I can understand some of the reasoning that the PS3 has dropped only $100.

But as for Sony cost savings on production that isnt the case. Anyone who knows anything about component costs knows that at this point the 20GB HD is probably the most costly HD. HD costs dont drop year over year the capacity increases and manufacturers make the smaller capacity in smaller amounts causing prices to stay the same or rise. Taking a quickie look at SATA HD costs at Newegg has the difference between 40GB and 80GB at $10. Difference between 60GB and 80GB is about $1.00.

So in reality the 60GB and the 80GB PS3's really cost the same to produce. Now the 40GB also has removed some components (as did the 20GB). Still the components didnt add much to the cost to begin with. So in reality the differences in models is all marketing.

Sony originally released the 20GB as a defensive measure once the $600 price point was announced. The 20GB didnt cost anywhere close to $100 less than the PS3 to produce and Sony did not want to take a huge hit. So they produced the 20GB in very limited quantities and just advertised that PS3 starts at $500.

Now they are in a position where they need to sell consoles or they are dead so they produced the 40GB and because of situation they need it to sell. In reality it causes them to lose more than the 80GB. Yet they have no choice. The upped the storage to 80GB to hopefully convince some people to purchase the 80GB so they dont lose so much on the PS3 getting back in the race, but they are counting on the 40GB.

A cheap stand alone blue ray player is $400. An Xbox 360 is $350. You can assume that a PS3 would cost much above $400 because of its high definition graphics + blue ray player. I assume a $200 loss per system minimum. I wouldnt be surprised if it was alot more. If they sell 3 million systems, thats a $600 million dollar loss + intense holiday advertising. I wouldnt be surprised if they lost another billion dollars this quarter

A cheap stand alone blue ray player is $400. An Xbox 360 is $350. You can assume that a PS3 would cost much above $400 because of its high definition graphics + blue ray player. I assume a $200 loss per system minimum. I wouldnt be surprised if it was alot more. If they sell 3 million systems, thats a $600 million dollar loss + intense holiday advertising. I wouldnt be surprised if they lost another billion dollars this quarter

i did a little research on it and i find that probably they r losing in the range of 25 - 50 per console and by the March they might have another US$ 50 off while still managing to break even with the console.

Actuall iSupply Data was used in the original analysis and they estimated the cost for the July - August period for the first batch of PS3.
Link for the original article
http://www.isuppli.com/news/default.asp?id=6919

I will be estimating the cost for current October period. So it will make it like 15 months difference..
Component ---------- Original Price - - - - - - - My Current estimate
Nvidia RS - - - - - - - 129 - - - - - - - 80
(original estimate in my view was high due to the low yield but with supposedly better yield after 15 months and adding 20% cost reduction after 15 months i think it should be less than 80)
Cell Proc - - - - - - - 89 - - - - - - - 45
(original was for 90 nm... Sony updated the processor to 65nm, so price cuts by half whenever there is die shrink.. normal fabrication rule i would say)
I/O Bridge - - - - - 59 - - - - - - - 40
(straight 20% price reduction over 15 months plus u have remember that sony removed Emotion Engine and GC for backward compatibility which must have reduced circuit complexit.)
EE & BC - - - - - -- 27 - - - - - - - 0 (not present in 40 GB model)
XDR Mem - - - - -- 48 - - - - - - - 40
Other - - - - - - - 148 - - - - - - - 120
Blue T - - - - - - - 4.10 - - - - - - 4.
802.11 - - - - - - 15.50 - - - - - - - 12.00
Other - - - - - - - 2.5 - - - - - - - 2.0
Mem Card - - - - 5.0 - - - - - - - 4.0
BR Diode - - - - - 125 - - - - - - - 20
(Sony officially stated that they have increased the production and reduce the cost substantially which i think is right as we are seeing BR players for less than 250 from more than 1 Manufacture.. so the diode is one small part of the player and i m sure it should not be more than 20 at any cost for Sony)
HDD - - - - - - - 54 - - - - - - - 35
PSU - - - - - - - 37 - - - - - - - 25
(the new SKU i think has a smaller PSU as the power requirement has come down in 40 GB model)
CMM - - - - - - 22 - - - - - - - 15
(lesser heat has reduced much stress on cooling)
EH - - - - - - - 31 - - - - - - - 25
Misc - - - - - - 1.75 - - - - - - 1.5
MC - - - - - - - 40 - - - - - - - 35


Total - - - - - 840 - - - - - - - 503.5

Take these number with huge amount of salt..:)

But i will like to clearify few things...

Sony went with the reduction of Cell processor from 90nm to 65nm instead of the Nvidia graphics minitiarization and if we apply common sense this means that the cost of Cell was higher than the Cost of Nvidia graphics... other reason could be that initially Nvidia graphics initially had a very high rate of defect which was the reason for high cost cuz i don;t think that 7900 GT equivalent chipset should be this expensive when 7900 GT card is for around $120... so i think they have the cost down to around US 50.

