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Analysts Claim Sony is losing $100 per PS3 Slim

thuway

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Feb 25, 2008
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http://www.andriasang.com/e/blog/2009/08/20/ps3_losses/

The newly announced slimline PS3 offers a new form factor, a higher capacity hard drive, reduced noise output and a lower price point compared to the current system. There has to be a catch, right? For Sony, there might be.

Today's episode of a general interest TV Tokyo news program called Pipitto! Keizai Koukishin covered Sony's Gamescom announcement of the new PS3 system. To help understand Sony's pricing strategy, the program turned to an analyst at Daiwa Institute of Research.

The slide lists the material cost for the PS3 as ¥40,000. The announcer explains that a price drop to ¥29,800 means that Sony's losses will increase with each system they sell. However, if they increase their sales, the material cost will gradually go down, and so too will the losses.

We last heard specifics on PS3's losses in May through a more official source. Back then, Sony CFO Nobuyuki Oneda revealed that Sony was, as of March, still taking a 10% hit on each PS3 sold. Given the PS3's price at the time, 10% would mean a cost to Sony of about ¥44,000.

The TV Tokyo segment also attempted to explain why Sony was reducing the price of the system despite offering new features like the higher capacity hard drive. The answer came in the form of a graph showing PS3 sales trending below Wii and Xbox 360. The speaker pointed out that the system, even with its new pricing, is still pricier than its rivals (the show listed the 360 at ¥19,800).

I don't how true this is. With Sony saying they reduced the cost of the PS3 by 70%. Any wild guesses?
 

Sipowicz

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Oct 13, 2008
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if this is true sony is even more fucked

that desn't sound ike a smart way to do business
 

KtSlime

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Feb 28, 2009
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If they dropped the price of manufacture by 70%, doesn't that mean, even if the first PS3s costed 1000$ to make, they now would be breaking even at selling for 300$?
 

ViperVisor

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Jun 20, 2007
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I doubt it.

They wouldn't do a slim for shits and giggles. It had to be part of the cost cutting from day 1. They can't throw more money at a problem hoping for the best. Hole is already very deep.
 

H_Prestige

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Aug 2, 2008
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ivedoneyourmom said:
If they dropped the price by 70%, doesn't that mean, even if the first PS3s costed 1000$ to make, they now would be breaking even at selling for 300$?
.
 

imtehman

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Dec 11, 2008
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From stagnant to decreasing YoY sales and CEO's of the biggest game publisher calling for a price decrease or else they won't develop for the ps3, Sony doesn't have much of a choice but to decrease the price, even if it means at a loss
 

IrishNinja

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yeah, i thought the last year or more was spent in reducing production costs, i cant say they woudlnt sell it at a slight loss but that sounds high, per unit.
then again, at what point last gen was sony making a profit off the hardware? by the ps2 slim?
 

thuway

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The way I saw it was in a best case scenario, Sony already reduced the cost by 70% on the 80 gig unit, with an improvement with:

1. 45 nm Cell processor
2. Smaller Fan
3. Small power supply
4. Smaller Chasis
5. Less Weight to Ship
6. Falling Bluray Drive Prices
7. RSX prices being extremely low by now


I could see Sony making 20-30 bucks off the console easily.
 

Cruzader

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Jul 23, 2007
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Somewhere...
Even if they did...who cares? I thought ppls want cheaper products not what it cost to make or if Sony is losing $$. Be happy it dropped to 300.
 

imtehman

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Dec 11, 2008
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ivedoneyourmom said:
If they dropped the price of manufacture by 70%, doesn't that mean, even if the first PS3s costed 1000$ to make, they now would be breaking even at selling for 300$?
don't take that 70 percent at face value?
 

Parl

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Sep 15, 2006
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ivedoneyourmom said:
If they dropped the price of manufacture by 70%, doesn't that mean, even if the first PS3s costed 1000$ to make, they now would be breaking even at selling for 300$?
Getting towards breaking even. There's shipping costs and overhead assocated with selling the products to retail, and then there's the retailers's margin too, which would mean a loss.
 

thuway

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Parl said:
Getting towards breaking even. There's shipping costs and overhead assocated with selling the products to retail, and then there's the retailers's margin too, which would mean a loss.
Like I said in an earlier post, the cost of reduction should be huge by now. See earlier post. With all those costs added, I can see at most a small loss.
 

donny2112

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Apr 18, 2005
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I AM JOHN! said:
Somehow I find it incredibly hard to believe that they would get in a position to make money off the sale of the PS3 hardware
This never happened. They were still losing 10% per console back in March. Whether the Slim reduced cost enough for them to ~ break even, I don't know, but Sony has not ever made money on the PS3 hardware to date.
 

nightez

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Dec 8, 2004
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I think Sony officially stated that they don't lose money on the hardware anymore. They also said costs have dropped dramatically.

