Hardware Supply Issues May Mean Sony Has to Sell the PlayStation 5 At a Loss

Discussion in 'Console & PC Gaming' started by GTPNewsWire, Feb 14, 2020.

  1. GTPNewsWire

    GTPNewsWire Contributing Writer

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  2. Enosigephs

    Enosigephs

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    Console's hardware periodically have lower costs so in depth of time the company will gain the desired profit.Same thing happened to ps3 (bluray and cell tech),but at the end Sony was the winner.Bring it on,people!!I am sorry for any wrong use of language,Greek here!
     
  3. Kiki_Haoru

    Kiki_Haoru

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    This is a recurrent issue for new consoles. This can also mean that the first gen consoles subare more likely to be subject to reliability issues, as the manufacturer will look for savings wherever they can while the supply and production chain is running at a loss.
     
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  4. Rotorist

    Rotorist

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    Let me just say that just the GPU chip in the APU die will have more than the horsepower of RTX2080Super that costs over $700 by itself. If we add all the components, PS5 production cost is valued at least $600 without taxes and profits. So, it should be sold at least for $800 to allow a small profit to Sony. In order to sell well though, Sony could sell it at a loss for $700 and wait to get the profits from the games that have big profit margins on consoles.
     
  5. Strittan

    Strittan Premium

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    All consoles are usually sold at a loss at launch. I thought this was common knowledge, especially if you’re into gaming, and ESPECIALLY if you’re running a gaming site?
     
  6. GlamFM

    GlamFM

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    You’re comparing apples and oranges.

    Retail prices have nothing to do with whatever Sony pays for parts.
     
    Last edited: Feb 14, 2020
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  7. Daz555

    Daz555

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    If it's $700, it's dead in the water.

    Consoles being sold for a loss at launch is fairly common as far as I'm aware.
     
  8. samdu

    samdu

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    I've expected $499 from the get-go. If it's less than that, I'll be both happy and surprised. But considering the tech that's to be in it, $499 seems right.
     
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  9. Famine

    Famine Administrator

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    PS4's initial manufacturing costs were estimated at $380, against a $399.99 launch price. PS3, on the other hand, cost almost $600 to make, for a $500 launch price (and earlier, 2006 models were even worse).

    Also, article has words in.
     
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  10. RaceFuchs

    RaceFuchs

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    499 is the sweet spot here and nobody should complain. If this console is going to be as powerful as people are expecting, 499 will offer incredible value. Anything below that will worry me a bit. That pretty much means compromises, and i dont think we want a next gen console with compromises.
     
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  11. opelgt1969

    opelgt1969 Premium

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    One TB SSD is even more stupid than launching the PS4 with only 1 TB HD. Launch should at least be 3 TB. I'm only guessing but I think some PS5 games will be hitting at least 200 GB without the updates after 2 week launch date.
     
  12. zzz_pt

    zzz_pt

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    Didn't Sony file a patent for a system of swappable SSD storage, much like the memory cards in the first 2 generations?
     
  13. RolexGTP

    RolexGTP

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    Hey that's good news for xbox lol
     
  14. zzz_pt

    zzz_pt

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    Hmmmm... XB uses the same components / materials as the PS. The market affects everyone.
     
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  15. Robin

    Robin Premium

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    The launch 60GB PS3's were estimated to have cost $840 to manufacture against a $600 price.

    Since the recession they don't like the loss margin to be too high which is why the PS4 was designed to be relatively cheap so they could sell it cheap. Worked out well for them and it was always pretty much expected that the PS5 would follow the same formula.
     
  16. opelgt1969

    opelgt1969 Premium

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    Add up your PS4 game storage (If you plan on playing them on the PS5) and I'd bet you won't have any room for any new PS5 games. Launching with a one TB HD is like trying to sell a new Corvette with a 4 banger engine ,looks pretty but no ump.
     
  17. zzz_pt

    zzz_pt

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    I don't usually keep my saves when I'm done with a game. The only games I didn't uninstall were GTSport, Bloodborne and DarkSouls 3.

    All the others, I delete when I finish them. But I understand if people want to keep their games ready to go, like on PC, it would be better to have a larger SSD. For those people, who I guess are a minority, expandable storage is always an option.

    In the PS4, I think some people even prefer running the games from the external hard-drive (because it's faster than the one inside the box).
     
