Great Deal on PS3?
Posted by Adam Wolfe :: Industry Trends
While you might think that Sony's PlayStation 3 is expensive in comparison to its competition, you would be wrong. According to a new report from iSuppli, the PS3 is a heckuva deal.
Lift the hood of the PS3, and you'll find $805.85 worth of hardware on the 20GB model -- meaning Sony is taking a loss-leader of $306.85 for every PS3 sold at the $499 retail price. Taking a loss is quite common for new game consoles, but iSuppli says Sony's margin is “remarkable.” For example, Microsoft's Xbox launched at a slight loss, but now sells for about $75 above production costs, according to the same report.
What does this mean to consumers? Probably not much. As CNN’s Chris Morris reports, most consumers do not have 1080p televisions to take advantage of the awe-inspiring graphics and game developers have yet to figure out how to take advantage of all the new features.
Nintendo has chosen to stay out of the fight for the most horsepower in the console market, looking instead to expand the market for console gaming with the Wii, and many hardcore gamers have had a year to build their library for the Xbox.
So will a great bargain on expensive hardware be enough for Sony to maintain its lead in the console market? Right now it looks promising. A quick search of Craig’s List shows there a market out there for the PS3 even at $3,500. We’ll find out in a few months when supply can catch up with the demand for PS3’s just how big of a market there is for a $500 video game console (though, of course, it’s much, much more than just a video game console).