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PS3 Has Cost Sony $3.32 Billion So Far
Launching the PS3 has been a very expensive endeavor for Sony, which warned investors recently that the large-scale investment for the new console may not be fully recovered.
Sure, paying $499 or $599 for a PlayStation 3 seemed outrageous, but if initial estimates around the console's launch were accurate, it cost Sony about $800 to manufacture each PS3. And while the cost curve has subsequently been improved, this cost/pricing balance has resulted in some pretty huge losses for the gaming division. As part of its fiscal 2008 report, Sony revealed today that $2.16 billion was lost on PS3 in 2007 and another $1.16 billion in 2008.
Sony warned investors that "the large-scale investment required during the development and introductory period of a new gaming platform may not be fully recovered."
The company added, "In the past, large-scale investment relating to capital expenditures and research and development for the manufacture of key components, including semiconductors supplied for [PlayStation 3] was also recorded within the Electronics segment."
Sony noted that it's had to invest large sums of money into research and development for the PS3 and that it's possible that this money may not be recouped if the console "fail[s] to achieve such favorable market penetration... resulting in a significant negative impact on Sony's profitability."
Nevertheless, things are definitely improving for the PS3 business. Sales at the game division rose 26 percent thanks to improved PS3 sales and lowered costs on hardware production. Sony said in May that it's expecting "...the profitability of the [game] segment will improve significantly due to hardware cost reductions and an enhanced line-up of software titles in the PS3 business."
Launching the PS3 has been a very expensive endeavor for Sony, which warned investors recently that the large-scale investment for the new console may not be fully recovered.
Sure, paying $499 or $599 for a PlayStation 3 seemed outrageous, but if initial estimates around the console's launch were accurate, it cost Sony about $800 to manufacture each PS3. And while the cost curve has subsequently been improved, this cost/pricing balance has resulted in some pretty huge losses for the gaming division. As part of its fiscal 2008 report, Sony revealed today that $2.16 billion was lost on PS3 in 2007 and another $1.16 billion in 2008.
Sony warned investors that "the large-scale investment required during the development and introductory period of a new gaming platform may not be fully recovered."
The company added, "In the past, large-scale investment relating to capital expenditures and research and development for the manufacture of key components, including semiconductors supplied for [PlayStation 3] was also recorded within the Electronics segment."
Sony noted that it's had to invest large sums of money into research and development for the PS3 and that it's possible that this money may not be recouped if the console "fail[s] to achieve such favorable market penetration... resulting in a significant negative impact on Sony's profitability."
Nevertheless, things are definitely improving for the PS3 business. Sales at the game division rose 26 percent thanks to improved PS3 sales and lowered costs on hardware production. Sony said in May that it's expecting "...the profitability of the [game] segment will improve significantly due to hardware cost reductions and an enhanced line-up of software titles in the PS3 business."
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