Sony PlayStation 3 price too low: $3bn loses in 2 years

Sony has just released their fiscal 2008 annual report, and in the report it shows that the Japanese electronics giant has lost over $3 billion in the past two years. The reason for this is because the PlayStation 3 price was set too low, it actually cost more to produce than they were selling the console for. Looking closely at the annual report it showed that Sony lost $2.16 billion in 2007 and $1.16 billion in 2008 on the PS3.

According to information in Sony’s fiscal 2008 annual report, the company has lost over $3 billion in the past two years by pricing the PS3 below its production cost. Rumors suggest that the PS3 actually costs about $800 (£400) to manufacture, but Sony were selling the next-gen console for around $500-600 (£250-300) in 2006. Sony has told investors that they might not be able to fully recover their large-scale investment on the PS3 if they do not achieve more favourable sales figures.

Sony has mentioned in the past that they should be able to improve the profitability of the PS3, as a result of hardware cost reductions. The PS3 has now seen the greatest year-to-year improvement in both hardware and software sales. Sony has stated that once they do make a profit from their PS3 they will not reduce the price.

They said that they have to keep the price the same as they would like to invest the money in other areas. These other areas that Sony wish to improve on is PSN, as well as bringing us greater serves like HOME.

Source

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