Sony to lose billion on Playstation 3

Source: PS3focus

According to a report from Merrill Lynch, published in Japanese magazine Toyo Keizai, Sony is set to lose over US billion on the Playstation 3 in the year following its launch.

The report indicates that Sony may be willing to sell the console at less than the production cost – said to be around 54,000 yen (almost US 0) – in an effort to gain a significant share of the market.

Merrill Lynch predicts that Sony will launch the PS3 with a US 9 price tag – around US 0 less than it costs to manufacture.

The expected move by Sony is similar to the plan they implemented with the Playstation 2, which initially sold at a loss before making up its profits with the sale of software in following years.

Microsoft’s next-generation console, the Xbox 360, was also reported to have been released at a loss, rumoured to be at least US 6 per console.

Sony Computer Entertainment president, Ken Kutaragi, told Toyo Keizai that he believes price will not be such a big issue because people will want the PS3 no matter what the cost.

“Whether consumers think a product is expensive or cheap all depends on the balance between its appeal and price. Our ideal [for the 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…

I’m confident that the PS3 is a product that people will definitely want,”

he said.

The expensive production cost of the Playstation 3 is mainly due to the advanced equipment of the machine, with the three main components – its Cell chip, RSX, and BD-ROM drive – totalling to the value of around 11,000 yen (approx. US 0).

Source: PS3focus

According to a report from Merrill Lynch, published in Japanese magazine Toyo Keizai, Sony is set to lose over US billion on the Playstation 3 in the year following its launch.

The report indicates that Sony may be willing to sell the console at less than the production cost – said to be around 54,000 yen (almost US 0) – in an effort to gain a significant share of the market.

Merrill Lynch predicts that Sony will launch the PS3 with a US 9 price tag – around US 0 less than it costs to manufacture.

The expected move by Sony is similar to the plan they implemented with the Playstation 2, which initially sold at a loss before making up its profits with the sale of software in following years.

Microsoft’s next-generation console, the Xbox 360, was also reported to have been released at a loss, rumoured to be at least US 6 per console.

Sony Computer Entertainment president, Ken Kutaragi, told Toyo Keizai that he believes price will not be such a big issue because people will want the PS3 no matter what the cost.

“Whether consumers think a product is expensive or cheap all depends on the balance between its appeal and price. Our ideal [for the 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…

I’m confident that the PS3 is a product that people will definitely want,”

he said.

The expensive production cost of the Playstation 3 is mainly due to the advanced equipment of the machine, with the three main components – its Cell chip, RSX, and BD-ROM drive – totalling to the value of around 11,000 yen (approx. US 0).