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Breaking Down the Dropping Parts Cost for Sony's PS3

Posted by timothy on from the wait-until-it's-all-one-chip dept.

will_die writes "The people at iSuppli have taken apart an October 2008 version of the PlayStation 3 to create a bill of materials, along with providing a comparison to original PS3. The article provides information about the changes Sony has made. One of the big ones was that the hardware has gone from costing $690.23 to the current price of $448.73. This was done using a combination of removing parts (currently 2,820 vs. the original 4,048), cutting the cost of the CPU ($46.46 vs. $64.40), and cutting the cost of the graphics processor to $58.01 from $83.17."

12 of 302 comments (clear)

  1. Sony needs to... by GPLDAN · · Score: 5, Insightful

    It still precludes them from selling at $299, which is where marketing data is suggesting they need to go to compete against Xbox.

    PS3 is being outsold by a good margin month to month, which means market share is dwindling (although objectively there are more PS3s in the world, which makes the equation for game developers shift) - and they seem to be losing developer mind share, as evidenced by the fact that there are few games that are PS3 exclusive. Most importantly and shockingly, Microsoft is getting Japanese game developers to come over to Xbox, where that model simply didn't exist in the PS2 days.

    Sony needs about 4-5 more Metal Gear Solid like titles, and they really need to work out the bugs with online play. I don't use my PS3 online, but from what I am to understand, it's not even close to Xbox live.

    1. Re:Sony needs to... by jellomizer · · Score: 5, Insightful

      They still need to make money.
      If you sell at a loss you don't make it up in volume, you just create a larger loss. I am not sure why people in slashdot never think of this concept that a for profit company kinda needs to make profit. Selling at a loss doesn't create profit. Sony is better off trying to prove that the Play Station is worth the cost, vs. selling at a loss. Even if they don't make #1 seller for the PS 3 they will make money from their units sold. And perhaps the PS 4 can get back.

      --
      If something is so important that you feel the need to post it on the internet... It probably isn't that important.
    2. Re:Sony needs to... by repvik · · Score: 3, Insightful

      They can still make money by selling the console at a loss. They just need to sell enough PS3s to create a large enough market for games.

    3. Re:Sony needs to... by tilandal · · Score: 3, Insightful

      It is a myth that you can sell consoles for a large loss and make up for that in games. No console has ever had an attach rate high enough to take a $150 loss on each unit and still make money. This is not even factoring in shipping, support, development and operating expenses.

    4. Re:Sony needs to... by Chuck+Chunder · · Score: 4, Insightful

      That is slightly modified for Sony and the PS3 as it pretty much won them the format war for HD video.

      I don't know how you'd begin to calculate what that is/will be "worth" to them. Plus there are additional revenue streams these days (ie online purchases) that don't effect attach rate but could bring a lot of profit.

      That said I think the Nintendo model makes a lot more sense.

      --
      Boffoonery - downloadable Comedy Benefit for Bletchley Park
    5. Re:Sony needs to... by EastCoastSurfer · · Score: 3, Insightful

      Consoles are a tricky thing. If they sold every PS3 at a decent profit margin then very few would sell and that in turn would lead to less games being developed. My guess is that they have a curve of cost vs. sales price. Originally they sell them at a loss to get them out there with the understanding that over time their input costs will drop and they'll eventually be on the positive side of the curve. Look at the PS2. They sell for $100 now I think. I'd be curious to see how much one of those actually costs to make now. At this point their profit margin on a single PS2 is probably pretty high.

    6. Re:Sony needs to... by EastCoastSurfer · · Score: 5, Insightful

      even the Wii will probably fall short unless it gets real games.

      People keep saying this while the Wiis market share keeps growing. I know 3 families that got Wiis for Christmas. All of these families were in the anti-video game crowd. Everyone one of them seems to enjoy their Wii. One friend of mine was excited about it because his wife goes..."it's great we can download the old nintendo games, because new games are too complicated to play."

      I have played games since I was a kid and it's easy to miss just how appealing the Wii and its lack of 'real games' is to an apparently large majority of people.

