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Forums - Sony - Sony breaking even on PS3/making profit 40gb PS3

Girl Gamer Elite on 11 January 2008

Again, just a PR stunt. Until we have solid evidence from a reputable source there is little more speculation to the PS3's standing in terms of breaking even.



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weezy on 11 January 2008
RabidBunny said:
@Bodhesatva
Many electronic products have cut costs to half over 12 months. The main factors have been that the product had new technolgies (e.g. Consumer DVD Players had DVD drives, + Decoder Chips both which dropped in price by more than half over the initial 12 months) and were not designed as cost efficiently as possible due to need to hit production dates (get out for Christmas with minimum risk, have redesign available ASAP).
RabidBunny

I'll call BS. I need concrete proof.

So what your saying is system maker X can release a $1000 product and expect it to go down to $500 in 12 months because its not selling so well? and then be able to profit?

Where can I get in on this!

So Nintendo, insted of making $40 a console must be making like $100per?

I bet Nintendo nets $250 profit off each Wii then.



I am WEEzY. You can suck my Nintendo loving BALLS!

 

MynameisGARY

RabidBunny on 11 January 2008

Again the cost of production and parts has been cut in half, this doesn't mean Sony is breaking even. Does anyone know the wholesale price for the 40 GB units? I would think it would have to be 299 to 349, but don't have a clue. For non game systems (like LCD TV, DVD Players, etc) the rule of thumb was that the BOM (Bill of Materials) cost (including manufaturing) had to 1/2 of the expected retail cost.
Rabid Bunny



rocketpig on 11 January 2008
RabidBunny said:
@Bodhesatva
Many electronic products have cut costs to half over 12 months. The main factors have been that the product had new technolgies (e.g. Consumer DVD Players had DVD drives, + Decoder Chips both which dropped in price by more than half over the initial 12 months) and were not designed as cost efficiently as possible due to need to hit production dates (get out for Christmas with minimum risk, have redesign available ASAP).
RabidBunny

No they didn't. I know this because I bought a DVD player 3 weeks after launch and almost bought another one a year later. They started at $500/600 prices and were around $350/450 after one year.




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URNotE on 11 January 2008

and the ps3 turnaround begins this is exactly how it happened with the ps2



URNOTE Proud Owner of a 60GB PS3 Console (Purchased 12/22/06)

 #1 reason MGS4 is PS3 exclusive  xbox is too loud for snake to sneak around
PSNTAG= Xander732

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Bodhesatva on 11 January 2008
RabidBunny said:
Again the cost of production and parts has been cut in half, this doesn't mean Sony is breaking even. Does anyone know the wholesale price for the 40 GB units? I would think it would have to be 299 to 349, but don't have a clue. For non game systems (like LCD TV, DVD Players, etc) the rule of thumb was that the BOM (Bill of Materials) cost (including manufaturing) had to 1/2 of the expected retail cost.
Rabid Bunny

They sell the systems to my store (Toys R Us) for 398.99. Most retailers can expect to make 1-5 dollars on these products. We make a killing on software, but on hardware like the PS3, we make virtually nothing. Therefore, Sony should be effectively losing nothing on hardware -- and yet, these people are still expecting Sony to bleed significant amounts of cash for another year or more. 

Why is that? Can anyone explain this to me?  



http://i14.photobucket.com/albums/a324/Arkives/Disccopy.jpg%5B/IMG%5D">http://i14.photobucket.com/albums/a324/Arkives/Disccopy.jpg%5B/IMG%5D">

RabidBunny on 11 January 2008

@weezy
If you read this article you will see history of this happening.
http://seattletimes.nwsource.com/html/businesstechnology/2001828701_ptcheapdvd03.html
First the question is can electronics manufacturers cut the cost of production of a product (including materials) in half in one year. The answer is yes. It doesn't matter if you are making money or not on the product, but it is possible.



URNotE on 11 January 2008
Bodhesatva said:

Like others here, this information is so shocking (has any major electronics product ever been able to half its production cost in a year? Going from 800 dollars to 400 dollars in 12 months?) that it's hard to believe, but the really puzzling thing is that the same people who made this statement -- Nikko Citigroup -- also expect SCE to lose 1.4 billion this year, and that they will "not be prosperous until late 2009."

So, if Sony isn't losing money on the consoles, why are they are apparently still going to be hemmoraghing cash for a long time to come?


well the production cost was down to 600 as of about months ago.... so they are still gonna be losing money on all the 60 and 80 gigs on the market because of the production cost at the time... the 40 gig had parts removed so thats believable plus with the cost of blu ray drives going down .. i do think that they are close to it... but i do believe they are still losing money on the 80 gb as the article states...



URNOTE Proud Owner of a 60GB PS3 Console (Purchased 12/22/06)

 #1 reason MGS4 is PS3 exclusive  xbox is too loud for snake to sneak around
PSNTAG= Xander732

FishyJoe on 11 January 2008
URNotE said:
and the ps3 turnaround begins this is exactly how it happened with the ps2

Not really. The losses weren't even close in magnitude.



RabidBunny on 11 January 2008

@Bodhesatva
Only thought is R&D costs for redesign, and not selling enough SW to cover marketing/promotional/everyday business costs. Look at it this way Sony might only make 10 per game. So if attach rate is 3 then Sony will make $430 for each Playstation. Can that cover the cost of making the device, supporting the device (phone, psn, etc), and marketing?
RabidBunny