PS3 costs 53% less to make now than at launch

by Andrew Yoon { Dec 23rd 2008 at 9:45AM }

It's well known that Sony's latest console is a powerful, expensive piece of tech. When Sony launched the PS3, it lost over $200 on every unit sold -- in spite of its $600 price point. However, over time Sony has been able to reduce the costs of manufacturing the system, by removing PS2 compatibility and switching over to a more efficient 65-nanometer chips.

iSuppli, the company which broke down the PS3 at launch, estimated the cost of making a PS3 was more than $840. Now, they say the PS3 costs 53% less to make -- at around $445, for a system which sells at $400. Sony is still losing money on each system sold, but in a much less extraordinary way.

Not only are the individual components cheaper to make, there are simply less things inside a modern PS3. According to iSuppli, the number of parts inside a PS3 has fallen from 4,048 to only 2,820. Since launch, Sony has reworked the innards of the PS3 to include combined chips. The falling price of components also helps Sony a lot: the Cell processor cost $89 at launch, but now only costs $46 to make.

Sony should be able to break even with the PS3 starting in 2009, which makes us wonder if they'll start adopting a more aggressive price strategy late next year. We hope so -- they need a way to make themselves attractive to customers, without breaking the bank.

[Via PlayStation Forums]

Tags: cost, isuppli, ps3

Reader Comments (Page 1 of 1)

vahdyx @ Dec 23rd 2008 10:16AM

I agree, hopefully more attractive price!

Kspraydad @ Dec 23rd 2008 10:23AM

The US dollar is earning SONY 25% LESS since Jan 08 and with the US dollar poised to plummet even more in 2009 vs the YEN it is difficult to see how SONY could lower the price in anything other than their home market.

slycooper_rocker [anti-panda death murder squadron force five] @ Dec 23rd 2008 1:33PM

what happened to your toro avatar?

Kspraydad @ Dec 23rd 2008 5:38PM

Work Kspray vs Home Kspray

Bagels PSN:WolfLogic @ Dec 23rd 2008 10:23AM

Even if I had bought a launch PS3, They've made enough money back from me in games (which to produce the actual product is quite cheap, besides the development cost) to make up for it.

JaffaBoy @ Dec 23rd 2008 10:33AM

Yep, same thing with the Xbox wasnt it... lost money on everyone sold but thats not where the money is made.

Just look at printer costs... can be damn cheap to buy one because its the ink where the money is made and once you have the printer you have to buy the inks!

I know alot of people here just like the PS3 for the games, but I love it for everything else it does (and PlayTV just added PVR to the list!)... Sony just have to keep that message going..."its not just a games machine"

Bagels PSN:WolfLogic @ Dec 23rd 2008 11:59AM

Exactly, I like that line because it justifies the cost. I think that the primary reason XBOX sells more is because it is advertised better, not because of the price. Xbox is crap, plus once you've paid "199" or even "379" you still have plenty of acessories that will set you back even more.

PS3 has all those things built in.

Nick @ Dec 23rd 2008 12:28PM

Let's be real here, guys. Sony would only be making money back in games if the games were selling well. The fact of the matter is that the games just aren't selling enough to off-set the losses they've suffered from both the PSP and the PS3. I love my PS3 and I believe it's the better system in almost every aspect, but I'm not going to try and ignore facts. The 360 is cheaper than the PS3 even when you include "necessary" accessories. You can buy very cheap wireless adapters for the 360 and the online is only ~$50 a year. It comes with component cables and a headset, both of which the PS3 lack. It's going to be hard for the PS3 to compete when there is a system that is substantially cheaper and rivals it in power and performance (though falls short, but as we see with the Wii and PS2, power and performance do not mean a damn thing) as well as a library full of very well-known and successful IPs.

slycooper_rocker [anti-panda death murder squadron force five] @ Dec 23rd 2008 8:10PM

@ Nick

actually, they have more well known ip's. everyone knows halo and gears. when i was raving about mgs4, all my friends except for one said"what's mgs4?". then i mentioned uncharted. none had a clue. i said resistance and they said "meh". i said god of war and they said "that's the only reason i would buy a ps3". even my friends with ps3s don't like our games. they said mgs4 sucked because "no one plays single player anymore and its online sucks". then i said fallout 3 and they shut up. :)

the point is that sony really needs to market the crap out of these games AFTER they get reviews. they tried marketing with haze and we all know how that turned out.

Jake @ Dec 23rd 2008 3:09PM

i agree with jaffaboy, sony need to actually push forward that it isn't just a games machine, i use it half the time for blu ray and playtv

sony just lack in actually pushing the machine in peoples faces, while xbox seems to have at least 2 adverts per advert break sony has 1 in a blue moon

i can't see the price coming down this the money problems at the moment. Plus why would they keep it so they loose money, they will want to make profit at some point, why not the year with all the console seller games that are coming?

