ROCK*

"Now conder than Sony came within 100,000 units of matching Xbox sales last quarter (1.1m Ps3, 1.2m 360)"

Eh? Where you getting these figures from? I thought the 360 sold better than that.

@Hyams

Joystiq and Microsoft would be happy letting you believe there was more than a 100k console difference, but there wasn't

Microsoft SHIPPED 1.2m units.
http://www.microsoft.com/msft/earnings/FY09/earn_rel_q4_09.mspx

Sony SOLD 1.1m units
http://www.bloomberg.com/apps/news?pid=20601080&sid=axhzsmkpSGp0

Found the source. You're right. Both figures are shipped, though, BTW.

Been a quiet quarter all around then.

Funny thing: PS2 outsold the PS3 and 360. There's life in the old machine, yet.

From the links above:

Microsoft:

"We shipped 1.2 million Xbox 360 consoles during the fourth quarter of fiscal year 2009, compared with 1.3 million Xbox 360 consoles during the fourth quarter of fiscal year 2008."

"Sony sold 1.1 million PlayStation 3 consoles and 1.3 million PlayStation Portable machines in the quarter, down 31 percent and 65 percent respectively from a year earlier."

No one invited you, made up name guy!

We were all having a discussion of how to cut costs and here you come interrupting the convo!

Thanks a lot, SPRINKLES II!

The link is wrong. Sony (and everyone else) ALWAYS use shipped numbers in reports.

They can't be 100% sure what their sold figures are, which is why they'd never use them, but they know exactly what they've shipped.

It's not that Sony doesn't use sold figures. It's that sold is shipped to Sony or Microsoft. they are paid when they sell them to the distributor. If they sell 1,000 PS3s to Best Buy and then Best Buy's warehouse burns down, these units would still be counted as sold even though they will never be sold at retail. And why shouldn't they? Sony made them, sold them and received whatever revenue comes from them.

For all these companies, shipped is sold. I've seen companies put product in a semi minutes before the end of the quarter and just drive the semi away from the dock into the parking lot. If the units had a buyer, they are still counted as sold because they are shipped and they have invoiced the buyer, even though they haven't been paid for them yet. MS is strongly suspected of doing this in Q4 2006 and Q1 2007 for example (but not recently).

http://www.informationarbitrage.com/2007/04/microsoft_phili.html

So calm down on the sold versus shipped. No matter what terminology is in the press release, if it is the console manufacturer writing it, they both really mean the same thing: units delivered and invoiced to the distributors or retail (for retailers with their own distribution).

PS3 is already a great deal in gaming when you consider everything it does and comes with for $399.

Free online gaming, Wi-Fi, big hard drive, rechargeable controllers, Blu-ray, tons of multimedia features, tons of games, etc.

Putting it at $299 would be awesome and I'm sure it'll sell well, can't wait.... Come on Sony, $299. Then again, I could still see them doing $349, but with a game or two that could be cool but not the impact it needs.

@eeeeeeeeeeefe

Well you don't think Sony or Microsoft ships them out for free and waits for the check when they clear inventory do you? Think for a second.

Give up on the shipped doesn't equal sold argument. It makes you look like you're totally unable to think things through. They don't ship items out and wait for a person to walk into the store and buy it before being reimbursed. When I had my business an item was sold when the distributor/dealership sent me an order for it - not when someone later bought the item from him. Shipped = sold and you're just misconstruing the semantics of language to form a weak and misguided argument.

We shouldn't be shocked though, as anyone who blindly calls everyone retarded most likely isn't the deepest thinker around.

Actually, Sony does us sold to customer numbers, has been for a while now. Even had to tell an interviewer like 3 times in one interview cause they wouldn't stop claiming otherwise

I think they should start with a $50 price cut. Let's not forget how much of a loss Sony took recently.

I wish just about to comment on that too, Alex.

Couple this post with yesterday's post about Sony's losses in just about every category, I think it's high-time Sony made the right move and announced some sort of price cut. I don't think $50 is too much to ask. It would put it at the price point of the Xbox Elite and you're still getting more from the PS3 for your money. Not to mention the money saved could buy you an extra controller or a game.

Lets not forget all those that took a loss on buying it on or near launch... 599.99 Ouch! Think about them.

I gladly paid my $600 for my 60 GB ps2-fully-compatible PS3. I honestly haven't even turned on my 360 in 2 months x.X.

