PlayStation 3 deemed a pricey bargain

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The researchers at iSuppli have provided an extensive teardown analysis of Sony's new PlayStation 3, and they seem to be thoroughly impressed: "iSuppli Corp.'s dissection reveals the PlayStation 3 is an engineering masterpiece that sets a new high mark for computing price/performance--even when considering it is more expensive than its nearest rival, the Xbox 360 from Microsoft Corp."

 What's so impressive about Sony's console? According to iSuppli, consumers are getting "supercomputer performance at PC pricing." All of this performance comes at a great cost to Sony, however. iSuppli's analysis indicates that the Blu-ray drive, Cell processor and other components yield a total production cost of $805.85 for the 20 GB model and $840.35 for the 60GB model.

 And that doesn't even factor in added costs for things like the controller, cables and packaging. The end result is that Sony is losing over $300 per 20 GB console sold and more than $240 per 60 GB console sold. As iSuppli points out, "With Sony taking a smaller loss on the higher-end model, it's not a surprise the company is steering customers to the 60Gbyte version."

 While it's quite common for hardware makers to lose money on gaming consoles, iSuppli still found Sony's loss per to be "remarkable, even for the video-game console business."

 In comparing those costs to an updated analysis of Microsoft's Xbox 360 costs, it would appear that Microsoft is actually profiting on hardware now. "... the HDD-equipped Xbox 360 has a manufacturing and materials total of $323.30, based on an updated estimate using costs in the fourth quarter of 2006. This total is $75.70 less than the $399 suggested retail price of the Xbox 360," the research firm explained.

 Despite the fact that Sony is losing a ton of money on the PS3, iSuppli seems to think it's worth it. "The reason why the PlayStation 3 is so costly to produce is because it has incredible processing power," said Andrew Rassweiler, teardown services manager and senior analyst for iSuppli. "If someone had shown me the PlayStation 3 motherboard from afar without telling me what it was, I would have assumed it was for a network switch or an enterprise server."

 He continued, "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. 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."

 At the end of the day, iSuppli views the PS3 console as a bargain. "While many fret over the high cost and price of the PlayStation 3 compared to the competition, iSuppli believes the console provides more processing power and capability than any consumer electronics device in history. Because of this, the PlayStation 3 is a great bargain, well worth its $599 price and $840.35 cost, iSuppli believes," the firm concluded.
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