How much does Sony lose on each 40gb PS3?

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I would actually put the average console cost of production around $900 U.S. We have a general estimate for parts around $800 U.S. Further more its quite generous to consider the additional expenses as being a mere $100 U.S. I can hear the fanatics out their with their hearts all a flutter. Calm down there is a rational explanation. Yes Sony has actually increased their losses.

Sony produced 5.5 million consoles by the end of April. You could consider this the initial production run. Seriously with the manufacturing woes up until that point. There was not the room for price cutting. Quite contrary to that the delays and difficulties increased costs as additional measures had to be taken. You have to remember Sony fell half a million units short of its goal by that point.

With the later price reductions Sony was forced to increase the losses on these initial production models. Sony actually lost more money then they were initially losing, and it will be months before any production savings can be factored in. Most of the units sold up until this point are measured under the original loss. Whatever you thought was the logical loss at the beginning of this year the reality is its much the same now since most of the units sold are of that original production run.

Lets say for example that I buy a hundred oranges at a dollar a orange, and then sell those oranges at half a dollar a orange. You would say I am losing half a dollar on each sale. Then lets say I get a new supplier that sells me oranges at seventy cents a orange, but before I can do the math I have only sold eight of those new oranges. You might say if I am still selling the oranges at half a dollar then I am only losing twenty cents a orange. However the truth is that life is not like that I have to average out my losses. Even though I lose less with my newer oranges. I still lost much more on average. Especially since I had only sold eight oranges at the significant reduction in losses.

Most of the units Sony sold were built in the initial six months during the shakeout. Hardly the best time to cut production costs, or to see wholesale cost reductions. The result being that when Sony increased the losses on these machines they actually lost more then they were losing initially all the way up to this very day.

The result is that Sony has actually increased the losses on their units, and manufacturing stream lining will not help at all in the near term. They caused a spike in losses. Which will probably not be counterbalanced by reduced production costs for the next few months. No Sony is not losing less money they are losing much more. The losses have increased dramatically.

I would say we might be looking at somewhere between component costs, and initial production costs which would probably place the losses at $250 U.S. You have to factor in a average loss dependent on price per MSRP per region then reach a average. For instance in some regions the loss was less, and in others substantially more. However it cannot be below $200 U.S. This is not even factoring in the other accumulated losses incurred over the year due to poor performance.

Sony is losing profits from game development that it is giving freely away as promotional bonuses. Further more they have had to fund greater development, and offer financial incentives to third party developers. You cannot ignore these, but without the contracts, or the projections we have no numbers to work from. However a degree of profitability was sacrificed here as well.

Sony has not actually made any great stride towards cost reduction on average. Whatever you felt was the rational number at the time. The reality is its probably just getting back to it at this point.