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Forums - Sony Discussion - Sony closer to breakeven on PS3

Alby_da_Wolf on 22 January 2010

I agree that iSupply prices for the various components look quite strange, with some close to wholesale ones and others to end user retail ones. Anyhow, if it's like previous yeard December estimates, they are done with October prices of the same year, now Sony should be starting building with components bought after the hot Xmas period and so already getting slightly better prices.



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ChichiriMuyo on 22 January 2010
ocean-1984 said:
299.00 EUR = 421.079 USD They dont loose money in euro countrys.
I fill like I payed a bit more then the rest of world...

Did your pay rate decline when the value of the dollar dropped or did you still make the same?  If it's the later, then you're not paying any more - you're paying justly given taxes and standard of living in your region.



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GreyianStorm on 22 January 2010
Shorty11857 said:
geddesmond2 said:
Well if it costs them 330 dollars to produce and the PS3 sells for 300 euros in europe which equals 420 dollars and the PS3 sells the most in europe, then I think its safe to say that the PS3 is now making a profit. Correct?

You're forgetting sales tax, which is at least 15% (EU Minimum, but can be higher in other countries); so the most money they can make would be $365 less in some European countries; if you factor in retailer cut, shipping costs; they probably break-even in Europe overall, maybe a slight loss

15% is the minimum? I know it is now, but it was reduced in the UK to...13% I think, for a while.



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GreyianStorm on 22 January 2010
Kasz216 said:
ocean-1984 said:
299.00 EUR = 421.079 USD They dont loose money in euro countrys.
I fill like I payed a bit more then the rest of world...

VAT is an inclusive tax.

The US pays 299.00 BEFORE taxes.

So, you pay more... but blame your government.  Not Sony.

Because the tax rate is 40% (300+40%=420)?
Sony gets more money from retailers per PS3 in Europe than they do in America. In Ireland, VAT is at 21% (which is high), which would mean the pre-tax price would be around €250, or $360ish. Clearly, it's not just "our government". 



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GreyianStorm on 22 January 2010
Shoestar said:
johnsobas said:
Shoestar said:
letsdance said:
johnsobas said:
Shoestar said:
Considering each retailer makes at least $30-$50 from the sale of one console, I think sony is losing at least $80-$100 in the US. (if Boxing and controllers are included).

In the UK and Europe, Sony might be close to breaking even as in Euro, the Console would cost 268 Euros to make but sells 250-300 Euros depending on the Region.


no the margins for retailers are very small, 5-10$ max.  There are some things not included in these estimates like shipping, controllers, boxing etc. 

controllers are included at under 15 dollars.

 

Hmmm... I'm not sure about the $5-10 per console... I know for sure that on game sales it's $4-$10 depending on price and recency of the game itself. I believe that for shelf space of a console, $30 per console most suited for retailers taking in consideration the service fees involved.

 

If the controller price is included in the 'other' costs... that leaves less than $60 for the body and other electronics such as board, hdmi/ethernet ports, buttons, Sound eqs etc...

you have it backwards, software and accessories are where retailers make the money.  It's very difficult to find numbers, i did find that Nintendo had a 8$ margin for the wii at launch and that was considered high.  Retailers don't discount consoles because the margins are so thin.  If software margins were that thin retailers wouldn't buy software, because the risk is so high you would have to sell it at full price or you would lose money.

 

Really? I didn't know that... still doesn't sound logical as it costs more in shelf space.

If retailers didn't sell consoles, nobody would be buying games. You wouldn't buy games if you can't buy a console.



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Kasz216 on 22 January 2010
GreyianStorm said:
Kasz216 said:
ocean-1984 said:
299.00 EUR = 421.079 USD They dont loose money in euro countrys.
I fill like I payed a bit more then the rest of world...

VAT is an inclusive tax.

The US pays 299.00 BEFORE taxes.

So, you pay more... but blame your government.  Not Sony.

Because the tax rate is 40% (300+40%=420)?
Sony gets more money from retailers per PS3 in Europe than they do in America. In Ireland, VAT is at 21% (which is high), which would mean the pre-tax price would be around €250, or $360ish. Clearly, it's not just "our government". 

No, it's just mostly that.  You've also got

Distribution costs (much higher in europe)

Translation costs (need more languages)

Staffing costs (need people who speak different languages)

Different companies (Sony France, Sony UK etc.)

and hosts of other problems when dealing with an area like europe which is almost as big a market as the US, but so framented based on laws, languages and many other factors.



AnthonyW86 on 22 January 2010

Wasn't this news already on the front page months ago?



drkohler on 22 January 2010
NJ5 said:

No offense, but you're a bit late to the party. The discussion moved on quite a bit since that post...

In the end some of these items look too expensive (for example the BD drive), while others look too cheap in comparison. I think iSuppli is full of it, and I don't know if the real cost is above or below what they claim.

The iSupply breakdown is, however, much more reasonable than the first attempt which was plainly ridiculous.

The optical drive is way "overestimated", it probably is around $28 to manufacture. There are various royalties associated with it so I'd guess it costs around $35 to slapp a drive into a PS3. The memory chips are correctly estimated at $10, these are just 64Mbyte chips that OEMs can buy around $1-$2 a piece depending on a variety of conditions. So manufacturing costs could be around $300 at the moment (including 1 controler in the box).

That obviously does not make the PS3  profitable based on the hardware alone, in any territory, including Europe. Taxes and store margins add anywhere from 28% to 42% to the product in Europe and margins in Japan are probably even higher than those in Europe.



AnthonyW86 on 22 January 2010

Found it, month and a half ago: http://news.vgchartz.com/news.php?id=6183 So why is this news?



Shoestar on 22 January 2010
GreyianStorm said:
Shoestar said:
johnsobas said:
Shoestar said:
letsdance said:
johnsobas said:
Shoestar said:
Considering each retailer makes at least $30-$50 from the sale of one console, I think sony is losing at least $80-$100 in the US. (if Boxing and controllers are included).

In the UK and Europe, Sony might be close to breaking even as in Euro, the Console would cost 268 Euros to make but sells 250-300 Euros depending on the Region.


no the margins for retailers are very small, 5-10$ max.  There are some things not included in these estimates like shipping, controllers, boxing etc. 

controllers are included at under 15 dollars.

 

Hmmm... I'm not sure about the $5-10 per console... I know for sure that on game sales it's $4-$10 depending on price and recency of the game itself. I believe that for shelf space of a console, $30 per console most suited for retailers taking in consideration the service fees involved.

 

If the controller price is included in the 'other' costs... that leaves less than $60 for the body and other electronics such as board, hdmi/ethernet ports, buttons, Sound eqs etc...

you have it backwards, software and accessories are where retailers make the money.  It's very difficult to find numbers, i did find that Nintendo had a 8$ margin for the wii at launch and that was considered high.  Retailers don't discount consoles because the margins are so thin.  If software margins were that thin retailers wouldn't buy software, because the risk is so high you would have to sell it at full price or you would lose money.

 

Really? I didn't know that... still doesn't sound logical as it costs more in shelf space.

If retailers didn't sell consoles, nobody would be buying games. You wouldn't buy games if you can't buy a console.

Retailers don't usually care for long term gains... it's always short term focus. I'm still a bit skeptical about this...  maybe when one day someone posts official figures we'll know for sure.



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