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jarrod on 07 February 2010
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theprof00 said:
jarrod said:
ramses01 said:
Attoyou said:

 

NEW Report Says They are Only losing $18, Google it if you have not already seen it , They are getting the price of the ps3 down Every month ,  THEY CAN And if They WANT Will Cut the Price , We will have to wait and see .


Even if the $18 is correct, that doesn't mean they are losing $18 per console.  It means that material cost of the console is $18 higher the MSRP. Sony's loss is much greater than that as each consoles also has retailer margin, shipping, and FTE costs associated with it.  Using your $18 as the base.  Then Sony is probably losing 18 + 15-30 for retailer margin + 3-5 for shipping + FTE costs (maybe $5-10) 

$18 per console would only be correct if the $349 SKU didn't exist.  That's PlayStation University's fuzzy math at work, the original source says "six cents loss on the dollar for hardware".

actually the quote is

“Sony loses about six cents for every dollar of PlayStation 3 hardware sales.”

I only brought this up because it has a very different nuance from what yours says. People who are saying that the number doesn't include shipping and such could be right or could be wrong. But it's obvious from the quote that those people do not have factual support for their statements. The fuzzy math could be from an average of both SKU sales, on average. But if that is true, then it is likely that the number DOES actually include shipping and other costs. Why skew facts in order to reach another skew? It makes much more sense to find the best fact and spin the reasoning as to why we should use that number.

If the fuzzy math does not exist, I still think their number includes shipping and such because of the quote presented above. It says "for every dollar of ps3 hardware sales", not "for every dollar of ps3 hardware". The original quote is actually quite direct and simplistic. For this reason, I think that the fuzzy math does exist, and includes all extra costs, meaning, 18$ per 299$ and 21$ per 349$ console. This is recouperable with 2 software sales or 1 game + 1 controller. 

I think you misunderstood, the "fuzzy math" is in actually claiming a "$18 loss per unit", which is exactly what PlayStation University did (and the Wallstreet Journal didn't do).  A six cent loss per dollar doesn't mean you can just apply that point blank per pricepoint, it means that's what the overall loss works out to. In terms of assembly/production cost, the 120GB and 250GB cost about the same, the only difference is in HDD capacity (which would be a minor cost difference).  What's likely happening then is a greater loss at the $299 pricepoint and possibly a small profit at the $349, but until we have a ratio for distribtuon of 120GB/250GB (say 60/40), we can't figure out what the exact loss per unit is.