Great read. Nice to see the real numbers for once. Sony made the mistake of giving consumers a lot of what they didn't want and now they are paying for it.

Nice thread, easy to read, once you understand it. Glad to see the psp doing well.
PS3 is dragging sony through the dirt isn't it? maybe it'll get better this year. (profit, or close to it)

Pulling your HW loss figures out your ass I see.

Sony has reduced PS3 costs down by 50%, that put costs to make a PS3 at $400 from $800. Seen as the PS3 sells for $400-$500. Sony is either breaking even or making $100 from each PS3 sold, depending on model.

Also factoring in that the PS3 price varies from country to country. Sony could be well on course too recoup alot of it's initial loses, through hardwre costs alone.

I'd take a guess that Sony makes the PS3 for $400 now.They then sell PS3 at approx $360 too distributor, which then sells on for approx $380 too the retailer. Which would leave Sony with a small $40 loss per unit, and allowing distributor/retailer too make a small profit each.

Well, to an extent the numbers are guesswork, but (and I made the same initial mistake) they are not HW loss/profit figures, they include everything else besides the manufacturing cost, i.e. marketing, R&D, general administration, ad placements and so on.

On another note, if the distributor only makes 20$ per PS3, and the retailer too, that's just insanely bad business. Granted, Sony does a lot of the work distributors normally do, but still I doubt 20$ is even enough to cover the costs of moving and warehousing the boxes. A somewhat normal distributor markup is around 30%, and for retail a bit less, but depending heavily on the product. I understand that game consoles are an exceptional breed of products, so I want to know if your figures are backed by facts or did you just pull them out of thin air?

Please note that hardware component costs are not the only costs for the PS3 hardware.  The loss includes all other expenses associated with PS3 hardware.

Please read more thoroughly so you can understand the original analysis.

@Marty8370

Oh, what Plaupius said...

this would have been a good read, unfortunately, you had too many assumed values for my taste. an assumption or two wouldn't be that bad, but you assumed almost all of your figures which = inaccurate analysis

i'm not denying that sony lost billions on the ps3. i believe that they announced that they lost about $3.3billion or something to that extent. while your "analysis" indicates that the loss is over $5billion.

i would assume that you over estimated ps3 loses and at the same time under estimated the gaming devisions profits.

You are assuming on his assumption?

Regardless of how well you may think Sony's games may be doing it is simply not enough to even cover for the development costs just to make the games. Sony dug itself into a hole with Blu Ray and it is going to take years to even begin to see any kind of profit from the PS3. My guess is when HD becomes standard the PS3 may even out.

@ils411

I hope you read the first few posts thoroughly. Then hopefully you can understand where those numbers are coming from.

Games division lost US$3 Billion + the last few years.

Even by that simple number, of course the PS3 has lost more than that, since PS2 and PSP are profitable.

To all readers with different "assumptions" of the different divisions:

Just to let you know, the original numbers that were used (*) as assumptions were based on the most plausible numbers - in order to fit some common perceptions about each division.

These are the perceptions that were used to do the assumptions:
1. PS2 software and hardware makes money
2. PSP hardware initially lost money but are now slightly profitable
3. PS3 hardware loses money
4. PS3 software makes money

If you suddenly "tweak" and change some of those numbers, then all the other numbers change, quite dramatically for most numbers that other people comment or spew out.

Let's look at this example:
PS2 software gets $5 profit because PS2 is so profitable.
PS2 hardware gets $20 profit because it's so old and cheap now.

Now you may think that $2 to $5 for PS2 software is not that much different, the same for PS2 hardware profit of $20 from $10.

If we keep everything else the same, this is how the numbers will turn out: