It turns out you were getting a deal when the PlayStation 3 sold for $599. It actually cost $840 to make, according to Business Week (via ZiggyTek, via friend Steve Hopstaken). That was for the 60GB model. The $499 20GB version? It cost Sony $805 to make. Similarly, the originally $399 Xbox 360 really cost $470 for Microsoft to make. 

Why? The companies were hoping for long-term sales to make up for the initial loss. Since both companies also develop games for their systems and, more importantly, earn money from licensing, accessories and related services, such as Xbox Live, it’s a bold business model that’s not uncommon in the industry. With estimated worldwide console sales of close to 31 million for the 360 and 23 million for the PS3, it seems to have worked. And as the systems have become more popular, they’ve also become cheaper to produce from the early days, when these figures are for. “Falling prices on components turned [Microsoft’s] $71 per-unit loss of 2005 into a $76 per-unit profit by the end of 2006,” Business Week says.

Here, according to Business Week, are other popular gadgets and what they cost when they were introduced vs. the actual cost of their components:

iPhone 3G S
MSRP: $199 (starting)
Actual cost:  $179.16

Palm Pre
MSRP:  $200 (after rebate)
Actual cost:  $137.83

Amazon Kindle 2
MSRP:  $359
Actual cost: $185.49

BlackBerry Storm
MSRP: $249
Actual cost: $202.89

iPod Touch (1G)
MSRP: $299 (8GB), $399 (16GB)Â
Actual cost: $147, $179

iMac
MSRP: $1,299Â
Actual cost: $898

Finally, the first HD DVD player cost Toshiba $700 in components. It sold the model, the HD-A1, for $499. Talk about an uphill battle. Toshiba didn’t even stand to profit from selling discs. Sure, it would have benefitted in other ways and manufacturing costs would have declined, but it sure put a lot of money on the line in backing the high-def disc format. And now you can find the HD-A1 — with 10 movies on HD DVD! — for less than $35 shipped on eBay.

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This entry was posted on Monday, July 6th, 2009 at 11:24 am and is filed under Gadgets, Mobile, Video games. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.