PS3 really cost $840, Xbox 360 $470
Posted on July 6th, 2009 – 11:24 AMBy Randy A. Salas
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)
Actual cost: $147, $179
iMac
MSRP: $1,299
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.
TAKE THE TECHNOBABBLE MP3 CHALLENGE!
Can you tell the difference between MP3s and the original CD?
18 Responses to "PS3 really cost $840, Xbox 360 $470"
You should change the title to Say like
“PS3 really cost $840, Xbox 360 $470 - Iniatially”
I think that given the current urge for the PS3 Price Drop, it’s a really misleading title.
We all know that the Original 60GB PS3 was a great bargain. At least I knew. Even if it was only being used a Blu-Ray Player. $600 or $1000 (Back in Fall of 2007).
Vin: The use of a past-tense verb in the title indicates that it applies to the past — something further clarified in the first sentence.
manipulative , self centered and ignornat writer talking about 2001 not 2009 …….if you have nothing to write about don`t do so - please don`t disrespect gamers with this old crap and old old data
Khan, what in the heck are you talking about? This article is about how electronics are often sold for less than their manufacturing costs. Nut job.
Khan: I am summarizing a NEW article from Business Week, as linked. It is interesting data, especially compared with other electronics. “Disrespect gamers”? Sheesh. I AM a gamer. And you were playing a PS3 in 2001?
Wow, way to replublish a 8 year old article. You’re the print version of digg
Ryft: Way to read the linked article, which was published July 2, citing recently released data. And, again, you were playing the PS3 and 360 8 years ago?
I used a literary technique know as exaggeration. My point was it that you are writing about news that is not longer pertinent or even correct. The prices you quote were the cost to build these gadgets at there release time, some as long as 6 years ago. These prices no longer apply today. This article mirrors several that were published back in 2005
http://www.theregister.co.uk/2005/11/24/xbox360_component_breakdown/
http://www.joystiq.com/2005/12/28/xbox-360-costs-715-to-make/
http://www.engadget.com/2006/02/18/playstation-3-costs-900-sez-merrill-lynch-mob/
You do have more recent info that is correct and which probably gave you the idea for this article
http://www.businessweek.com/technology/content/jun2009/tc20090623_210230.htm?chan=rss_topStories_ssi_5
But the majority of your article is out of date and in tech you cannot afford to be out of date.
Also he is the more up to date information on the cost to make a ps3 for you readers http://www.businessinsider.com/2008/12/sonys-ps3-cost-to-build-falls-35-pass-on-the-savings-sne
And I eagerly await Randy next DTV transition column
Ryft: I used a literary technique known as summarizing another article and linking to it. “When they were introduced” = “there release time.” It’s a historical FYI. What can’t you understand about that?
You used “there” when you should have used “their” in your last comment
Ryft, I was quoting you. That’s why I used quote marks.
Touché
Thanks for a good laugh. Cheers!
wt* happened to the respondents to your articles lately Randy? Geeze. I, for one, have appreciated your work (especially when giving us information about buying electronics and pointing us to great sites on the web). Your work isn’t perfect, but the anger you’ve gotten the last few weeks is bizzrro.
Mike: This one’s just from very devoted PS3 fans defending their console in online forums. I get that. (The PS3 is actually my system of choice, even though I have them all.) But they’re misreading what I wrote as some kind of attack.
The other incident, about Sirius, was due to crazy Howard Stern fans and stockholders (one and the same) being funneled to the blog by Google Finance. I didn’t have the heart to tell them that, as a longtime DirecTV subscriber, I still have access to Sirius XM (and Cinemagic!) via the satellite TV service in my home. It surely would have sent them off the deep end.
Thanks so much for your kind words and support.
Cool, you seem to have a nice thick skin most of the time. If I played more video games (just can’t find the time, compared to other choices), the PS3 would my system of choice (though we did buy a Wii, as my wife and kids wanted one, and didn’t have an HD tv at the time).
Wish I had a PS3 sometimes though.
I actally rock the Xbox 360.
