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Sony Shrinks PS3 Build Costs By 70 Percent

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.
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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