| Andrespetmonkey said: The components in the Vita are estimated to cost around $160 (which doesn't include the costs of putting the parts together btw), now add manufacturing costs, the retailers cut, the shipping costs etc.and that price goes up quite a bit. And that's just the cost on single units. For the system as a whole you've got the R&D cost, which is huge (new OS + mass produced OLED screens added to this cost greatly I imagine), marketing and licensing. Kaz Hirai himself said that the Vita will be profitable in 3 years. |
And what he meant is that the Vita will have recouped setup costs after three years. You people should really learn the difference between manufacturing costs and production costs of a product. It is really annoying to see so many clueless "analysts" here.
Just to get some idea, let's look at Andrespetmonke's manufacturing costs:
The average chinese worker drone costs around $2 per hour for a manufacturer. Now guess how many Vitas a worker assembles per hour? Let^s say he is really slow and only manages 5 units perhour - ridiculous assumption. Of course it's an assembly line with tens of workers working on tens of units in parallel. So assembly costs are less than 30c per unit.
Now shipping costs. In the past, prices to ship a 2TE unit from China to wherever cost $4000. Due to bad economy, these prices have drastically shrunk to below $1000. How many Vitas can you pack into a 2TE unit? 20'000? 30'000? So shipping costs are less than 30c per unit.
So how much is Sony paying for manufacturing the Vitas? Probably around the $150 that are repoerted The only unknown quantity here is the OLED screens which could be very expensive (m-OLED manufacturing quantities are known, and are limited. What Sony has been selling might be near what they could actually get on OLED area - hence the strange launch period).
The difference between manufacturing costs, store price costs, and estimated number of units sold per time interval determines the time until the Vita product is profitable. Obviously Sony calculated with a three years period to recoup setup costs. In the beginning, The price of a product is determined by development costs, factory setup costs, advertising, freebies, etc, later in the timeframe basically by advertising only.
So is the Vita profitable or not? On the manufacturing level, yes no doubt. On the production level, maybe not because it sells less than the three year plan would have required. This creates the puzzling result that Sony is (currently) losing money on the Vita although they make money on every unit sold..
