Feeds

PS3 component cost halved in 12 months, analyst claims

Console's parts now cost $400, apparently

5 things you didn’t know about cloud backup

Sony's PlayStation 3 costs just $400 (£200) to make these days - about half of what the console cost to produce when it was launched in November 2006.

So claims Nikko Citigroup analyst Kota Ezawa, BusinessWeek reports. Ezawa puts the reduction down to increased volumes, cheaper components but most particularly much-reduced Cell processor and GPU fabrication costs thanks to improved yields.

Market watcher iSuppli took a PS3 to pieces in November 2006 and calculated that the cost of the components in the 60GB console was $840 - $241 more than Sony was asking punters to pay. Nvidia's Reality Synthesiser graphics chip contributed $129 to the total, the Cell chip a further $89. The Blu-ray Disc drive cost $125, iSuppli estimated.

Back then there was a shortage of blue laser diodes, a key component of both Blu-ray and HD DVD drives. That tightness eased mid-way through 2007, with Blu-ray hardware prices falling rapidly as a result.

Likewise, Sony and Toshiba have become better able to punch out more working Cells per wafer, with a proportionate reduction in the cost of each chip.

If Ezawa's correct in his analysis, that means Sony's making a decent profit on the $499 80GB PS3 and is probably doing the same on the $399 40GB version, because it contains fewer components.

But that's only part of the story, of course. Sony has to pay for assembly, distribution, marketing and advertising, and out of the retail price of each console its supply channel partners will take a cut. Sony needs to push down production costs further if it wants to make money on the hardware.

Software is more lucrative, but until there are many more PS3 owners out there buying games, Sony's cut from software sales isn't going to generate spectacular profits. Which is, of course, why the PS2 remains such an important product for Sony.

The essential guide to IT transformation

More from The Register

next story
So, Apple won't sell cheap kit? Prepare the iOS garden wall WRECKING BALL
It can throw the low cost race if it looks to the cloud
Samsung Gear S: Quick, LAUNCH IT – before Apple straps on iWatch
Full specs for wrist-mounted device here ... but who'll buy it?
Apple promises to lift Curse of the Drained iPhone 5 Battery
Have you tried turning it off and...? Never mind, here's a replacement
Now that's FIRE WIRE: HP recalls 6 MILLION burn-risk laptop cables
Right in the middle of Burning Mains Man week
HUGE iPAD? Maybe. HUGE ADVERTS? That's for SURE
Noo! Hand not big enough! Don't look at meee!
AMD unveils 'single purpose' graphics card for PC gamers and NO ONE else
Chip maker claims the Radeon R9 285 is 'best in its class'
prev story

Whitepapers

Endpoint data privacy in the cloud is easier than you think
Innovations in encryption and storage resolve issues of data privacy and key requirements for companies to look for in a solution.
Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Advanced data protection for your virtualized environments
Find a natural fit for optimizing protection for the often resource-constrained data protection process found in virtual environments.
Boost IT visibility and business value
How building a great service catalog relieves pressure points and demonstrates the value of IT service management.
Next gen security for virtualised datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.