|El Segundo (CA) - Market research firm iSuppli has taken apart two of the first available PS3s and found that - not surprisingly - Sony may spend far more on manufacturing the game consoles than the retail price may suggest. The company is estimated to spend about $840 to build and manufacture the 60 GB model.|
According to iSuppli, Sony could spend $840.35 to purchase and assemble the hardware for the 60 GB Playstation 3 and $805.85 for the 20 GB model during the fourth quarter of this year. These numbers compare to retail prices of $600 for the 60 GB version and $500 for the 20 GB PS3 and reflect premiums of 40 and 61%, respectively. The manufacturing cost does not include shipping, a share for the retailer who actually sells the device and marketing cost, which typically are in the range of 5 to 10% of revenues.
Pricing a game console well below the retail price is not unusual; however, Sony is subsidizing the PS3 console more aggressively than it has been the case with other devices before. For example, Microsoft was estimated to spend $552 on manufacturing its Xbox 360 last year ($323 this year), which translated into an initial premium of $152 or $38% over the $400 retail price. The PS3's premium is 58% higher for the 60 GB model and even 103% higher for the 20 GB version.