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iSuppli: PS3 Sold At $300 Loss On Hardware Components

iSuppli: PS3 Sold At $300 Loss On Hardware Components

November 16, 2006 | By Brandon Boyer

November 16, 2006 | By Brandon Boyer
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More: Console/PC

Researchers from electronics supply chain iSuppli have performed their latest 'teardown analysis' on Sony's new PlayStation 3, and have calculated the manufacturing cost of the 20GB model at at $805.85 - over $300 more than its retail price.

The researchers, who a year ago also measured Microsoft's Xbox 360 hardware at $127 over retail cost, perform the analysis by tallying an estimated cost of each of a console's component parts, not including costs for controllers, cables and packaging.

As their extensive charts reveal, Sony is taking an estimated loss of $306.85 for its 20GB lower-end model, and another $241.35 loss for each 60GB model, compared against their respective $499 and $599 price points.

Though it's not uncommon for initial hardware sales to be priced at a loss for the manufacturer, iSuppli remarks that Sony's cut is "remarkable, even for the video-game console business."

Pegging the high costs of the console on the processing power it provides, iSuppli also remarks that the console is impressive in its design, with senior analyst Andrew Rassweiler saying, "If someone had shown me the PlayStation 3 motherboard from afar without telling me what it was, I would have assumed it was for a network switch or an enterprise server."

Also impressive to iSuppli is the level of engineering that's gone into the console. "To give an example of how cutting-edge the design is," says Rassweiler, "in the entire history of the iSuppli Teardown Analysis team, we have seen only three semiconductors with 1,200 or more pins. The PlayStation 3 has three such semiconductors all by itself."

He adds, "There is nothing cheap about the PlayStation 3 design. This is not an adapted PC design. Even beyond the major chips in the PlayStation 3, the other components seem to also be expensive and somewhat exotic."

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