Sony's new generation of PS 3 video game consoles now costs 35 percent less than the previous-generation system, which the company sold at a loss. The latest version of PS3 has a total cost in materials, manufacturing and packaging of $448.73, while the previous generation had a total cost of $690.23.

 

Why did Sony make this change? It's the normal learning curve and supply and demand factors that bring component prices down over time, so it's a natural process. The new generation of portables contains about 2,820 individual parts, while the previous contained about 4,048, with a 60 GB hard drive. Therefore, the overall cost of the console is drastically reduced.

 

Sony has to face a fierce competition in the gaming console industry, such as Nintendo's Wii and Microsoft's Xbox 360, and this price reduction might help the company gain a few more customers. With the price estimated at around $399 in the US, the PS3 might really be able to break even in 2009 with further hardware revisions.

 

The research firm iSuppli, which performed the study about PS 3's sales, also found out that Sony is still losing money on each unit sold, but the electronics giant is losing much less money than when the console launched in 2006.

 

It's very clear to everyone that Sony's losses come from the fact that its console is priced too high. Even if the company is trying to convince its customers that it's like the Cadillac of the video game industry, meaning that if offers more value, people want an affordable console and it's something they won't find in the PS3. Value or not, consumers want to save money in the current economic conditions.