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Forums - Sony - PS3 profitability -- Breaking down Kaz' statement

NJ5 on 25 August 2009
greenmedic88 said:
Xxain said:
guys..do we know how much it cost to make a Slim and Phat yet at this moment???...

There is no definitive answer. Everything has been based upon estimates, with a common one using the often quoted $840 initial production cost of the 60GB unit as the starting point for the "near 70%" reduction in per unit production cost quoted recently by SCE, which would put the production cost at about $252.

Assuming it isn't, either that $840 initial estimate was too low, or the "near 70%" reduction could in fact be something closer to 65% or even 60% which would bring current production cost to $294-336.

As one can see, it really doesn't take much to shift that current production cost number.

 

I believe the 70% production cost reduction refers to the cost in Yen, in which case I calculated the production cost would be at least $311 now (which doesn't count the controllers, boxing, manuals, shipment and things like that).

 



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JEDE3 on 25 August 2009
greenmedic88 said:
Xxain said:
guys..do we know how much it cost to make a Slim and Phat yet at this moment???...

There is no definitive answer. Everything has been based upon estimates, with a common one using the often quoted $840 initial production cost of the 60GB unit as the starting point for the "near 70%" reduction in per unit production cost quoted recently by SCE, which would put the production cost at about $252.

Assuming it isn't, either that $840 initial estimate was too low, or the "near 70%" reduction could in fact be something closer to 65% or even 60% which would bring current production cost to $294-336.

As one can see, it really doesn't take much to shift that current production cost number.


For the fats though we have a better estimate. Since the CFO said they still lose about 10% on each system sold.

durtysouthhustlah on 25 August 2009
JEDE3 said:
You guys are fucking obnoxious. How is "Ps3 is profitable allows them to cut the price" Me saying "Ps3 is making a profit now"

Seriously guys, grow up. You are fucking obnoxious.

Were they your words are not? Just answer the question.



What, son, what? New York, New York!!!

Xxain on 25 August 2009
greenmedic88 said:
Xxain said:
guys..do we know how much it cost to make a Slim and Phat yet at this moment???...

There is no definitive answer. Everything has been based upon estimates, with a common one using the often quoted $840 initial production cost of the 60GB unit as the starting point for the "near 70%" reduction in per unit production cost quoted recently by SCE, which would put the production cost at about $252.

Assuming it isn't, either that $840 initial estimate was too low, or the "near 70%" reduction could in fact be something closer to 65% or even 60% which would bring current production cost to $294-336.

As one can see, it really doesn't take much to shift that current production cost number.


ah..I see, so theres is a probable chance they are profiting?......Why is this such a popular topic on a gaming forum???

JEDE3 on 25 August 2009
durtysouthhustlah said:
JEDE3 said:
You guys are fucking obnoxious. How is "Ps3 is profitable allows them to cut the price" Me saying "Ps3 is making a profit now"

Seriously guys, grow up. You are fucking obnoxious.

Were they your words are not? Just answer the question.


Yes, but taken completely out of context and not even on the same topic as this thread here so that quote is completely irrelevant.

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JEDE3 on 25 August 2009
NJ5 said:
greenmedic88 said:
Xxain said:
guys..do we know how much it cost to make a Slim and Phat yet at this moment???...

There is no definitive answer. Everything has been based upon estimates, with a common one using the often quoted $840 initial production cost of the 60GB unit as the starting point for the "near 70%" reduction in per unit production cost quoted recently by SCE, which would put the production cost at about $252.

Assuming it isn't, either that $840 initial estimate was too low, or the "near 70%" reduction could in fact be something closer to 65% or even 60% which would bring current production cost to $294-336.

As one can see, it really doesn't take much to shift that current production cost number.

 

I believe the 70% production cost reduction refers to the cost in Yen, in which case I calculated the production cost would be at least $311 now (which doesn't count the controllers, boxing, manuals, shipment and things like that).

 


I don't know, I estimated ~280 not including all that stuff. (As you can see from my previous post) 311 isn't that far off but would they be able to sell enough software and periphs to make up for that? What would the dollar amount be for their loss for you. Including all that stuff. And I know you wont forget to take retail cut out of the 300.

greenmedic88 on 25 August 2009
NJ5 said:
greenmedic88 said:
Xxain said:
guys..do we know how much it cost to make a Slim and Phat yet at this moment???...