Blu Ray Diode price could be higher than 20 but i personally read somewhere that they have got it to around 8... but i don't find that source again but if u read the following link they have mentioned that by reducing the cost of Blu ray they r expecting at a direct $100 reduction...

http://arstechnica.com/news.ars/post/20070615-sony-ps3-a-price-cut-candidate-perhaps-by-christmas-sony-ceo.html

But it could be off.

i don;t find motherboard in the iSupply data, they either have it included in the I/O or in the other cost... but by removing the Backward Compatibility Sony must have saved more than US $50 else i don;t think they would have gone with the chopping of Backward Compatability as it is one of the thing they have always claimed heavily.. So the cost must have to justify it.. So i have removed 27 from the EE & BC but some $10 from I/O.. but i think they could have save quite a bit in Other cost also by removed this Backward Comatibility.

Lastly i think for the first 15 months 20% reduction is a bit consertive as initially the defects r high, So the reduction in price comes at much higher pace initially but after 2 years it sort of levelled off. So i won;t be surprised if in some components like RAM and I/O component they have managed to save more... cuz i don;t think after 2 years they will be reducing much cost on these components..

Once again its a rough estimate but i have tried to be as objective and logical as possible...

And one last request can we just stop having this argument that Sony reduced the Price by $200 or $100... Sony initial price was $499 and $599 and now it stands at $399 and $499... i think that look a lot more objective and logical to me... u want to call it $200 price drop its ok with me.. but if my maths doesn't agree with yours then leave it... i think let it remains as a paradox of Maths for the future generation that how it is $200 price drop or $100 price drop. :)

I think Sony's in a bit of trouble.

Estimates of PS3 losses per unit at $150 seems optimistic to me. I believe a $200 to $250 range is more likely. Sure, the PS2 may be neutralizing some of the damage in its gaming division, but that's hardly a position of strength. The PS2 legacy should have given Sony an incredible edge early in the next gen. Instead it relies on it just to keep its head above water.

By many accounts, the battle of HD disc formats is at stand still. While an expected price war may break that tie, there is no certainty Blu-ray will reign. In any event, an extended price war will not help the bottom line.

Its electronics and digital equipment is facing growing competition from low cost producers across Asia.

I even hear the movie studio is expecting a less than stellar '08.

Music division? No clue.

But otherwise it seems like Sony is taking hits from all sides. By no means is the company going to fold, but for a company that prides itself on being a titan in technology and entertainment, it is on pretty shakey ground.

At this point, MSFT and Ninty have much stronger hands to play.

I'm sorry, your estimate is not very good...

Lets use nice round numbers for the RSX and Cell:

The RSX initially cost Sony $100 ($75 physical manufacturing cost, $25 Licencing/profit)
The Cell initially cost Sony $100 ($90 physical manufacturing cost, $10 Licencing/profit)

The Cell has a lower licencing fee because Sony is involved on its R&D and will likely pay for most of its future development. Now, assume Sony moves to the 65nm process for these processors:

The RSX now costs $62.5 ($37.5 Phyiscal cost, $25 Licencing/profit)
The Cell now costs $65 ($10 R&D, $45 Physical cost, $10 Licencing)

The $10 R&D cost on the Cell represents the $100 Million Sony would have to spend on the Cell to prepare it for the 65nm process spread out over the initial 10 Million consoles sold at this price ...

Basically, with my round numbers you can see that Sony could save about 35% of the cost of two of the components that will drop in price the fastest by now; overall an estimate of 20% to 25% is much more realistic. Being that Analysts initially estimated the PS3 as costing $800 to product a 25% reduction would put it at $600, and a 33% price reduction would have it at $525.

 When comparing the original cost of the $599 model with the cost now of a $399 model I thik it's fair to say it's a $200 price cut.  If one wants to compare the cost reductions of the $100 price drop they should do an estimate of the 80GB model.

no, you are wrong. thats like saying the 360 had a $100 price cut because all three of its sku's had price cuts to add up to that amount, when that clearly isnt the case.

 each model, bar the 40gb have only had a price cut of $100

Well I don't see how this is a big deal. Who cares how much money Sony looses per console? Only Sony. I don't see why so much of you care about Sony's wellbeing in their gaming division. If Sony can make a "$200" price cut this year when they loose money. Then when they fall behind again why can't they make another price cut?

If I remember, MS was in a pretty big hole with the Xbox, but they still made the 360. So it shouldn't matter to Sony how much they loose.

Sony has proven this year that desperate times call for desperate measures and I don't think 2008 will change that.

It isn't like that at all.   Noobie took the isupply breakdown of the 60GB model when it was priced at $599 and did an estimate of the 40GB model priced at $399.  That's a price drop for the consumer of $200.  It isn't adding up the individual SKU price cuts, but a comparison of cost between the most expensive SKU at launch with the least expensive SKU now.