Sony still losing $50 on every PS3 sold

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EXIT: DATA Junkyard
No wonder they didn’t lower the price for the holiday

Even with all of the recent production revisions of the PlayStation 3, according to iSuppli as well as other sources, Sony continues to lose money on the PlayStation 3. On the $399 PlayStation bundle, Sony is still losing almost an incredible $50 per console sold.

While the company has taken every step to reduce costs, the reality is that the PlayStation 3 is an expensive console to manufacture. The decision to drop the backward compatibility by dropping the use of the Emotion Engine from the PS2 helped the company reduce prices, but at the same time many Sony fans are unhappy about the lack of backward compatibility in the latest units.

As with all consoles, the ability to move to die sizes on some of the chips and improved yields have helped improve the bottom line. The size reductions have also allowed Sony to use a less powerful power supply, which also has helped drop the bottom line while at the same time improving cooling performance.

While consoles are sold at close to break even in the best of situations, lackluster software sales have also hurt Sony’s ability to recover costs associated with the console. Our sources are suggesting that Sony is planning another cost reduction move for the PlayStation 3 after the holiday season that will see the company get close to the break-even point, while at the same time put the company in a much better position for the long-awaited price drop that many are hoping will get PS3 sales moving in the right direction again.

Of course, many retailers have lots of PS3 consoles on the shelf this holiday season; and one retailer we talked to said that with the popularity of the Wii and the price drop on the Xbox 360 that shoppers were favoring these consoles over the more expensive PlayStation 3 when making their purchasing decisions this holiday season.

Sony will have to wonder if the loss in potential new players coming over to the PlayStation 3 was worth the decision not to drop the price this holiday season. Both the Wii and Xbox 360 have gained a significant advantage in numbers sold this holiday season and it will be difficult for the PlayStation 3 to play catch up; in fact, it might already be too far behind to catch up in this round of the console wars.
No matter how powerful or how highly recommended a console is, if the price is high, sales wont be as good. Maybe that 50$ loss is a price Sony has to pay to remain competitive in the market.
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