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Analysts Claim Sony is losing $100 per PS3 Slim

XiaNaphryz

LATIN, MATRIPEDICABUS, DO YOU SPEAK IT
Nov 5, 2005
52,177
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SF Bay Area
riceandbeans said:
Can't see how they're still losing out on so much money. They're using cheaper plastic, parts and components. Maybe on launch Slims they're losing out, but I can't see how this would be a long-term loss.
As it's been mentioned numerous times in the thread already, there's more to manufacturing costs than just the raw materials.
 

Averon

Member
Aug 27, 2008
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Just wait for the inevitable iSupply breakdown. They were pretty damn accurate on the cost of the 80gig phats that had Cell and RSX at 65nm.
 

gregor7777

Banned
Jan 17, 2007
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XiaNaphryz said:
Yes, but to REALLY get attention you need an animated gif obviously. Go commission Mama Robotnik. ;P

We may have to. People are still claiming Sony isn't losing money. When they stated they are. In an article dated August 20th. Of 2009. About the new slim. :lol

Shame I don't have any Star Trek clips about. This will have to do.

 

m00

Member
Jul 24, 2007
274
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975
Tylahedras said:
This has already been said I know, but I have to say it again:

70% of original cost often estimated at about 900$ has been cut.

So

.3 x 900$ = 270$
Except that the 70% quote is PR speak, so it is almost definitely not a percentage of the original cost, but of the current cost. Why would anyone calculate the cut as a percentage of the current cost? Because 70% is more impressive than 41%.

That said, if we start with an original cost between $700 and $800, we get:
$700 / 1.70 = $412
$800 / 1.70 = $471
...and Sony is still losing money on the console after cutting costs "70%".
 

AndyD

aka andydumi
Jan 24, 2007
19,100
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Nashville, USA
m00 said:
Except that the 70% quote is PR speak, so it is almost definitely not a percentage of the original cost, but of the current cost. Why would anyone calculate the cut as a percentage of the current cost? Because 70% is more impressive than 41%.

That said, if we start with an original cost between $700 and $800, we get:
$700 / 1.70 = $412
$800 / 1.70 = $471
...and Sony is still losing money on the console after cutting costs "70%".

So you think they are losing over 100 per unit? They would have never dropped the price.
 

backbreaker65

Banned
May 18, 2006
4,956
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gregor7777 said:
We may have to. People are still claiming Sony isn't losing money. When they stated they are. In an article dated August 20th. Of 2009. About the new slim. :lol

Shame I don't have any Star Trek clips about. This will have to do.


The problem with your absolute is, you don't know which PS3 he's talking about. It might be true, but this interview doesn't specify or make a distinction between the two.
 

spwolf

Member
Feb 15, 2007
16,282
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AndyD said:
So you think they are losing over 100 per unit? They would have never dropped the price.

little chance on that... that means Sony would lose what - 1.5-2 billion on PS3 alone FY09? With their business down so much in every category, there is apsolutly no chance on this happening.
 

Four_Chamber

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May 3, 2009
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gregor7777 said:
We may have to. People are still claiming Sony isn't losing money. When they stated they are. In an article dated August 20th. Of 2009. About the new slim. :lol

Shame I don't have any Star Trek clips about. This will have to do.


Yup, its still happening :lol
 

Jokeropia

Member
May 15, 2006
6,556
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gluv65 said:
The problem with your absolute is, you don't know which PS3 he's talking about. It might be true, but this interview doesn't specify or make a distinction between the two.
Read the article.
Times: It’s well known that Sony loses money on every PS3 it sells. Will that still be the case with the new machine?

Kaz: If you're just talking about the hardware alone, the quick answer is yes.
 

