Sony Playstation 4 Will Not Be A Loss

Sony has confirmed that its PlayStation 4 console will not be sold at a major loss. The following provides more information.

The current version, PS3, pulled out all the stops. With a custom-built processor using new architecture developed through a $400 million investment between IBM, Sony and Toshiba, plus a Blu-ray drive, high-speed custom XDR RAM and a state-of-the-art controller it was a real must-have console for serious gamers.

 

Sony Playstation 4 Finaces

But for Sony it was a bank balance nightmare and lost a lot of money. According to iSuppli, Sony lost around £200 on each of the £325 entry-level consoles sold. It took nearly four years for Sony to start making money on PS3 hardware, and it will not be employing the same tactic with the new PlayStation 4.

To now it was expected that unit losses would be minimised to a more manageable level, but that overall money would still be lost. But Sony chief financial officer Masaru Kato has spoken out.

“Unlike PS3, we are not planning a major loss to be incurred with the launch of PS4,” he stated.

“At the time we developed PS3, we made a lot of in-house investments to develop the chip, the Cell chip. This time, yes we have a team working on chip development, but we already have existing technology to incorporate and also product investment and all the facilities will now be invested by our partners, other foundries, so we don’t have to make all the investment in-house.”

But what makes the 3 and 4 versions so different and how will Sony reduce its losses this time round?

It will be aided by the fact that, in dollar costs, components have become much cheaper. In 2006 the CPU would have cost $89. In 2006 that was slashed to $37.73. The Blu-ray drive fell from $125 to $66 and the GPU fell from $129 to $45.82.

And further per-unit savings came in the PS3 thanks to a smaller and simpler chip board. Such revisions do save money in the long term, but developing them means up-front investment. But with much of that groundwork done, new models can build on existing technology at lower investment costs. It’s a bit like buying the tools to build a boat. Laying out for all that equipment at once makes the first vessel expensive. But the more you build, the more value you get from your investment and the lower the relative cost of each new boat.

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