...
 

Phantast2k

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Jul 26, 2006
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Yes they didn't drop the price for about two years and had to wait until they could produce a slim version only to lose $100 per console.
makes total sense.
 

1-D_FTW

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Jun 14, 2006
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And some of those analysts were saying Nintendo was barely breaking even when Wii launched. Never has an occupation had such an apt name. They're even up from in the first syllable about where they pull information from.
 

donny2112

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duk said:
im amazed there are so many Sony BOM experts on GAF
Well, technically the Sony guy who stated they were losing 10% on each console sold back in March isn't on GAF. Also, he's only Sony's CFO, so how would he know how much it costs to make a PS3!
 

thuway

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H_Prestige said:
They'd lose a lot more money if you didn't buy one...
He's just bitter because he's a Wii Fanboy. Shit like this makes me wonder how some people aren't banned.
 

laserbeam

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Mar 23, 2007
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donny2112 said:
Well, technically the Sony guy who stated they were losing 10% on each console sold back in March isn't on GAF. Also, he's only Sony's CFO, so how would he know how much it costs to make a PS3!
Well to be fair Sony's Chief Financial Officer is just a troll that is trolling Sony what would he know about finances
 

Taurus

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nightez said:
I think Sony officially stated that they don't lose money on the hardware anymore. They also said costs have dropped dramatically.

...
Howard Stringer said in an interview this spring that they were selling PS3 at loss. I don't think couple of months has made a huge difference. Kaz Hirai mentioned after Slim announcement that PS3 Slim is sold at loss.

I'll try to Google some links...
 

gregor7777

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Jan 17, 2007
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I haven't seen any facts nor am I privy to internal documents. I'm 86% sure this is false based on that.
 
laserbeam said:
Well to be fair Sony's Chief Financial Officer is just a troll that is trolling Sony what would he know about finances
grandjedi6 said:
laserbeam said:
How about the fact Bethseda said they are Developing a Wii game for 2010 and will release details later this year versus a Shovelware company game being published in Europe only by Bethseda. Hmmm......

Its not like everything Hines says is guaranteed true anyways. Its like walking upto miyamoto and demanding info on the Next Zelda when He doesnt want to talk about it
How about the fact that the Vice-President of Bethseda says this is the game that they were speaking of? Or how about the fact that it was the of managing director for Bethesda in Europe that originally hyped up this game in the first place? Or how about the fact that said managing director never said that they were developing it? Or how about the fact that said managing director said that it was coming out this year?

hmm....
I love irony.
 

Asmodai

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Jan 22, 2009
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ivedoneyourmom said:
If they dropped the price of manufacture by 70%, doesn't that mean, even if the first PS3s costed 1000$ to make, they now would be breaking even at selling for 300$?
They cost 700 or 800 to make at launch, not a 1000.
 

diddlyD

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Feb 20, 2007
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using price watch

core i7 3.2 ghz = $870 (comparable cpu to cell)
80gb notebook HD = $25
geforce 7800 = $45
512mb ram = $31
case = $50
blu-ray drive = 75$

cost of ps3 slim to manufacture = $1096. ouch!

but really if you take into account the cell doesn't cost more than 100 bucks by now, you come away with a cost of $326 using off the shelf retail prices. maybe sony shops at best buy, that would probably push it up to $400 :lol
 

Ultimo hombre

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Apr 3, 2009
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You'll get a better idea when the financials come out. You're looking at a $100 price drop on a product they were losing $40 per unit sold. Granted there is a redesign but to assume the redesign shaved off $140 of cost per unit by the redesign might be wishful thinking.
 

thuway

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Feb 25, 2008
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diddlyD said:
using price watch

core i7 3.2 ghz = $870 (comparable cpu to cell)
80gb notebook HD = $25
geforce 7800 = $45
512mb ram = $31
case = $50
blu-ray drive = 75$

cost of ps3 slim to manufacture = $1096. ouch!

but really if you take into account the cell doesn't cost more than 100 bucks by now, you come away with a cost of $326 using off the shelf retail prices. maybe sony shops at best buy, that would probably push it up to $400 :lol

What most people don't realize also is that Sony buys in massive bulk and gets huge discounts on all products. Its hard to truly nail down what true cost is.