Report: PS3 "At Or Near Tipping Point For Profitability"

Sony wants to start turning a profit on the PlayStation 3 very soon, and according to manufacturer iSuppli, that time isn't far off.

At the start of the generation, it was revealed by iSuppli that it cost Sony approximately $840 to produce one 60GB PS3, which meant Sony was initially losing $240 per system (the first price tag was $600). However, Sony recently cut the cost of manufacturing by a whopping 70% and then debuted the recently released 120GB PS3 Slim with its lowest price point ($299) to date. Now, iSuppli has reevaluated the situation and while Sony is still losing money on each console sold, the number is much lower. It now costs Sony about $336 for every PS3 Slim made, which means they're only losing $36 per machine and iSuppli reminds us that costs will continue to fall in the coming year. iSuppli director and principal analyst Andrew Rassweiler said, "In light of these factors, the PlayStation 3 probably is already at or near the tipping point for profitability." Couple this with the surge of PS3 popularity due to a variety of reasons and perhaps you can say with confidence, "things are looking up." And maybe that's an understatement.

We'll have to see how the PS3 performs in 2010, but with exclusives like God of War III, Heavy Rain, Gran Turismo 5 and The Last Guardian leading the way, next year is shaping up quite nicely already.

12/15/2009 9:29:44 PM Ben Dutka

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Comments (44 posts)

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calculator
Tuesday, December 15, 2009 @ 9:43:17 PM
Reply

First?
WOOOO!!!
Uhh.... sorry bout that.
Go PS3!

4 up, 29 down

The Doom
Tuesday, December 15, 2009 @ 9:47:55 PM

T_T

7 up, 1 down

WorldEndsWithMe
Tuesday, December 15, 2009 @ 10:15:32 PM

fail.

13 up, 2 down

Alienange
Tuesday, December 15, 2009 @ 10:27:10 PM

Apology not accepted

13 up, 3 down

Scarecrow
Tuesday, December 15, 2009 @ 10:38:47 PM

It's nothing personal, but I gotta thumb you down

12 up, 3 down

Ben Dutka PSXE [Administrator]
Wednesday, December 16, 2009 @ 12:40:47 AM

'sigh'

Please, no "first" posts at PSXE. My head will explode.

16 up, 0 down

jerocarson
Wednesday, December 16, 2009 @ 1:18:49 AM

why the?

0 up, 1 down

Qubex
Wednesday, December 16, 2009 @ 1:28:19 AM

Barf!

Q!

"i am home"

2 up, 1 down

Banky A
Wednesday, December 16, 2009 @ 3:25:57 AM

Haha, talking Calculator is pwned.

5 up, 1 down

HeXeN
Wednesday, December 16, 2009 @ 11:57:01 AM

*applauds*

3 up, 1 down

calculator
Wednesday, December 16, 2009 @ 3:30:29 PM

Sorry guys, i just HAD to do it
Feel free to send me hate mail.

3 up, 1 down

WorldEndsWithMe
Wednesday, December 16, 2009 @ 5:42:55 PM

Everybody gets ONE.

5 up, 1 down

Klint
Thursday, December 17, 2009 @ 1:09:41 PM

The only thing worse than a "first!" post are all the following comments that point it out.

1 up, 2 down

Bugzbunny109
Tuesday, December 15, 2009 @ 9:54:14 PM
Reply

Good to hear....

5 up, 0 down

Qubex
Wednesday, December 16, 2009 @ 1:28:45 AM

Lol bunny!

Q!

"i am home"

0 up, 0 down

WorldEndsWithMe
Tuesday, December 15, 2009 @ 10:17:44 PM
Reply

I wonder how MS is doing (as if they would admit the damages) I think it is a decent strategy to keep on rollin until it's even cheaper to produce because ultimately the money is going to come from their exclusives as the sales keep coming in and people finally take the leap to the superior gaming console.

3 up, 0 down

Qubex
Wednesday, December 16, 2009 @ 1:31:04 AM

Can you imagine some of the children of M$ employees... there may well be teenagers that really want a PS3, but one of their folks work at M$ they may not have a "real" choice... they would be to intimidated by the parent to stick to the 360 and support the cause... poor bastards!

