A report this month from market research firm iSuppli pegs the manufacturing cost of the Playstation 3 at $448.73 as of October 2008, down 35 percent from the first-generation price tag of $690.23.
The biggest reason for the lower production cost, according to iSuppli, is the shedding of individual components, from 4,048 to 2,820. Normal "learning curve" and supply/demand factors play a role as well.
"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, the firm's director and principal analyst of teardown services.
Image by DeclanTM
This iSuppli report was released on January 5, but recent speculation of a Playstation 3 price drop in April makes it worth another look. This week, Wedbush Morgan game industry analyst Michael Pachter -- a widely quoted figure among journalists -- said Sony will cut the Playstation 3's price by $100 in April, to $299. That means Sony would take a loss of $149.73 for every console sold if iSuppli's figures are accurate.
Later, Pachter told TheGameReviews (disclosure: I edit the news section there) that Sony can reclaim about $250 per console on game and Blu-ray disc sales, so it's worth it for them to take a $100 dollar loss up front. Presumably, the same would be true for a loss of roughly $150.
This is wading deep into speculation territory -- not the most comfortable place for someone who isn't an analyst -- so let's back off and return to iSuppli's report. A list of improvable components for the future would've been convenient here. Last year's drop in individual parts seems pretty drastic, but it's not clear that another generation of consoles could continue to make such great strides.
Knowing whether lower manufacturing costs are imminent would go a long way towards determining if a consumer price drop is coming soon.
