Is Sony Really Making Only $18 Per Playstation 4 Sold?

Would you be astounded to learn that Sony is making just $18 from every one of the new Playstation 4 units sold? The numbers may be hard to believe, but they are accurate. Even with the $399 pricetage on the Playstation 4, Sony is making less than a twenty-spot on them. The good news is, they sold a million of them in the first 24 hours after launch, which is eighteen million dollars. But even with the massive numbers, how does a company survive with such a narrow profit margin? Possibly the hardest to believe of all, but still true, is that Sony actually sold the Playstation 3 at a loss for the past seven years. The manufacturing price tag is higher than the price tag that consumers are getting, but for many companies, that’s the way it is on cutting edge technology products.

PS4The surprising part of the Playstation 4 news is that the company was able to make a profit at all during the first run of the system. The total cost of the Playstation 4 comes to $381, and the price tag on the system is $399. But the Playstation 4 incorporates technology that is on the forefront of the market like a processor and memory subsystem. It is a major upgrade from the Playstation 3. Even though they are technically making $18 on each Playstation that they sell, the company is currently selling at a loss due to other expenses like marketing and shipping. However, the company will eventually break even and then be able to make a profit.

The reason for this is that as the price of the hardware that they are using in the Playstation 4 drops the cost for making the unit will decrease dramatically and the company will be able to make a great deal of money from the console if it proves successful. “Sony is on a greatly shortened path to the hardware break-even point, or even profitability, with its cost-conscious PlayStation 4 design,” said IHS Senior Director Andrew Rasswiler. The Playstation 4 will be a much more profitable console than the current version of the Playstation three. The cost for manufacturing the Playstation 3 was $336 for the 2009 version, but the Playstation 3 only sold for $299. There are many other factors that you have to consider as well such as the software, licensing fees, any royalties that Sony has to pay, marketing and other expenses.

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