iSuppli: 60GB PS3 Costs $840 to Produce

iSuppli: 60GB PS3 Costs $840 to Produce

An in-depth teardown of the PlayStation 3 shows that the materials and manufacturing costs of the system amount to $805.85 and $840.35 for the 20GB and 60GB version, respectively.

Electronics supply chain researcher iSuppli’s analysis showed that Sony loses $306.85 per 20GB hard-drive equipped PS3 sold, not including packaging, controller or cables. The amount is greater than the loss incurred from the 60GB model, which has a $241.35 difference between the cost and retail price.

By comparison, iSuppli stated that the hard drive-equipped Xbox 360, which retails for $399, costs only $323.30 to produce—a favorable $75.70 difference. At the Xbox 360′s launch a year ago, estimates indicated that Microsoft lost around $125 per console.

Console makers often sell their systems at a loss, making up for it through software sales. Nintendo, however, has traditionally sold its consoles for a profit. The company’s upcoming Wii will continue that practice.

Some of the more expensive PS3 components that were charted by iSuppli include Nvidia’s $129 RSX graphics chip, the $125 blu-ray disc drive and the $89 IBM Cell processor.

iSuppli said that the size of Sony’s loss per system is “remarkable, even for the videogame console business,” but conceded that the components within are highly impressive pieces of electronics.

Andrew Rassweiler, teardown services manager and senior analyst at iSuppli put the PS3’s costs into perspective. “The reason why the PlayStation 3 is so costly to produce is because it has incredible processing power," he explained. "If someone had shown me the PlayStation 3 motherboard from afar without telling me what it was, I would have assumed it was for a network switch or an enterprise server.”

Rassweiler went on to describe the PS3’s components as “somewhat exotic.” iSuppli overall called the PS3 a “great bargain,” saying the console has “more processing power and capability than any consumer electronics device in history.”

Last month, Sony said that it expects its game division to lose 200 billion yen ($1.7 billion) this year due primarily to expenses associated with PS3.