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PlayStation 3 Nears Break-Even Point, Says Report

11 Dec, 2009 By: Erik Gruenwedel

Despite a recent price cut to $299 for the PlayStation 3 video game system, Sony Corp. is nearing break-even status — selling the latest 120GB PS3 units in the United States for $31.27 less than its materials and manufacturing cost, according to a new report. 

El Segundo, Calif.-based iSuppli Corp., said a previous manufacturing cost comparison found that Sony sold the previous-generation PlayStation 3 for $49.72 less than its manufacturing and materials cost.

The report said the teardown analysis accounts only for hardware and manufacturing costs and does not take into consideration other expenses such as software, box contents and royalties.

“Sony has subsidized the price of every console sold [since 2006], a deficit the company has made up for with game sales and royalties,” said Andrew Rassweiler, director and principal analyst, teardown services, for iSuppli. “However, with each new revision of the game console hardware, Sony has aggressively designed out costs to reach the hardware and manufacturing breakeven point as quickly as possible.”

Indeed, the PS3 in November posted the greatest increase in unit sales among consoles compared to November 2008, according to NPD data.

The PS3 sold 710,000 units (including 440,000 consoles in the U.S. during the week of Nov. 29, or Black Friday) to Xbox 360’s 819,500 and Wii’s 1.26 million in the month.

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