Sony Still Losing Money On Every New Slim PS3 Sold

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Despite a total redesign, a move to new third-party manufacturers in China and a totally new marketing campaign, Sony is still losing money on every new slim PS3 console it sells, claims a new report from iSuppli.

According to new teardown research, Sony is set to lose millions this year selling its PS3 console and, with falling game sales, there is little hope that the situation will be reversed soon.

According to new research, the US 120 Gb Hard Disk Drive (HDD) version of the new PlayStation 3 has components that carry a combined Bill of Materials (BOM) and manufacturing/test cost of $373, says iSuppli.

The unit is selling for $325 and that includes an advertising margin, retail margin of at least 20 per cent, distribution and transport costs.

Adding to this, Sony Australia is giving away thousands of PS3 consoles this Xmas in an effort to sell its Bravia TVs, which are also costing Sony millions in lost profits as each Sony Bravia TV is sold at a loss by the Sony Corporation.

The iSuppli analysis shows that the single most expensive component of the 2568 components in the new PS3 is the Blu-ray drive, which costs Sony $73.

“Since the introduction of the PlayStation 3 in late 2006, Sony has subsidised the price of every console sold, a deficit the company has made up for with game sales and royalties,” said Andrew Rassweiler, director and principal analyst, of  teardown services, for iSuppli.

“However, with each new revision of the game console hardware, Sony has aggressively designed out costs to reach the hardware and manufacturing breakeven point as quickly as possible … This means Sony sells each PlayStation 3 in the United States for $31.27 less than its materials and manufacturing cost.”

In comparison, iSuppli’s Teardown Analysis Service determined that Sony sold the previous-generation PlayStation 3 for $49.72 less than its manufacturing and materials cost, based on pricing from October 2008.

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