A $50 price drop is useless because nobody is going to be convinced to buy one like that. What they'll probably do is cut the price some months after FFXIII is out, in time for the 2010 holidays, but about $100.

That's my prediction anyway. If i was Patchter, i'd probably just tell you that "it'll drop in the near future".

"I gladly paid my $600 for my 60 GB ps2-fully-compatible PS3. I honestly haven't even turned on my 360 in 2 months."

What's one have to do with the other?

Not really. Those last losses have been written off - they're no longer all that relevant if they start making a profit.

And to make a profit, they need to give the PS3 a big price cut - they can stomach a slight loss on PS3 hardware if it drives their install base high enough to give PS3 software a boost.

@Tretton Absolutely nothing. He's just preaching his newly found infacuation with the PS3 for some reason. That or he somehow feels special because he spent $600 on the PS3 (stupid) and wants others to be FULLY aware of that fact.

I'm not sure if $50 is enough of a drop to entice new customers.
Folks that have put off buying a 3 because of the price are not going to be swayed buy a $50 cut.

["I gladly paid my $600 for my 60 GB ps2-fully-compatible PS3. I honestly haven't even turned on my 360 in 2 months."

What's one have to do with the other?]

Maybe he's trying to get a PS2/3/60 menage à trois going...

They need to drop it $100. A $50 drop would be insignificant from the consumer's point of view, and promoting only that much would be a waste of effort. They can drop it any time, but they're waiting for the most effective time to do it. Probably before the holiday season starts.

They have that new bundle with Killzone 2 & MGS4 for $399 and thats a good deal. So, maybe they take that bundle with the two games and knock $50 off the price. You get two great games and a nice discount.

Just thinking out loud here.

I also paid the launch price for my 60 GB PS3 and am glad I made that decision. Now, would I have loved to get it for cheaper? absolutely. But, all this time I've been playing great games and enjoying a great console. I just want everyone to have the ability to enjoy the PS3 for what it is and not have cost of entry be a deturant.

Here's some common wisdom about price cuts: If you cut the price, you sell far more units and make more than you do selling fewer units at a higher price.

This wisdom is questionable: in the current economy, would a $50 or even $100 cut bring in more sales to offset the price cut? We've seen a 38% sale drop compared to this time last year. Although the 360 saw a growth in YTD for June, the PS3 saw a 40% drop. Was June's spike in hardware sales a fluke in a 2009 trend of decreasing sales?

As a gamer, I'd like to see the drop, but it's debatable how much it'd benefit PS3 sales.

Yeah, I gotta say... I think if they do $50 people will just bitch its not $100...

I paid $599 for mine at launch, and

@guttertalk You've undermined your own argument: increased 360 sales are the result of a price cut (months earlier, but still in effect).

Doesn't the PSPGo cost less than the original PSP...look how that turned out.

It actually costs the same amount as the original PSP when it launched.

....unless I missed something where they lowered the price of the Go at launch.

People just assume the Go is cheaper since it's without the pricey UMD slot. There's been no confirmation aside from that.

Don't get me wrong, I totally think they're making a profit on it. Just no confirmations yet.

People also don't take into account the wages for R&D coming up with the new design, new boards being pressed, manufacturing, etc. I'm sure it'd be nice to work at a business that actually makes money per item sold for a change.

Yeah, I bought my PSP first week. It was $250 with case, remote and 128MB memory stick (ha!). There was allegedly a "core" pack which only cost $200, but it was never for sale anywhere.

Pricecut confirmed.

Exactly. All this press about UBI, Tecmo and all these other publishers saying to lower the price is just to wet people's appetite.

You're probably right, but my BS meter is going off. Sony's higher ups are in deep shit right now with the board. They need good news all around to make investors happy or else they'll be screaming for blood.

I see claims like this and I think of that off brand cereal with the claim "50% MORE!!!!".... (than a half pound box)

I can guarantee a price cut for christmas. can i get an amen?

don't forget that this is all a rumor, but seeing how terrible sony is at keeping secrets, i guess it's real. but damn!! 240 bucks!!!!

Good for Sony. They have a great machine and I'm optimistic they can get the price down for some holiday momentum.

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Rumor: PS3 now 70 percent cheaper to manufacture

Reader Comments (134)

Posted: Jul 31st 2009 11:47AM RKN said

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