Little Big PSN ID: johnnynumber5 @ Dec 23rd 2008 4:42PM

I also love the PS3 and everything that the machine is capable of doing. I think it's easily the best piece of consumer electronics and gaming console I have ever purchased. I can't help but point out some of Sony's mistakes with mismanaging the internal components of the console. I understand they wanted to push the cell and Blu-Ray so I won't call those mistakes. I will call adding PS2 backward compatibility as mistake as well as the memory card readers and Wi-Fi. Though I use all of those devices and functions daily I wish they would have allocated more money towards another cell core to control the slaves and more video card memory.

I actually love the console but if they started from day 1 with the current 80 GB model with the only additions being another cell slave controller (for lack of a proper term) and double the video memory the system would have not only been more functional but would also be head and shoulders the better next gen console in terms of what we see on screen at all times.

Not trolling the PS3 or Sony as I love the device but it seems as if some of the priorities were mismanaged from the start.

iamkid @ Dec 23rd 2008 4:44PM

yep bagels, theyve probably made that money back from me, too. and if they havent, theyre getting close

me @ Dec 23rd 2008 10:40AM

i HATE to see post like this becuase they estimate that it cost sony about $480 to make a ps3 but what about the consoles they sell in europe and the UK . in europe we pay 399 EUROS which at an average exchange rate of about 1euro = 1.45 dollars shows that sony isnt makeing a loss in europe but still us europeans get the Sh*ty end of the stick with less service less features etc

PBone @ Dec 23rd 2008 11:08AM

Umm the us dollar to the euro more then 1.45.
its 1 EUR = $1.3939 in U.S. and this is up to date. if u dont believe me go to cnn.com.

Archon @ Dec 23rd 2008 11:39AM

PBone, wow... What a fine way to miss the point.

PBone @ Dec 23rd 2008 12:00PM

I didnt miss the point, I understand people in Euro paid way more for the ps3 because there euro is higher i understand that.

But I'm just stating the fact that the dollar isnt 1.45 right now. its 1.39 to the Euro and two weeks ago it was 1.20 but it fell back down to 1.39 as of today. it goes up and down.

But two years ago the dollar was the strongest in the world. the euro was like 80 cent to the dollar. soo it all depends when you buy things.

Nick @ Dec 23rd 2008 12:30PM

"Average," PBone...6 cents isn't going to drastically change the price Europeans paid, anyway.

SimbaDogg @ Dec 23rd 2008 3:07PM

Mmm...how much of a VAT are you guys paying for the PS3? that might be a good source of your high price. here in the US and Japan, we dont have that...so that's a little piece of the puzzle.

Ghaleon @ Dec 23rd 2008 10:40AM

They seem more interested in selling bundles than just a CHEAP system

slycooper_rocker [anti-panda death murder squadron force five] @ Dec 23rd 2008 1:41PM

at least our consoles include the hard drives. and you can switch them out for cheap non-proprietary ones. :)

justin @ Dec 23rd 2008 7:57PM

well the bundles save them more money then a cheap system, games really only cost them around $10 max and the downloads for games are very cheap so the 160gb system costing $500 US is making them more money over a $450 160gb cheap system.

acefondu @ Dec 23rd 2008 10:43AM

Eh....now I'm worried since my PS3 has all those 4,000+ parts. That simply means the more parts it has the more chances they can break which worries me. Curse my need to have a PS2 capable PS3.

Dan Rabot @ Dec 23rd 2008 10:49AM

I'm in the same boat, Old PS3 - backward compatability, loads of USB slots etc but so many parts to go wrong!

fingers crossed, in fact I can uncross them, mine is insured for the next 3 years. Would hate to have it replaced with a new SKU though.

HAAS599 @ Dec 23rd 2008 10:50AM

I would like to see the PS3 launch strategy come back.

Let the customer choose either a bare bones PS3 (20gb HDD, 2 usb ports, no card readers, 1 sixaxis) for the cheapest possible price or a "premium" PS3 with all the bells and whistles (BC, DS3, Headset,4 usb ports,160gb HDD) and just charge what you have to charge for it.

Maybe $200-$250 for the basic PS3 and go back to $600 for the premium.

Dan Rabot @ Dec 23rd 2008 11:44AM

I couldn't agree more!

There NEEDS to be a bare bones PS3, for all those out there that can't afford / don't know enough to buy a PS3 over an Xbox. I mean it's christmas, all adverts say "on Xbox 360" for all multiplat games, and all parents are thinking "hmmm, same games, or even MORE games, £129 or £300?"

It's a pretty easy decision to make if you're not a gamer or if you don't know what the difference is.

A £200 PS3 would be far better received alongside the £129 360. It's a shame, but it needs to be done to improve the userbase.

i do however enjoy knowing that i'm playing with a certain caliber of gamer, gamers who know good hardware and who can afford to buy a decent console. Rather than the XBL full of children screaming and shouting at each other on the cheapo games console mummy bought them with her benefit money.

Christian @ Dec 23rd 2008 12:11PM

Well I am seeing the adverts too, and I think Sony needs to spend their earnings on increased marketing as opposed to a price cut. The PS3 defends its price very well in terms of features, so Sony just need to get out the word.

bambino @ Dec 23rd 2008 10:54AM

I'm quite happy my 40 gig. I never owned a ps2. Just got back into console gaming this generation since the Mega drive days.

