PlayStation 3 estimated to cost $800 per unit [Update 2]

A team over at the investment firm Merrill Lynch took the liberty of breaking down the component costs of the PlayStation 3, concluding that the PS3 will cost Sony $900 per unit at launch. The figures which are based upon estimates and predictions, show that the lion's share of the parts costs come from the Cell processor and Blu-Ray drive, which total $580 alone. Fortunately for Sony, the firm has also estimated that the console's cost after 3 years could drop to $320.

What these figures show is that the fate of Sony's console lies in the circuits of two components: the Cell processor and the Blu-Ray drive. It's in Sony's interest to make sure that Blu-Ray drives and Cell chips are sold in vast quantities, which will lower prices and limit the amount of money that Sony will lose on each console. Of course we still don't know how much Sony will be willing to subsidize PS3s. Previous rumors have hinted that the PS3 will launch at $500. In other words, a $400 loss on each console.

For a little perspective, lets take a look at a similar example in the same industry, the Xbox 360. Earlier estimates suggested that the Xbox 360 costs $715 to make which means Microsoft is willing to lose around $350 per console sale based on a $299-399 retail price. If Sony wants to remain competitive with Microsoft (does it?) and rival the Xbox 360's price, it could lose as much as $500-600 on each PS3. Finally, it's worth noting that these companies have money to lose: as Yahoo finance indicates, Microsoft and Sony both have mountains of cash at their disposal. Although Microsoft happens to have a lot more.

Here's the link to the PDF file: view/download pdf file

Source: JoyStiq

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