iSuppli : PS3 costs $448.73 to build ...

[Laa-Yosh]

If that is to be believed, the lost is around $15 on the 40GB PS3s in the US.

Exchange rates are going crazy nowadays, so you can't really nail down the losses. One shipment may have a loss of X at the time it's manufactured, Y at the time it's unloaded from the boat in the US, Z at the time it reaches the retailer and W when it's finally sold. And consoles built the week after that may have completely different XYZW numbers.

Even Sony itself is probably having a hard time keeping track of how much any given PS3 actually costs them...

 

[Cheezdoodles]

Exchange rates are going crazy nowadays, so you can't really nail down the losses. One shipment may have a loss of X at the time it's manufactured, Y at the time it's unloaded from the boat in the US, Z at the time it reaches the retailer and W when it's finally sold. And consoles built the week after that may have completely different XYZW numbers.

Even Sony itself is probably having a hard time keeping track of how much any given PS3 actually costs them...

Meh, if your worried about exchange rates any competent firm should buy the approriate futures and thus eliminate all exchange rate risk. Seems like Sony doesn't like futures thought..

 

[Laa-Yosh]

Yeah, well, if you've been worried about the economy you could've liquidated most of your investments in time before the stock markets crashed. Bu we could probably count the number of people with such foresight on a few hands.

Exchange rates are hurting Sony, I seriously doubt that they could do anything reasonable about it. Just how many exchanges happen throuh a PS3's creation anyway, from IC manufacturing to assembly to packaging to shipping, anyway?

 

[RudeCurve]

From my own research, even at this point in time, the BR drive is still at least 4 times as expensive as a DVD drive.

 

[Carl B]

I don't understand why whenever someone does one of these BOM breakdowns they always do it in terms of US dollars. This makes no sense at all to me.

None of these consoles are manufactured or assembled in the US. And yet they always compared the costs in US currencies.

The US dollar fell ~25% vs the yen just this year. There is no suggestion that their breakdown takes this into account.

So true. And this report is even more useless than the first one because we don't even have the breakout, just BusinessWeek's synopsis of it. I mean are the assembly and packaging costs there still as ludicrously high as they were before? Point is, any teardown estimates are more or less unusable, and they become even moreso when they're not normalized to the actual base currency.

What we know is that the PS3 loses money per unit, and that in Europe and the US the 'price cut' Sony has absorbed is on the order of ~20-25%, and in the UK it's closer to 40%. I don't think it's worth it to try and get more fine grained than that.

 

[TheWretched]

So true. And this report is even more useless than the first one because we don't even have the breakout, just BusinessWeek's synopsis of it. I mean are the assembly and packaging costs there still as ludicrously high as they were before? Point is, any teardown estimates are more or less unusable, and they become even moreso when they're not normalized to the actual base currency.

What we know is that the PS3 loses money per unit, and that in Europe and the US the 'price cut' Sony has absorbed is on the order of ~20-25%, and in the UK it's closer to 40%. I don't think it's worth it to try and get more fine grained than that.

Well yeah... if converted to todays currency, the PS3 costs...

40.499 Yen
313 Euro...

(I ignored the UK this time, because the Pound only recently lost too much of its worth, so it isn't really comparable, but those who are interested in numbers, it is 305GBP compared to 299GBP MSRP (w/o recent taxcuts))

I don't know the actual MSRP in Japan nowadays, but in Europe, it still is 399€ (the pricecuts aren't official, maybe just some christmas sales).

I know those numbers mean nothing, since the early numbers are estimates only and not normalized, but this goes to show, that even so, Sony doesn't lose cash in Europe (and maybe Japan, there are other factors too).

 

[Carl B]

My point is that we shouldn't be getting an estimate in dollars to begin with, at least not without a lot more additional context to the numbers. Like, were these figures compiled in a 'before' or 'after' financial crises mindset? And did they tear this thing apart and just start assigning dollar values without any thought to the disruptions caused by currency volatility? If you're unaware as to my feelings on iSuppli's first teardown estimates, I thought they were horrible - and no reason to give this effort any more credence IMO. It seems pointless to even discuss the system's profitability around a number that plainly seems arbitrary.

But as for the Euro pricing, remember to remove roughly ~20% of the value immediately anyway, due to VAT. Using 20% as a Eurozone average, that's a cut that certainly doesn't go to Sony. So 320 Euros post-VAT equates to 41,312 yen, ignoring whatever logistical/distribution/retailing costs are involved. And I wouldn't ignore the GBP's recent drop at all, firstly because it's not so recent (it began several months ago), and secondly because it still encompased the busiest shopping months of the year. Now granted if and when Sony might choose to repatriate those funds is a different matter, and will effect the final exchange rate, but they're going to be accounted for in the financial statements either way, and it's going to hurt.

Ultimately the point is though that we can't assert where or if Sony makes or loses money in any territory, because to do so assumes these iSuppli numbers are credible to begin with, which is a leap of faith I certainly can't make. I do assume though that it is lossy in all territories still, otherwise we would see what I think is a fundamentally shifted earnings picture for the division... it's still too loss burdened for me to think otherwise. The best we can realistically hope to nail down is an understanding of the forces/variables affecting the system's profitability, rather than hope for a Rosetta-stone type answer of "the system costs this much."

 

[Blackraven]

Sony is aiming to make a profit for every PS3 sold by sometime next year (2009). Personally, whether or not they achieve that goal, one can only guess........though I hope they do.

Still, even if they just break-even within next year, then that would still be quite good if you ask me

 

[Carl B]

Sony is aiming to make a profit for every PS3 sold by sometime next year (2009). Personally, whether or not they achieve that goal, one can only guess........though I hope they do.

Still, even if they just break-even within next year, then that would still be quite good if you ask me

Well, Sony stated that goal before the financial crises hit. Honestly whether it's still a plausible goal or not, it's at least been made much more difficult. And as for whether it will still be a goal or not, and how close they are or not to it, believe me, we'll be told clearly. Expect all of these things to be discussed in their next quarterly conference call.

 

[eastmen]

Well, Sony stated that goal before the financial crises hit. Honestly whether it's still a plausible goal or not, it's at least been made much more difficult. And as for whether it will still be a goal or not, and how close they are or not to it, believe me, we'll be told clearly. Expect all of these things to be discussed in their next quarterly conference call.

Well sony certianly has a few things to help it like the 65nm rsx's .

But who knows , the only thing that really matters in the grand scheme of things is how much the losses on the console are affecting sony's ability to drop the price and become more competitive in markets where its fallen behind. It seems like many countrys in europe and pal land it is competitive right now , but in the NA market it seems to far behind at its current price points.

Can sony break even next year while lowering the price to better compete ? Will titles like Killzone 2 drive sales up without a price cut allowing them to break even at the $400 price point.

All fun questions to talk about but we can't know for sure till after the reports come in

 

[JPT]

As for the competitive part I am not sure, here in Norway you can get an XBox 360 Frcade for 400kr/€41 if you trade in your old PS2 and 5 games.

Now if that doesn't convert the old PS2 "mainstream" crowd to the X360, I do not know what will. I have not seen in any trade in offers with for the PS3 and the cheapest PS3 out there now, that I have seen is about 3700kr/€372.

So will a €50-€100 price drop be enough to compete?