TheRagnCajun

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Feb 23, 2007
7,227
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Wow i thought Sony was making money off of it by now...I guess they've flip flopped from 'We're concentrated on turning a profit' to 'lets increase install base'
 

FrankT

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Jan 18, 2007
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"If you look at the growth of the installed base, it is slower than the PS2 was but it's pretty much on track with the growth that we had with the original PlayStation," Hirai said. Responding to the issue of selling the redesigned PS3 at a loss, Hirai explained, "I don't actually know that that's the true nature of the business that we're all in, whether it's PlayStation, Xbox or the Wii. I think the better indicator is to look at the business as a whole platform, to ask: are you profitable in terms of the hardware, software and peripherals. And the answer to that question is yes on a gross profit level since the last fiscal year."

http://www.joystiq.com/2009/08/25/hirai-ps3-slim-sold-at-a-loss-but-business-profitable-overall/


That is an interesting comment because that would mean they are losing a whole heck of a lot of money in the business elsewhere, and moreover the losses in the division have not slowed. Where in the world would all those losses be coming from because marketing certainly would not make up for all those losses. As of May this year they were still losing 10% or so on the hardware so SW and peripherals would have to be really shining. Then again that still doesn't explain the huge losses that continue
 

inner-G

Banned
Jul 28, 2007
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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

That's 256MB of XDR RAM, not that DDR2 crap! (the other 256 of video RAM is DDR3, IIRC)

;P
 

H.Cornerstone

Member
Mar 20, 2007
2,376
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diddlyD said:
that was my point. even using off the shelf retail prices, the system costs at most $325. sony makes the parts for a lot cheaper than that. i don't know how these 'analysts' could possibly come up with a $400 estimate.



actually they get really close. console hardware typically sells to retail for maybe $5 less than the suggested retail price, at most. the profit for retail is all on software.

I don't think its that low... but all I remember is when the 360 first came out when had to sell 29 to make up for a stolen unit, or some high number like that.

My guess is that they lose somewhere between 30-50 dollars per unit.
 
May 16, 2006
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MirageDwarf said:
To be fair, article you posted is new one and different than the one which was being discussed.

Old article - http://www.timesonline.co.uk/tol/news/uk/article6802297.ece

Not really. Two different articles based on the same interview by the same reporter for the same news outlet.

There's nothing different about the quote.

It is important to note the following quote though, in fairness:

Kaz H. said:
“I think the better indicator is to look at the business as a whole platform, to say are you profitable in terms of the hardware, software and peripherals. And the answer to that question is yes
 

tinfoilhatman

all of my posts are my avatar
Dec 8, 2006
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I can't believe anyone would think Sony is EVEN CLOSE to breaking even on the PS3(slim or otherwise), get real people the sky is blue here in the real world.
 

grumble

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Dec 6, 2008
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After reading through this thread, it seems clear that many people don't understand the console business, the xerox/gillette model or continuous cost reduction via kaizen. Sony can lose this much on consoles and still make money off of royalties and peripherals. It's absolutely fine, and a good though risky way to run a business.
 

Psychotext

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Jun 15, 2007
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grumble said:
Sony can lose this much on consoles and still make money off of royalties and peripherals. It's absolutely fine, and a good though risky way to run a business.
They've already lost more this gen than they made in the first 6 years of the PS2... so apparently no, they can't.
 

phil_t

Banned
Jul 13, 2009
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grumble said:
After reading through this thread, it seems clear that many people don't understand the console business, the xerox/gillette model or continuous cost reduction via kaizen. Sony can lose this much on consoles and still make money off of royalties and peripherals. It's absolutely fine, and a good though risky way to run a business.

Kaizen is stating the bleeding obvious though.. all companies do the same, it's not related to their business model of giving the hardware away at cost/slight loss and making money on the peripherals/games, which is also the same model as MS and even if Ninty make money on their consoles, their primary income will be the same..
 

Raist

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Jan 27, 2007
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tinfoilhatman said:
I can't believe anyone would think Sony is EVEN CLOSE to breaking even on the PS3(slim or otherwise), get real people the sky is blue here in the real world.

What do you mean "breaking even". Recoup the losts LTD, or stop losing money on each unit?
 

grumble

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Dec 6, 2008
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Psychotext said:
They've already lost more this gen than they made in the first 6 years of the PS2... so apparently no, they can't.

They can lose this much on consoles, not 400 bucks. It also depends on consumers making a lot of bluray, game and peripheral purchases, which have been slower than the company would have liked. I honestly think that with the slim, sony will see a lot of profit. It's just a more purchase friendly console.
 

Psychotext

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Jun 15, 2007
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grumble said:
They can lose this much on consoles, not 400 bucks.
You weren't very clear... you spoke specifically of cost reduction which lead me to understand that you were talking about costs over the lifetime.