Sony Almost Ready To Earn A Profit On The PS3 - HotHardware
Sony Almost Ready To Earn A Profit On The PS3

Sony Almost Ready To Earn A Profit On The PS3

After nearly four years of production, numerous design revisions, and a determined battle to establish Blu-ray as the de facto next-generation method of HD content distribution, the PS3's financials have almost turned a corner. By August, Sony is expected to finally begin earning a profit on the actual Playstation 3 console, rather than losing money on every single console sold.



Sony's drive towards profitability has been anything but smooth. When the Playstation 3 launched, iSuppli estimated the company was losing $241.35 per premium system (60GB HDD, $599) and $306.85 for the low end 20GB model (a steal at just $499). Microsoft's first-generation XBox 360, in contrast, cost the company just $75, while the Wii was profitable at $6 per unit sold from the beginning.

Microsoft appears to have hit the break-even point back in 2008, 2.5-3 years post-launch, but it's taken Sony longer to close the gap. The company's second-generation PS3 released in 2008 cost an estimated $50 per console, while 2009 revisions cut that figure to $37. This time around, the cost reduction will be thanks to a new 40nm version of the Playstation's NVIDIA-built RSX "Reality Synthesizer" GPU. The new chip will pair up with a 45nm Cell processor and draw significantly less power than even the current PS3 Slim. This could theoretically allow Sony to remodel the enclosure; there's a persistent rumor that we'll see a new custom SKU come August.
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It's good to hear that Sony is about to make a profit on the PS3.  The funny thing is in my Supply Chain Management class (and mentioned in other business classes) they said that even though you could have an item that doesn't earn profit, it can at least cover the overhead cost. (accounting fees, advertising, depreciation, insurance, interest, legal fees, rent, repairs, supplies, taxes, telephone bills, travel and utilities costs)   So if you remove that item, it could be more damaging to your business.  So it must have been sustainable for Sony to keep the PS3 even though they weren't getting a direct profit from it.

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^that and licensing fees for the developers and accessories 

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Moe,

No. If Sony was losing $200 per console sold that doesn't work out to anything but a loss. The entire console business is built on the idea of game sales being the long-term revenue generator. If you look at the PS3's attach rate, however, it took much longer than the XBox and Wii to reach its current high.

The problem with that is that if the attach rate isn't high enough, even software sales aren't making you any money. Back when Sony was losing $200 a system, an attach rate of 2-3 games wouldn't have covered the cost of the PS3 + marketing.

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After 4 years, it's almost ready to make a profit...

I think the main problem with the system was that the components were to expensive to produce and there wern't many exclusive, playable PS3 games at launch. But now that the PS3 has some sweet exclusive titles and now that it's getting less expensive to produce, I think Sony will have a winner on it's hands.

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They are just now ready to make a profit, and already plan to release a next gen console? It seems risky to me fellas. 

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Its about time these guys turn out a profit. Lol..I think this is comedy rather than news. The Cell processor??SMH..innovation gone to waste.

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