New Sony Game System Cheaper To Make

Miami, FL (AHN) - Sony Corp.'s new generation of its Play Station 3 video game consoles cost 35 percent less to make than the previous-generation system, which the company sold at a loss, according to the market intelligence company, iSuppli.

The latest version of PS3 has a total cost in materials, manufacturing and packaging of $448.73. The previous generation had a total cost of $690.23, iSuppli said.

A portion of the cost decrease is attributable to normal learning curve and supply/demand factors that bring component prices down over time, according to an iSuppli press release. But a more significant reason is what iSuppli calls a "clever integration of discrete components" into the core silicon of the new PS3.

The new generation PS3 contains an estimated 2,820 individual parts, compared to 4,048 in the previous-generation model with a 60 gigabyte hard drive. This also dramatically reduces the overall cost of the console, iSuppli said.

These reductions could help Sony break even with the latest PS3 generation. Sony has fierce competition in the gaming console industry with Ninitendo Co.'s Wii and Microsoft Corp.'s Xbox 360, the Wall Street Journal reported.

"With its new-generation PS3, Sony has come closer to breaking even, although it probably hasn't quite reached that mark yet," Andrew Rassweiler, director and principal analyst, teardown services, for iSuppli said in a statement. "With iSuppli's estimated PS3 cost at $448.73, the product retailing in the United States at around $399 and taking into account other expenses, the PS3 may be able to break even in 2009 with further hardware revisions."