There is also marketing and distribution costs as well. All those national TV commercials don't come cheap, especially ones that air during football. 

The blu-ray diodes cost has already dropped by $100.00 or so. They did cost OVER $100 a piece when the ps3 first came out, not they are around $7.00 a piece. That's HUGE savings from just one part.

Then why are BD players still retailing for the same price as a PS3?

congratulations sony!!, now you are only stealing to us(Europeans)

That's a good point ... To put it another way:

Consider HD-DVD players, their primary advantage over Blu-Ray players is that they're less expensive; now Toshiba has a very good reason to sell their players close to cost or at a loss and yet they're still $300 (for the most part). The PS3 has several expensive components (Hard-drive, Cell processor and GPU, Memory, etc.) which are not in Toshiba's HD-DVD player.

Certainly it is possible that Sony is breaking even on the manufacturing costs, but there are lots of reasons not to believe it.

Another thing to consider is that while at some point the diodes may have cost $100 on the open market, it's likely that Sony negotiated a bulk price that may or may not have been ever close the the open market price. Most likely the contract was for much lower.

Even ignoring all the arguments which have already been presented against the idea that Sony is breaking even on the PS3 per hardware unit (some of which are quite good), I just find it incredibly hard to believe that Sony could have slashed the cost of production by 50% after little more than a year on the market.

The PS3 is composed of several pieces of very new technology, which for the most part have never been mass-produced before, so this is just very hard to believe, especially when all the evidence we have for it is a couple of random websites with little credibility.

 would they? If people knew that production costs were way down, would people start wanting another price cut?

Earnings will be out in a couple weeks. We'll know the real story then.

I call BS on this article. However if its true...

the only way this can possibly be true of them breaking even is if those other sold assets in 2007 gained them enough money for the division.


Seling assets from another division and pumping the cash into the game division to pretend/coverup the huge debt to break even is BS. They are no were near breaking even.