Q!

"i am home"

Last edited by Qubex on 12/16/2009 1:31:52 AM

7 up, 0 down

frylock25
Tuesday, December 15, 2009 @ 10:19:38 PM
Reply

i was walking through walmart earlier today and i saw a huge stack of sony blueray players for like $147. i stopped for a min to take another look cuz i didnt think that was right for a second. just seeing that made me smile a little as it shows that blueray players are coming down in price considerably.

did the ps and ps2 go slim before they made money on them? anyone know?

either way good to know.

0 up, 0 down

WorldEndsWithMe
Tuesday, December 15, 2009 @ 10:43:06 PM

I dunno but they took a whole helluva lot longer to go slim than the PS3.

0 up, 0 down

photo K
Wednesday, December 16, 2009 @ 2:21:56 PM

over the black friday weekend and still till this day you can find Samsung bluray players for $130. You can also find more generic brands for $99.

It sure has come a long long way. But then, now what?

0 up, 0 down

Gone
Tuesday, December 15, 2009 @ 10:22:35 PM
Reply

Is Sony making any profit from selling the DS3 at $54.99? This is an actual question, not trying to be sarcastic.

0 up, 0 down

frylock25
Tuesday, December 15, 2009 @ 10:25:46 PM

im sure they are. from what i heard it was accesories and games that they made their money on til the system turns around.

look at it this way. you under pay for the system and slightly over pay for the extra controllers.

4 up, 0 down

Gone
Tuesday, December 15, 2009 @ 10:32:41 PM

That makes sense, thanks for the explanation.

3 up, 0 down

WorldEndsWithMe
Tuesday, December 15, 2009 @ 10:43:32 PM

It's still major ass rape though.

6 up, 1 down

Qubex
Wednesday, December 16, 2009 @ 1:37:47 AM

Well Boom, when I consider those "special bundles", like a "DS3 with Uncharted"; let us be honest, the DS3 is probably pretty cheap to make, therefore they could be making at least $15 to $25 profit on each one of those, maybe more... so adding Uncharted to that bundle wouldn't be hard, and adding $4 dollars to "top it off" is not surprising... it is all nicely worked out and rounded to the nth cent.

Sony should be making a handsome profit on some areas of the business now!

Some of this additional profit could go some way in mitigating the loss for each consolce manufactured, however, I assume, as many large corporations do, they expect the PS3 console hardware division to turn an actual profit on their own eventually, and not have their losses absorbed by overall profits made by the entire PS3 business.

I expect the hardware division to have their P&L (Profit and Loss sheet) - but as stated earlier, it is at a tipping point now... so only a matter of time before all divisions are very much in the black. I guess the game and accessory side is already in the black; just waiting for the PS3 console division to get there...

Q!

"i am home"

Last edited by Qubex on 12/16/2009 1:40:24 AM

4 up, 0 down

onsiterecording
Tuesday, December 15, 2009 @ 10:29:42 PM
Reply

Maybe they are losing money in the U.S. but how about in other regions? The slim is on sale in Australia for AU$499. Also the Australian dollar is fairly strong at the moment (above 90cents US). I don't know about Europe and Asia's pricing but could it be possible that they are already making money form hardware sales in places other than America? something to think about....

9 up, 0 down

Alienange
Tuesday, December 15, 2009 @ 10:30:18 PM
Reply

I wish I had so much money that I could consistently lose money for three years and then say "Let's see how we do in 2010." That must be one fun seat to sit in.

Last edited by Alienange on 12/15/2009 10:30:57 PM

4 up, 0 down

WorldEndsWithMe
Tuesday, December 15, 2009 @ 10:45:03 PM

How about enough money that you can put out neverending ads, shoddy hardware, sub-par games, and still never run out of cash while everyone loves you?

9 up, 1 down

Alienange
Tuesday, December 15, 2009 @ 10:48:33 PM

I don't know about the love part... but yeah, that'd be a good seat too.