    7. Re:Sony needs to... by dave562 · · Score: 3, Insightful

      At this point in the life of the Metal Gear series, most of the people who are playing the game for the story. They are playing for those long, drawn out cut scenes. They aren't buying a video game, so much as they are buying a movie that they get to control a part of. Grand Theft Auto is very similar. They seem to have focused primarily on the story. I'm really disappointed with the lack of challenge/difficulty in GTA IV. They have either made the game much easier, or it's just much easier since I stopped smoking pot. It's probably a combination of the two. From a storyline point of view though, GTA IV is really good. On the PS3 the game world is absolutely amazing. The weather, the lighting, the sound, the physics, everything. The game is so detailed that if you are listening to the radio when your cell phone rings, it makes that buzzing sound a second before it rings.. just like if you have your real cell phone too close unshielded PC speaker wires.

    8. Re:Sony needs to... by cowscows · · Score: 3, Insightful

      Luckily for Nintendo they've already made a decent product selling the Wii itself. They're making money faster than they can count it, and Wii's are selling just as quickly as they were two years ago (maybe even faster since availability is somewhat better) I don't think they care in the least if you buy an Xbox360 to sit next to your Wii.

      --

      One time I threw a brick at a duck.

    9. Re:Sony needs to... by Sleepy · · Score: 4, Insightful

      Nope. It doesn't hurt your credit score.
      There are things that do hurt your score, like riding your credit limit over 50% on all your cards, or flipping a card like this when it is your "only" card. With 2 other accounts 5-10 years old, this doesn't even blip. My credit is in the high 700s every year when I check.

      Yeah, I saw this got marked troll. There's someone abusing the moderation system.
      The /. digg/bury moderation system is very "cathedral".. some people get picked to moderate all the time, and I haven't been asked in maybe 5 years. Someone who gets picked often does not like me, and the irony is I've probably been a faithful Slashdot poster for longer than half of that moderator's life.

  2. Consistency Please! by camperdave · · Score: 5, Insightful

    Keep all the price comparisons either from-to or all to-from. Don't mix the two because you'll confuse people (eg me). When I saw "...the hardware has gone from costing $690.23 to the current price of $448.73." it triggered me to read the last sentence as "cutting the cost of the graphic processor from $46.46 to $64.40.". I thought I was seeing some sort of Orwellian finances in effect.

    --
    When our name is on the back of your car, we're behind you all the way!
  3. Re:Unfortunately, not all these changes are good! by Geoff-with-a-G · · Score: 3, Insightful

    1. In the next year, PS2 will become less relevant than it currently is. At some point, nobody will care if it can play PS2 games.
    2. They cut the hardware price by $241.50. The cost of a new PS2 is $129. The money saved could almost by two PS2s.

    They're still releasing new PS2 games. If you go to Game Rankings right now, the top game on the main page is Persona 4 for... Playstation 2.

    This used to be a source of pride for Sony - look at how well we support our platform, we're still releasing top-quality games for it 8 years after it came out, and 2 years after it's "replacement" was released. According to good old Wikipedia, it's the top-selling console ever, at 140 million. Now they're actively removing that platform of games from their current product? Taking steps away from compatibility with it? Sure, eventually it will become less relevant, but I think it's gonna take a while. If we jump over to a DRM-related story, you'll find long threads complaining about "what happens if I buy this game, and 5 years from now their servers get shut down, or the company goes away? I still play my old computer games once in a while, I don't want them taking that away from me..." Forget Persona 4 just being released, aren't there people who will want to play Final Fantasy X or XII again? Kingdom Hearts? Gran Turismo 3 (wow, 14 million copies sold, really?).

    Yes, as you say, we can just buy a PS 2, or keep an existing one. But there's plenty of reasons that's a pain (inputs, controllers, and space mostly) and it's just a big visible step backwards for the product. And cost alone doesn't justify that, the $240 cut isn't all from the Emotion Engine, and if you check the eBay listings for 60 Gig PS3s, you'll see how much of a premium their customers are willing to pay for that feature. I'm one of those people - and there's plenty of others in this thread - stuck between buying a new one and keeping my old PS2, buying an old one off eBay for a premium price, or waiting and hoping Sony steps up instead of down with a future revision. In the meantime, I'm one more customer not buying a PS3, even with their modest price cuts.