Sony Making Manufacturing Profit on PS3?

It must be much more than that. For $400 they could put 2 entire new PS2s into the box.

The sales in Japan alone aren’t enough to erase the deficit in America. Anecdotally, and according to the official numbers out there the 360 has dropped behind the PS3 in Europe. The PS3 looks good to surpass the 360 in Europe this year. If Sony can maintain this advantage as the price drops occur and console sales overall go up that mean the difference will increase as a matter of fact. They won’t be stuck picking away at Microsoft’s lead only 50k a month forever. If that figure goes up and up, the 360’s lead will go down and down.

It must be much more than that. For $400 they could put 2 entire new PS2s into the box.

It’s a lot of things. Most notable is the optical drive which was artificially inflated in price due to a diode shortage when the PS3 launched. That was resolved within the first few months. Removing the PS2 chips dramatically simplified the motherboard, which is a pretty good savings above those ICs. They’ve shrunk the Cell process (and the RSX shrink is about to happen), they’ve shrunk/replaced the south bridge, they’ve probably integrated the wireless and network controller chips. The power reduction has reduced the cost of cooling and the power source is less hefty now and cheaper. RAM prices have bottomed out. Even the removal of the card reader and reduction of USB ports has simplified complexity and eliminated component costs. Sony has so much experience and they are doing so much in house it makes them a lot more nimble at this sort of thing. How long did it take for Falcon to come out? MS is so dependent on outside firms for the hardware that their cost reductions are not very efficiently executed. And since the hard drive and optical drive in the 360 are effectively at their lowest possible price already there is less room for them to make reductions. Once flash prices come down enough both will switch to ssd for storage which will allow new opportunities for reduction.

Hell, they could put three.

In terms of LTD? I kind of doubt that. France (by the end of Q3/2008):

Wii - 1.1m
XB360 - 500k
PS3 - 270k

Germany, by the end of Q3/2007:

Wii - 389.000
XB360 - 328.000
PS3 - 172.000

I don’t have any UK numbers, but I do recall some Eurogamer article in late August or September that mentioned that the 360 was outselling the PS3 by 3:1 or 4:1 at that point. Even if the price drop/40GB SKU boosted the sales, it would be surprising if that was enough to surpass the 360.

There’s no doubt though that the PS3 is selling better in Europe. Or the Xbox 360 is selling worse; whatever way you like to look at it. And in Germany, the PS3 versions of games like Assassin’s Creed or CoD4 tend to outsell the Xbox 360 versions.


No, no. Not life to date yet, but that week to week more PS3s are being sold than 360s. My guess is that those UK numbers also refer to total sold at that point. The UK is the 360’s strongest market, but from what I’ve read they sell close to the same week by week. Again, going by rough numbers I think the 360 only has a LTD lead in Europe of 1 million consoles at this point. After 2 years the 360 is around 5 million and after 1 year the PS3 is near 4 million. MS sees the problem which is why they’ve stated Europe will be a point of emphasis for them this year, but I imagine the PS3 will still surpass the 360 in total hardware sales some time in 08.

MS sees the problem which is why they’ve stated Europe will be a point of emphasis for them this year

Just like Nintendo, they keep saying that every year. :)


I dunno man. Microsoft built a really cost-conscious console and they can afford to get it down to $300 and $200 more quickly than Sony. The first one to get down to $200 and not take a bath on the consoles will win this generation (or get second depending on how long the Wii’s demand keeps up).

But since when has Microsoft ever been pro-active with regard to price-cutting on their consoles? AFAIK, they’ve only made price-cuts as re-active measures to Sony’s price-cuts.

So, unless that changes, Brad will be absolutely correct.

Edit: or did Brad mean LTD sales? Because that’s a stretch, since PS3 would have to sell 600-650k more than 360 every month this year for that to happen (and they’re not even going to be close to those numbers for the first 7-8 months).

Using VGChartz, Sony did pretty well in Europe in December. However, those numbers make clear that the market there is much smaller than the US market in terms of total numbers.

That said, Sony has made some impressive progress in narrowing the gap globally. Now we have to see if they can maintain that when things slow down past the holidays. We also have to see if it leads to software sales, because that’s where the money is and we don’t know how many of these PS3’s were sold as blu ray players only.

However, those numbers make clear that the market there is much smaller than the US market in terms of total numbers.

Sony shipped pretty much the same amount of PS2s in Europe as they did in NA, so I wouldn’t exactly say ‘much smaller’. The DS is selling better in Europe at this point, too, and reached the 10 million mark before it did in the US. It’s more a question of whether you make it to appeal to the audience here or not. Microsoft didn’t really set PAL gamers on fire at this point. Sony does a solid job given the high price of the system, makes you wonder what they could have sold at €299.


I didn’t mean the overall market potential, just that if you add up Wii, PS3, and 360 sales across Europe (based on the VGChartz info, anyway) you get a total that is significantly smaller than in the US for the same period. While US sales for December among those three platforms was likely 3m+, the total in Europe was maybe 60% of that.

With the Xbox 1, they were in a totally non-competitive situation with cost, and were getting scrod, so yeah, reactive only. But this time around – the theory goes – the 360 is designed to be cost-reducible and Microsoft should be able to keep a normal pricing curve.

Of course, that hasn’t worked out so far, and their die shrinks have all been way behind schedule and they’re still losing piles of money, but maybe they’ve got it all down now and can start being more aggressive going forward. Or maybe not, who knows?

Frankly, though, if the 360 gets to its fourth Christmas and isn’t well below $299, there’s something badly badly wrong. By any reasonable extrapolation in 2005, it should have been $299 by now and down around $199 next year.

Isn’t that what securing those soccer games as exclusives was supposed to do?

Well, they really couldn’t last time around because they couldn’t bring down the price low enough. Excluding repairs and packaging, I’m pretty sure they’re making a manufacturing profit on each Xbox 360 they sell, especially with the Elite. A lot of the things they’ve done this generation: no included Wi-Fi, selling the HDD unit at a premium, etc are all aimed at cutting costs down the line.

I was talking about just Europe’s installed base.