Sony could soon break even on manufacturing its PlayStation 3 video-game console, thanks to a new reduced-cost design. A teardown study by iSuppli found key changes in components from the last generation of PS3s.
Based on pricing in October, the latest version of the PS3 carries a combined bill of materials, manufacturing and box-content cost of $448.73. That’s a 35 percent reduction from the $690.23 it cost to build the last-generation model, iSuppli reported. Of course, the firm added, the totals do not include other costs, such as software and royalties.
While Sony sold the previous-generation PS3 at a significant loss — recouping its costs through game sales — the new version may help Sony get out of the red, according to iSuppli.
“With its new-generation PS3, Sony has come closer to breaking even, although it probably hasn’t quite reached that mark yet,” said Andrew Rassweiler, director and principal analyst of teardown services for iSuppli. “With iSuppli’s estimated PS3 cost at $448.73, the product retailing in the United States at around $399, and taking into account other expenses, the PS3 may be able to break even in 2009 with further hardware revisions.”
Shaving Costs
At least part of the cost decline is attributed to a normal learning curve and supply-demand factors that cut component prices over time. A more significant factor, however, is Sony’s integration of discrete components into the core silicon of the PS3, which dramatically reduces the component count.
The new generation PS3 contains about 2,800 individual parts, compared to about 4,000 in the previous-generation model with a 60GB hard drive. This also dramatically reduces the overall cost of the console, iSuppli said.
What’s more, the key integrated circuits in the new PS3 are very different, employing more advanced process geometry. These key parts, which include Nvidia’s Reality Synthesizer, IBM’s Cell Broadband Engine, and…