It's been suggested that Sony is likely to lose nearly $100 for every PlayStation 3 unit sold. That verdict comes from financial analysts at Merrill Lynch Japan, and is based upon the assumption that Sony will launch the third PlayStation console at $399. The news follows a story from a few weeks back, reported on this site, that rival Microsoft could lose as much as $75 for every Xbox 360 unit that sells at launch.
As well as suggesting that Sony will launch at the $399 mark, Merrill Lynch's report also calculates that the Blu-Ray drive, Cell chip and RSX graphics processor will cost around $101 each, whilst the other components and the cost of manufacturing the thing will mean the final production cost will skyrocket to the $490 mark. Yowsa. And the $90 deficit could mean Sony is set to take a $1.18bn loss in it's first year on the market, if year one sales predictions of 14 million units prove true.
As many readers will be aware, it's quite normal for console manufacturers to take losses on hardware at launch and for the early stages of it's lifespan. The PlayStation 2 lost Sony $0.46bn in it's first year (though reversed this in the second year with a profit of $0.76bn), whilst the Xbox has lost Microsoft money throughout it's lifespan.
One genuinely worrying prospect for Sony is that Microsoft could well slash the price of the Xbox 360 within the first 12 months of the console's launch, forcing Sony to follow. Such a move could mean year two losses totalling approximately $1.2bn, suggests the report.
Of course, this is all based on educated guesses, but whilst the component prices do seem quite high to PALGN, the $399 price tag may not be so far off. Sony Computer Entertainment chief Ken Kutaragi himself (most recently in Japanese magazine Toyo Keizai) has suggested in various interviews that Sony's next console will launch at a higher price than the Xbox 360, which is expected to launch Stateside at $299.
'Whether consumers think a product is expensive or cheap all depends on the balance between its appeal and price,' says Kutaragi. 'Our ideal [for PS3] is for consumers to think to themselves, 'OK, I'll work more hours and buy it.' We want people to feel that they want it, no matter what.'