If Sony brought back BC via firmware update, the only 2 ps2 games I would buy would be ICO and SoTC. :)

nakedatthecomp @ Dec 23rd 2008 1:36PM

I don't think that BC would be possible in a firmware update, I think you need an actual physical chip in your PS3 for that to work, that the 20/40/80 don't have...

OddyOh @ Dec 23rd 2008 10:54AM

I use all four usb ports and the card readers all the time, glad I bought when I did, even if it uses more power than the newer ones, as some articles claim.

debaser @ Dec 23rd 2008 11:04AM

Hey it uses more power so that means it has to be more powerful right?....

:P

PBone @ Dec 23rd 2008 11:10AM

Also ive said the ps3 will drop in price in Q3 in 2009.

aaron @ Dec 23rd 2008 11:12AM

wheres my damn LBP MGS DLC!!!!

Jerses @ Dec 23rd 2008 2:21PM

All updates to the store are on thursday.

Fane @ Dec 23rd 2008 6:41PM

...except during holiday weeks.

Flame @ Dec 23rd 2008 11:19AM

I really cant see them dropping the price. Even at $300 people are still gonna turn heads to the 360. I mean come on, its cheaper than the wii.

hesham8 @ Dec 23rd 2008 11:25AM

Typo in sentence 3 - Sony switched to 45 nm chips, not 65nm.

Fane @ Dec 23rd 2008 1:07PM

Nope. They switched from 90 mm to 65 mm. They will be switching to 45 mm soon (maybe already, but that wasn't the switch which affects these calculations).

Fane @ Dec 23rd 2008 1:09PM

nm not mm LOL It's early.

Evi1d33d @ Dec 23rd 2008 11:41AM

The Cell processor only cost $45? Wow that's pretty cheap for a super processor, or what they claimed.

Casper32 @ Dec 23rd 2008 12:32PM

Still wish it could be a little more attractively priced when it's also attractive competition is almost 1/2 it's price.

Hopefully it has a price drop before Killzone 2, otherwise I'm forced to buy it at the $400 mark.

iFester @ Dec 23rd 2008 2:04PM

If the system comes down in price my interest in purchasing will go up an easy 53% (see what I did there?).

kentuckyfried @ Dec 23rd 2008 2:06PM

Good to know that Sony's not entirely bleeding to death on the sale of PS3's. Here's hoping for a price drop in February so that more people can finally jump in and enjoy the goodness.

Sancho @ Dec 23rd 2008 2:46PM

@ jerses, christmas is thursday so the store updates today

koehler83 @ Dec 23rd 2008 4:23PM

I paid $594 taxes included for my 60GB PS3. So basically I paid $150 for 2 more usb slots, memory card slots and for all intents and purposes, an HDD compatible PS2. I consider that a fair deal.

Minus the extras listed, I'd still happily pay $445 for a PS3. Though I was even happier to pay $399 for the 40GB last year and the 80GB this year for my mom and dad respectively, for Christmas.

gillyy0 @ Dec 23rd 2008 6:21PM

More aggressive price strategies for sure. I have high hopes for Sony in the coming years.

don_sf @ Dec 23rd 2008 6:22PM

the ps3's expensive price will eventually lead to a very cheap (or reasonably priced) cell based playstation4 system.

considering how high the ps3's price is above their competitors, ps3 is selling amazingly.

most of the consoles sales are shown when the price point of the console is around £100 mark (or probably around the 150$) in usa.

the xbox 360 arcade is pretty close to those price points, and as would be expected, it is selling better. (recently i became a customer as well). however i remain optimistic about sony's sales. They are selling this well at the big price point, so when the price comes down, it will sell even more.

One thing which may be overlooked. Most of sony's ps1 customers brought ps2 as their next gen console, and stuck to it. Unfortunately, alot of their ps2 owners are buying the xbox 360, the qestion is, will they also buy a ps3 at the cheaper price....or will xbox 360 always be cheaper than ps3 and always draw more sales?

Copland @ Dec 23rd 2008 8:58PM

This is why they can't lower the price of PS3.

TJF588 @ Dec 23rd 2008 11:43PM

So, when will everything be cheap enough to un-nerf BC and inputs? Really, our biggest home console game set is PS2, so having one machine to handle three/four different things (PS1, PS2, DVD, and maaaybe PS3) would be very convenient.

gravewolf @ Dec 24th 2008 12:29AM

I still dont agree with a price cut. I think the ps3 is a very affordable system for what it can do and the same goes for my psp. I dont understand why people complain so much about the price when i remember consoles like the 3DO would cost about $600 dollars when it was released and i think the original playstation at that time had about the same price as the PS3. And if your whining about the price of games, any old gamer would remember that the Neo-geo cartrideges would cost about $200 depending on the game. I dont complain about the BC since i also have a ps2 slim since its so cheap nowadays and some games would look really ugly if you played it upscaled on a ps3. Having a ps2 than bc is much cheaper than having your bluray lens replaced due to overuse. Ive been playing consoles games and pc games since 1982 and ive owned a lot of consoles and i can say that the ps3 is a bargain at what it can do. If there is going to be a price cut then i would predict that it would happen next year.