PS3 to sell for $399, but cost $494 to make

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Apoptosis
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PS3 to sell for $399, but cost $494 to make

Post by Apoptosis » Wed Jun 29, 2005 8:11 pm

Gamespot has said that Merrill Lynch of Japan predicts Sony will lose more than $1 billion on hardware during its next-gen console's first year on the market--a sum it may not be able to recoup.
According to the latest issue of Japanese magazine Toyo Keizai, Merrill Lynch Japan Securities has recently calculated an analysis that the production of a single PlayStation 3 console will cost Sony approximately 54,000 yen to make ($494), as of its initial release in 2006.


Merrill Lynch Japan estimates that the machine's main components--namely its Cell chip, RSX, and BD-ROM drive--will cost about 11,000 yen ($101) each. After adding the other electronics that will be used in the PS3, the machine's production cost goes up to 54,000 yen.

Given that Sony's PS3 will face stiff competition from Microsoft's Xbox 360, the chances that Sony will release its console at its production cost is slim. Under the assumption that the Xbox 360 is expected to sell at around $299, Merrill Lynch Japan predicts that Sony will sell each PS3 at the price of 44,800 yen ($410) in Japan and $399 in America. That would mean Sony would suffer a loss of more than 130 billion yen ($1.18 billion) during the first year of the PS3's release.
Wow I am shocked that the PS3 costs $494 to make and the XBOX 360 is only going to run $299.... It is clear that Microsoft has already won the price war of next gen consoles before they have even come out.

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Post by -mogwai » Wed Jun 29, 2005 10:09 pm

i think it's a smart move by sony. by having a lower entry price than the cost of manufacturing the ps3, it gets more consoles out. later, they'll be able to raise the price back to normal and will gain some revenue to get closer to breaking even. i think, initially, the games are what will break them even and boost them past microsoft.
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Re: PS3 to sell for $399, but cost $494 to make

Post by NAiLs » Sat Jul 02, 2005 11:29 pm

Apoptosis wrote: Wow I am shocked that the PS3 costs $494 to make and the XBOX 360 is only going to run $299.... It is clear that Microsoft has already won the price war of next gen consoles before they have even come out.
Actually, Nintendo will win the price war. Their console will most likely be $199! :P I can't say much else as no one knows a damned thing about the system. They might end up screwing up like usual and not make big sales this time around. All I gotta say is, they better have something impressive in the works!
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Post by -mogwai » Sun Jul 03, 2005 12:08 am

i think it's fair to say that 80% of the gaming sector has lost almost all faith in nintendo to come out with something awesome
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Post by Antonik » Tue Jul 12, 2005 2:15 pm

Am i the only one who will wait till the prices drop? And of course see which console can be modded the easiest and what it can do after modding. If something comes out that can playback video like XBOX I'll be hooked.

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Post by NAiLs » Wed Jul 13, 2005 2:00 am

I will be saving my money for school and a new computer... screw consoles. I may buy the revolution depending on the games that are in the works, but that's about it... I don't have $400 to spend on a freaking console! I bought PS2 when it dropped to $200, guess how many games I own for it. TWO! FFX & GTA! XBox too... I own ONE whole game for that POS. Fable.
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Post by jigr69 » Wed Jul 13, 2005 2:15 am

When the original XBox came out, it was on the shelves for considerably less than it cost to make. I would be very surprised if the XBox 360 costs less to make than the price tag it will have when it finally reaches the shelves.

Manufacturers make most of their revenue on licenses for the games being sold and figure that the average XBox/XBox360/PS3 user will buy a number of games in the first two years to recoup the initial loss and make a profit. If even the profit amounts to a couple of dollars/pounds per console, multiplied by the number of sales, and it all begins to add up.

Its akin to contracts with mobile phones, you may pay £200 for a contract free (SIM free) mobile phone, or have a monthly contract for £15. They gamble on you spending more than the £15 worth of calls/text each month so that over the first year, they still make a profit.

But looking at the other perspective, would you pay a higher initial price for the console, but then pay a much lower price for the games? It all depends on how much its going to get used.... If you buy one or two games, then the lower console higher game prices is ideal, but if you buy alot of games, then the reverse is true.

This is probably why PC games tend to be lower in price than console games, simply because the hardware overhead for PC games is non existant.

These views are based upon my experience in rip off Britain (UK). :finga:
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Post by Nobahar » Fri Jul 15, 2005 9:45 am

I'm not buying anymore consoles, it's cheaper for a vid card (and ram upgrade) and the pc doubles as a whole entertainment center and workstation ;p. Plus the games are cheaper and the controls are better (esp for first person shooters).

But correct me if I'm wrong, didn't Sega do the same thing Sony is doing? Their Saturn and Dreamcast systems cost more to produce than they were selling and it ended up hurting the company dearly.

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Post by Yuriman » Thu Sep 15, 2005 3:37 pm

All consoles that I can remember cost more to make than they sold for... at least at first. Parts get cheaper over time.

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Post by teer » Mon Sep 19, 2005 8:27 am

pc > console.

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