great datas NJ5,

I was asking myself the question ...

Your forgetting about VAT, sellers markup, ect...

In other words, Sony only get a percentage of the $640.

Yes, Sony is breaking even on the hardware. Partly it's because they cost-reduced the heck out of the BluRay diode - a $125 item which is now under $20 - and partly because all other components drop 30% a year (this is a rough rule of thumb in the electronics biz). Whatever minor loss they're making on the $399 model are balanced by profits on the $499 model.

This is just the beginning for the cost-reduction slope. Sony will be able to slash the price to $299/299EUR in November 2008, and $199/199EUR by November 2009, and still make money.

 A price cut for the PS3 in the US by around November this year. Models will be reduced to $299 and $399

They'd still be losing money if it cost less than $400. Having worked in retail, I can tell you for most retail sotres the minimum mark-up from wholesale to retail price is 50%. That would leave the wholesale price at around $275 for a 40GB PS3. Now, considering the high price of console sales and quickness in which they leave the stores, there's a chance the mark-up is less and Gamestop and whathaveyou have a system in which they get more of a mark-up on games than on consoles, but I still doubt it's any less than, say, 25%. I was a member of a food co-op, which was completely staffed by members (only about 10 paid full time employees for a 10,000 member food co-op) and is non-profit, and the mark-up on goods was still 23%, to cover maintentance fees and spoilage (obviously, the latter is not something Gamestop would have to worry about). Most supermarkets fall between a 55%-95% mark-up. The comic book store I used to work at was similar to Gamestop, in that the wholesale and retail prices were both set by the companies themselves. The mark-up was around 60%, varying based on number of issues ordered per title. Anyone know offhand what the mark-up on consoles is for, say, Gamestop?

Marketing is a completely different ledger item and is not something that would directly affect console price. Based on hardware alone, though (both in terms of the cost of the hardware and in terms of only looking at it via what they make or lose on PS3 console sales themselves), the PS3 is almost definitely still losing money. They'll have to get down to $300 or so for parts before they get close to breaking even on individual consoles.

Believe me, they don't care.
Blu-ray is the next disk format, and they have quite a big stake in the shareholding structure of that business. They're f*cking rich.

I don't know if you know, but the road ahead for BD is massive. Just like DVD is now, they'll be BD devices in every PC and MAc in 2 to 4 years, as well as BD players under millions and millions of tv's, in cars, in hotels...

They make a bit of money on every disk or piece of BD hardware sold.

So what if console hardware never makes money, every PS3 game and Every movie has to pass their cash register.

Check your PS2 and DVD rack, then you can imagine the $$$ that's coming to them.


I've said it once, and I will say it again: Blu-ray is such a big victory to them, average consumer just doesn't realize it yet.
Xbox 720 will have to stick with dvd (and never be succesful), make its own high capacity disk (which means no movie player capability and thus will fail) or go for Blu-ray technology.
That last option is MS' best bet, but that will mean that Sony makes a little money on every Xbox 720 MS sells, a little money on every Xbox 720bought, AND a little money on every Blu-ray movie the Xbox 720 consumer buys.

Believe me, harsh times are a' comin' for MS, and they know it.

Actually, I deleted my post, cause it might have been considered a troll.

Either way, yeah, I have no idea if they're making money or not, off each console. There's a link atop the page, says it's not, doesn't matter. Software is where the profit is at, unless your Nintendo, in which case, Nintendo is where the profit is at. 

If Nobuyuki Oneda was taking into account a expected price drop (speculation only) then it would mean they are already very close to breaking even on the hardware sales but would drop price before that happened thus delaying the time when ps3 sells at a profit

@ jalsonmi: I'm pretty sure that if Sony takes a LOSS on it they're not going to want retailers jacking up the price that much. As I recall, I've heard consoles are generally sold at a very small profit to retailers ... but then I haven't worked at a game store.

I can say with utmost confidence that Gamestop does not make 25% profit ($100-125) on each PS3.

(A brief Internet search reveals the following: I am a salesmanager for one of the larger retailers out there and let me tell you, there isn't any markup in any of the game consoles, thats why retailers like to bundle their systems or try to push as many add-ons as possible. As for the profit margin per console its closer to the 4% to 6% area, this isn't an opinion this is a fact.)