PS3 'Near the Tipping Point for Profitability,' says iSuppli

Famously, the PS3 was originally sold at a $600 price point that netted Sony a loss of roughly $250 per unit. While the situation has gotten better over the years, iSuppli today released a report estimating that the new PS3 slim is still sold for a loss, as Sony Computer Entertainment’s Kaz Hirai said at the system’s launch.

“Since the introduction of the PlayStation 3 in late 2006, Sony has subsidized the price of every console sold, a deficit the company has made up for with game sales and royalties,” said Andrew Rassweiler, director and principal analyst for teardown services at 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. The latest version of the PlayStation 3 manages to further reduce the loss, even with the U.S. price of the console having fallen by $100 during the past year.”

iSuppli estimates that the PS3 slim is sold for $31.27 less than its materials and manufacturing cost, an improvement from the $49.72 during October 2008. The reduction in cost comes from component reduction (2,568 components, down from 4,048 in the original version), fewer semiconductors and a cheaper power supply. They note that the reduced price has benefited the system at retail and the reduced cost will help lift SCE into black ink.

“In light of these factors, the PlayStation 3 probably is already at or near the tipping point for profitability,” noted Rassweiler.