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PlayStation 3 production cost cut in half
By: Matthew Davis
11/01/2008 11:04 pm
It's a general way of doing business in the gaming hardware marketplace, you sell your console at loss and make back on that through licensing. That is except for Nintendo that is who is able to make something for every unit sold from the get go. Some companies take a bigger hit than others, take the PlayStation 3 for example.
For each console that Sony sold, they were taking a close to $200US loss despite the high RRP and when you consider the amount of units assembled, that's a considerable hit to the company's bottom line.
With Sony experiencing what can only be described as disappointing financial reports for quite some time surrounding the launch of the PlayStation 3, it's understandable that they would feel compelled to reduce the loss made by each console sold. Nikko Citigroup has reported that by shrinking the chip sizes, re-evaluating parts (ie removing the Emotion Engine) and various other design tweaks, Sony has been able to bring the production cost of each console down to $400US from what was pre-November pre-40Gb model, $800US.
This is in line with Kaz Hirai's plans to see the gaming sector of Sony returning to the financial black by the middle of 2008. Also now that production costs are below the RRP, this leaves Sony some breathing space to bring the price down once again without disrupting profits.
The recent Warner Brothers Blu Ray revelation has also financially boosted Sony, with investers raising the value by 4.1%.
http://mygen.com.au/article.php?page_id=75602388148801047&format=4&se_id=29&rss=1
By: Matthew Davis
11/01/2008 11:04 pm
It's a general way of doing business in the gaming hardware marketplace, you sell your console at loss and make back on that through licensing. That is except for Nintendo that is who is able to make something for every unit sold from the get go. Some companies take a bigger hit than others, take the PlayStation 3 for example.
For each console that Sony sold, they were taking a close to $200US loss despite the high RRP and when you consider the amount of units assembled, that's a considerable hit to the company's bottom line.
With Sony experiencing what can only be described as disappointing financial reports for quite some time surrounding the launch of the PlayStation 3, it's understandable that they would feel compelled to reduce the loss made by each console sold. Nikko Citigroup has reported that by shrinking the chip sizes, re-evaluating parts (ie removing the Emotion Engine) and various other design tweaks, Sony has been able to bring the production cost of each console down to $400US from what was pre-November pre-40Gb model, $800US.
This is in line with Kaz Hirai's plans to see the gaming sector of Sony returning to the financial black by the middle of 2008. Also now that production costs are below the RRP, this leaves Sony some breathing space to bring the price down once again without disrupting profits.
The recent Warner Brothers Blu Ray revelation has also financially boosted Sony, with investers raising the value by 4.1%.
http://mygen.com.au/article.php?page_id=75602388148801047&format=4&se_id=29&rss=1
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