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Sony: $3.31B Lost in PlayStation 3 Cost, Pricing Gap

by Aaron Linde, Jun 23, 2008 12:50pm PDT
Related Topics – Hardware Sales, Sony

Disparity between the production cost of the PlayStation 3 and its retail price point caused Sony to lose roughly $3.31B over 2007 and 2008, Kotaku reports.

Outlining potential risk factors to investors, the company revealed in its fiscal 2008 annual report that by pricing the PlayStation 3 below production cost, the company shed $2.16B in 2007 and $1.16B in 2008. Sony added that its major investment in the early development and introductory phases of the PlayStation 3 "may not be fully recovered."

These research and development costs are typical in introducing a console to market, but the costs may prove unrecoverable if a platform "fail[s] to achieve such favorable market penetration... resulting in a significant negative impact on Sony's profitability," the company added.

Sony went on to remark that though it may eventually see a return on its investment, it's still possible that the company may end up in the red over the PlayStation 3's introductory period.

At the time of its initial launch, production costs of the PlayStation 3 were estimated at roughly $800 and $840 for the 20GB and 60GB models, respectively. Hardware revisions and cheaper availability of components have since driven production costs down by about a half of those initial figures.


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Comments

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  • #81
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    By: Dr_Cube x
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    Man the implications of this could be huge. Do you think the next round of consoles will pull a Wii and focus on user interface and cost, foregoing ultra fast processors?

    I mean, it looks like it's too expensive to try and put a supercomputer in a box and sell it for a couple hundred quid. Does that mean the PS4 and the Xbox720 will only be marginally faster than the PS3 and 360? Not to tout my favorite platform but that would leave the PC as the only platform with true next gen hardware.

    Was the PS3 and 360 a short but unsustainable burst in computing performance for consoles that only happened because the two titan companies were wailing away at each other for the performance crown and willing to toss billions into custom hardware?
    Jun 23, 2008 11:01pm PDT