5 up, 1 down

mexgeo86
Tuesday, December 15, 2009 @ 10:39:35 PM
Reply

Even though they're losing on each console, I'd imagine the software manages to cover some of that loss and looking into 2010, they're going to get a lot of revenue from the software side of things. Given the 10 year life cycle that they expect out of the system, breaking even before the halfway point is a very good thing.

1 up, 0 down

Scarecrow
Tuesday, December 15, 2009 @ 10:40:00 PM
Reply

Sounds good
Judging by the number of ps2s sold, Sony should be fine

In time the ps3 might approach ps2 or ps1 like numbers. That'll give them enough profit

3 up, 1 down

jaybiv
Tuesday, December 15, 2009 @ 11:50:23 PM
Reply

Thank you Sony for taking it in the shorts with my 60gb launch system! You can make me crazy sometimes, but I still love you!

Last edited by jaybiv on 12/15/2009 11:50:34 PM

6 up, 0 down

___________
Wednesday, December 16, 2009 @ 12:01:32 AM
Reply

meh, its not the hardware sales they need to worry about its the software sales.
there abysmal, and i can see why.

0 up, 7 down

HeXeN
Wednesday, December 16, 2009 @ 12:01:54 PM

I think they should be worrying about both(specially software),since neither is where it should be at this time.

2 up, 0 down

___________
Thursday, December 17, 2009 @ 6:30:54 AM

nah hardware sales are going quite well actually.
take in all the numbers, considering how long each console has been out the PS3 is slightly in the lead.
also, sony stands to make a much larger profit off games, than consoles.
that is unless they can significantly cut the production costs.

0 up, 1 down

hehateme
Wednesday, December 16, 2009 @ 1:11:22 AM
Reply

i love my ps3

5 up, 0 down

jerocarson
Wednesday, December 16, 2009 @ 1:20:31 AM
Reply

Sony has tried, other companies facing the same thing would have given up, and i wouldn't ve got the chance to play HEAVY RAIN!
Eight days pls

3 up, 0 down

OtisFeelgood
Wednesday, December 16, 2009 @ 10:41:09 AM

Eight Days! wooo!

2 up, 0 down

BikerSaint
Wednesday, December 16, 2009 @ 1:48:42 AM
Reply

I hope Sony's "back in black" soon.

From the site linked above...
<<<<<As for specific improvements under the Slim's hood, iSuppli underscored the benefits of Sony's 65-nanometer and 45-nanometer semiconductor chips.
Not only are the chips cheaper than their counterparts in the original PS3, but they also require less power (and thus created less heat) to achieve the same results.

That allowed Sony to get by with less expensive cooling solutions and a cheaper 220-watt power supply. The older PS3 models had a 400-watt power supply.>>>>

Wow, never realized the oldies had a 400 watt supply.
No wonder my 60GB's heat signature feels like it's hiding a space heater inside.

1 up, 0 down

NoSmokingBandit
Wednesday, December 16, 2009 @ 7:28:40 AM
Reply

Sony doesnt really care if they lose a few dollars on the ps3. They make all that back with licensing dev kits and other various fees that they charge for making a game. Sure it would be great for them to make a profit on the actual hardware, but when you use new technology instead of recycling old technology like the 360 and wii you have to expect to lose some money on the hardware. Sony knows this and im sure they planned ahead for it.

2 up, 0 down

photo K
Wednesday, December 16, 2009 @ 2:22:39 PM

When Target or Walmart sells a PS3 for $299.99, how much does sony actually sell the PS3 to those stores for?

2 up, 0 down

Fane1024
Thursday, December 17, 2009 @ 4:25:54 PM

Retail outlets make next to nothing on console sales, even when the systems are profitable for the manufacturers.

0 up, 0 down

swapnilgyani
Thursday, December 17, 2009 @ 4:59:01 AM
Reply

The shocking thing is, here in India, the 120 GB PS3 slim sells for the same price as the 80GB PS3 "fat" (which is packed with Uncharted).

Even more shocking is the price-tag of INR 19,500 (US$415 approx)

:(

0 up, 0 down

AcHiLLiA
Thursday, December 17, 2009 @ 11:33:42 AM
Reply

I wish they brought back the PS2 backwards compatiblity.

1 up, 0 down

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