Sony Losing Almost $250 Per Console.

It was clear that the cost of producing PS3 units were high for Sony, forcing the company to charge $600 per unit, but now we know exactly how high. Next-gen.biz has offered a full analysis of Sony's expenses. As it turns out, Sony is losing $306.85 for each 20GB system sold and $241.35 for every 60GB system.

The full production cost for a 20GB system is a whopping $805.85, with the 60 GB coming in at $840.35. Chief among the expenses are the RSX graphics chip at $129 and the Blu-Ray optical drive at $125. In contrast, the $400 Xbox 360 only costs $323.30. For the first time in its five-year console publishing history, Microsoft is making a profit on each system sold.

For those wondering about retailers, it should be noted that stores make almost no money selling consoles. Retailers such as EB Games and Wal-Mart make money on software and peripheral sales.

The steep cost of producing PS3s won't last forever. In general, the longer an item is produced, the cheaper it becomes to manufacture. Over time, the cost of the PS3 will get lower as the cost of parts gets cheaper and production becomes more efficient. That doesn't guarantee Sony will ever make a profit on selling the system alone, but it can still bank on earning a hefty paycheck from software sales and digital downloads.

The bottom line is that no matter what it costs Sony to make one, you only have to pay $600 to own it. In that sense, you're getting a hell of a bargain when you purchase a PS3.

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