Sony is the loss leader king

“With the PlayStation 3, you are getting the performance of a supercomputer at the price of an entry-level PC,”

[iSuppli estimates] the combined materials and manufacturing cost of the PS3 at $805.85 for the model equipped with a 20GB drive and $840.35 for the 60GB version (not including additional costs for stuff like the controller, cables and packaging). That means Sony is losing more than $300 per unit on the lower end PS3 and about $240 on the top-end console. In contrast, iSuppli’s latest breakdown for the Xbox 360 shows Microsoft’s component costs coming in about $75 under the selling price.

Some of the key parts: dual graphics processing units from Nvidia and Toshiba; IBM’s Cell Broadband Engine, which serves as the PS3’s CPU and provides the equivalent computing power of eight individual microprocessors; and four Samsung 512Mbit DRAMs that employ high-speed memory interface technology from Rambus.

“To give an example of how cutting-edge the design is, in the entire history of the iSuppli Teardown Analysis team, we have seen only three semiconductors with 1,200 or more pins. The PlayStation 3 has three such semiconductors all by itself,” Rassweiler noted. “There is nothing cheap about the PlayStation 3 design. This is not an adapted PC design. Even beyond the major chips in the PlayStation 3, the other components seem to also be expensive and somewhat exotic.”

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