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Sony Shrinks PS3 Build Costs By 70 Percent
Sony Shrinks PS3 Build Costs By 70 Percent
July 31, 2009 | By Kris Graft

July 31, 2009 | By Kris Graft
More: Console/PC

Since the 2006 launch of PlayStation 3, Sony has wrestled down build costs for the console by about 70 percent, Sony CFO Nobuyuki Oneda said in an earnings call this week.

"The cost reductions since we introduced the PS3 are very substantial, and on schedule," the exec said, as reported by consumer site GameSpot. "We don't disclose how much of the PS3 cost reduction was specifically achieved during the past two years. But that is on schedule."

He continued, saying "roughly speaking", Sony has reduced the cost to build the console by "about 70 percent."

At around the time of PS3's launch in November 2006, supply chain analysts at iSuppli tore down the console, estimating that Sony was initially losing $306.85 and $241.35 on hardware components for the now-discontinued 20GB and 60GB PS3 models, respectively. Sony launched the PS3 at high price points: $499 for the 20GB and $599 for the 60GB, but those amounts were still far below the estimated $805.85 and $840.35 the company was reportedly spending on each respective console.

iSuppli's teardown took into account the bill of materials for the console only, not the controller, packaging, labor costs, and overhead associated with PS3 manufacturing.

Sony, a seasoned hardware manufacturer in various capacities, has been known to be adept at reducing the costs of PlayStation hardware. A complete cost-chopping cosmetic revamp of the PS3 is widely rumored -- a strategy that Sony has used for the PlayStation 1 and 2, as well as the PSP.

In December 2008, iSuppli performed a breakdown of more current PS3 hardware, estimating that Sony was losing $50 per console at the time.

Sony has been reluctant to reduce the PS3 price tag below the $399 price point, as the company seeks profitability. Sony reported this week that unit sales of PS3 dropped to 1.1 million during the quarter from 1.6 million sold for the same quarter a year ago.

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Julien Tremblay
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So, the real reason why they removed PS2 backward compatibility was not because PS3 games were not selling and was actually part of the cost-reduction plan? Ha!!!

Michael Toth
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Unfortunately, as I've surveyed select pools, the majority of fans interested in the playstation itself were due to its backwards compatibility. I, myself, opted out of purchasing the product knowing now that I could not play my old PS2 games on it, and games like Champions of Norrath are simple classics that I cannot do without.

Tom Kammerer
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I am going to have to agree with andrew. It was a necessary move by Sony. If you are gonna opt out of the price cut and not buy a PS3 because of no backwards compatibility. Put the extra 50 into a ps2. I can find a used ps2 for like 20 bucs now.

Brighton gardiner
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"Sony is really starting to be the tragic hero of this console generation, kinda like Macbeth."

But developers are not pleased with Sony, its hard to be a tragic hero when you don't empower your the studios who are looking to bring their games to your platform.

Microsoft has been a saint in regards to development support. Sony just wants to keep all their little secrets for their first party studios and show no love to third party devs.

David Rodriguez
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Brighton, a bit off topic. Sony has been incredibly supportive of developers with the PSPgo slashing dev kit cost for projects. As for the PS3, the numbers are there for you to look at. Every system is killing sony, they don't have the luxury of being extra supportive. Keep in mind, Microsoft ganked on Sonys tech from intel. Realistically,There wouldn't be a polished out Xbox360 if not for Sony's expensive research. It's unfortunate indeed, but the PS3 is still the most impressive piece of hardware.

Christopher Plummer
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Most publishers are trying to push an XBOX port on to the PS3, and then ask SONY to help them do it. Can't really fault them for standing their ground in those cases. IF you look at the PS3 titles that actually made an effort or the Unique PSN titles you can really tell that they are empowering studios. I'll reserve my comments for what Microsoft is doing, but saintly is completely off-base.

Rob Schatz
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Thomas, good to see you on Gama. It's Rob (we were in Wallcott's class together). I don't mean to put you on the spot, but I do. :) Sony just announced they sold 23.8 million units since launch to 6/30/09. (see Xbox is a little over 30 million, Wii is at 50 million. As long as Sony keeps at it, they will overtake Xbox (thank G-D) and then set it's sites on Nintendo just like it did with the PS1. What happened to N64 after that? Poooof! Don't get me wrong, I love Nintendo and grew up with them. In fact, I want it to go back to the days when there were 6 or 7 systems on the market, not including hand-helds. Watch how fast the console makers (Wii being the exception) would make GOOD games and not let the processors do all the work.