There is no definitive answer. Everything has been based upon estimates, with a common one using the often quoted $840 initial production cost of the 60GB unit as the starting point for the "near 70%" reduction in per unit production cost quoted recently by SCE, which would put the production cost at about $252.

Assuming it isn't, either that $840 initial estimate was too low, or the "near 70%" reduction could in fact be something closer to 65% or even 60% which would bring current production cost to $294-336.

As one can see, it really doesn't take much to shift that current production cost number.

 

I believe the 70% production cost reduction refers to the cost in Yen, in which case I calculated the production cost would be at least $311 now (which doesn't count the controllers, boxing, manuals, shipment and things like that).

 

The cost in Yen would explain it while keeping both the "near 70%" statement and an initial production cost of about $840.

No need to include cost of controllers, packaging, print materials, distro costs, retailer cut etc. since those aren't included in unit production costs. They do have to be included, on the other hand, once a hardware manufacturer starts to claim that they are making a profit on every unit sold.

Even if SCE was producing them for under $300, they'd still be losing money on every unit sold due to included accessories, packaging, distro costs, retailer cut, etc.



JEDE3 on 25 August 2009
greenmedic88 said:
NJ5 said:
greenmedic88 said:
Xxain said:
guys..do we know how much it cost to make a Slim and Phat yet at this moment???...

There is no definitive answer. Everything has been based upon estimates, with a common one using the often quoted $840 initial production cost of the 60GB unit as the starting point for the "near 70%" reduction in per unit production cost quoted recently by SCE, which would put the production cost at about $252.

Assuming it isn't, either that $840 initial estimate was too low, or the "near 70%" reduction could in fact be something closer to 65% or even 60% which would bring current production cost to $294-336.

As one can see, it really doesn't take much to shift that current production cost number.

 

I believe the 70% production cost reduction refers to the cost in Yen, in which case I calculated the production cost would be at least $311 now (which doesn't count the controllers, boxing, manuals, shipment and things like that).

 

The cost in Yen would explain it while keeping both the "near 70%" statement and an initial production cost of about $840.

No need to include cost of controllers, packaging, print materials, distro costs, retailer cut etc. since those aren't included in unit production costs. They do have to be included, on the other hand, once a hardware manufacturer starts to claim that they are making a profit on every unit sold.

Even if SCE was producing them for under $300, they'd still be losing money on every unit sold due to included accessories, packaging, distro costs, retailer cut, etc.


So you agree with me that even if they cost 280 to manufacture Sony would still not be profitable.



greenmedic88 on 25 August 2009
Xxain said:
greenmedic88 said:
Xxain said:
guys..do we know how much it cost to make a Slim and Phat yet at this moment???...

There is no definitive answer. Everything has been based upon estimates, with a common one using the often quoted $840 initial production cost of the 60GB unit as the starting point for the "near 70%" reduction in per unit production cost quoted recently by SCE, which would put the production cost at about $252.

Assuming it isn't, either that $840 initial estimate was too low, or the "near 70%" reduction could in fact be something closer to 65% or even 60% which would bring current production cost to $294-336.

As one can see, it really doesn't take much to shift that current production cost number.

ah..I see, so theres is a probable chance they are profiting?......Why is this such a popular topic on a gaming forum???

The official statement is that SCE is still taking a loss (no word on how much), regardless of how small it may be, on every PS3 slim sold.

As it's already been pointed out, even if the production cost was under $300, they'd still be losing money on each unit sold after factoring in distro costs, packaging, in box accessories, retailer cut, etc.

I'd say hardware profitability of the PS3 is such a hot topic because it was well documented that despite being the most expensive console ever sold by a major (sorry 3DO, SNK) platform developer, SCE was still losing well over $200 on every unit at retail.

That bit of information in turn had many declaring the PS3 would take SCE out of the console business, a notion that some are still clinging to for whatever personal reasons three years later.



NJ5 on 25 August 2009
JEDE3 said:

I don't know, I estimated ~280 not including all that stuff. (As you can see from my previous post) 311 isn't that far off but would they be able to sell enough hardware and periphs to make up for that? What would the dollar amount be for their loss for you. Including all that stuff. And I know you wont forget to take retail cut out of the 300.

Here is why I get $311:

When the PS3 launched, 1 dollar was about 117 yen. If iSuppli's estimate of $840 in production cost was correct back then, that was:

$840 * 117 = 98,280 yen

Reduce that by 70%, and you get 29,484 yen, which is about $311.

 



My Mario Kart Wii friend code: 2707-1866-0957