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  18. ZedNinetySix

    ZedNinetySix

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    I genuinely feel sorry for Soney, it will be another tough start for them, clearly they don't want to move an inch from the $400 sales price. But it's good to know that the money put into each unit is legitimately good value for hardware and not inflated.

    Hopefully though as more units are produced, costs in manufacturing go down soon after aswell.


    It will a tough start for them, but I have no doubt it will ultimately result in a success, aswell as a finacial success later onwards.
     
  19. Slapped

    Slapped Premium

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    Wasn't this pretty much always the case for a PS - at least at launch?

    Consoles are like printers - you sell the big hardware at a loss but make up for it in consumable (software in the case of consoles) sales.
     
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  20. Tired Tyres

    Tired Tyres

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    Retail to you or me mate. What Sony pay would be fundamentally different. I used to work in PC sales and something I would sell for £250 cost my company between £17-20 plus VAT. What Sony can do with bulk buying and a technical partnership with AMD is much greater. I don't buy the 450 number for even one second.
     
  21. fordlaser

    fordlaser Premium

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    Consoles are like printers - you sell the big hardware at a loss but make up for it in consumable (software in the case of consoles) sales.[/QUOTE]
    Good point.
     
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  22. Famine

    Famine Administrator

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    Not for PS4, which made a small profit, but definitely for PS3 which made enormous losses on each unit.

    I don't think anyone wants another PS3 situation - although that console had its own further issues.

    That's covered in the article. First-party software (and paid DLCs), third-party licensing, and of course PS+.
     
  23. evldave333

    evldave333

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    Not too worried about the 1tb ssd drive they've already stated you can be very selective about what you download this time out, no more multiplayer online guff for me lol... Also I will be keeping my ps4 pro so the memory will be for newer titles only... The backwards compatibility will be nice mainly for slow loading ps4 titles, but realistically when a new generation arrives the older games gather dust. Im hoping (although its unlikely) that there will be a killer app like GT7 at launch otherwise PS5 can come to the boil before I buy it.
     
  24. Gr8_Lakes

    Gr8_Lakes Premium

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    Last I read the number of PlayStation Plus subscribers was around 36.3 million. And hardware for those memberships cost? Sure, there’s costs associated with maintaining a network. But I bet Sony could give away consoles and still make money on games and memberships alone.
     
  25. ShakesMcQueen

    ShakesMcQueen

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    I'll go ahead and predict a 0% chance of a 3TB SSD in either console, right now. You can consider this me planting a flag in that particular hill.

    You're getting, at most, 1TB internal. Probably with some sort of add-on expansion option.
     
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  26. GTV0819

    GTV0819 (Banned)

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    Yeah but this one needed an article.
     
  27. AlanH49

    AlanH49

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    ZhugeEX, an analyst, confirmed PS4 sold at a small loss during it’s launch window (6-12 months).

    But we’re now in a different world. Revenue from PSN will continue undiminished with PS4 & PS5 software. While PS+ will continue to bring in revenue from 35m-40m users.

    It’s easier to take an upfront loss.
     
  28. Corsa

    Corsa Premium

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    People wanting 3TB SSD on a console. I just put an 860 evo in my rig (1TB) $150.

    I was looking at 3.8s prices are significant starting around $500 up to $1500 just for the drive.
     
  29. ShakesMcQueen

    ShakesMcQueen

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    The Bloomberg article's main thrust didn't even really have to do with whether they'd have to sell it at a loss. It was that Sony were having trouble keeping costs for materials down where they had hoped, due to increased demand for NAND, which may necessitate a higher price. I don't know why GTP opted for that headline.

    Some people were holding out hope that the PS5 might be $399 like the PS4. However, a $450 BOM means that is very, very unlikely, because the total cost of the console will be well over $500 once you factor in R&D, manufacturing, marketing, and shipping, on top of the raw components.

    Sony would probably prefer to sell the console at $499, and take the same small initial loss they did with the PS4. However, it also sounds like their strategy is going to depend on what Microsoft do with the Xbox Series X - Sony may opt to take a bigger loss to stay competitive on price.

    Don't expect the kind of deep early losses Sony accepted with consoles like the PS3 to return, however. Those were the days of exotic, highly customized hardware - not the more standard x86 boxes we have now.

    All of this is ultimately just noise, because we are probably still about four months away from hearing a price for either console anyway.
     
  30. GTV0819

    GTV0819 (Banned)

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    Okay. But we all know the PS4 is 6 years old already. So I think it's only normal if acquisition cost becomes lower as time passes by.