Sony’s new-generation PlayStation 3 features a cost-reduced design due to integration and some key changes in components from the previous-generation model, according to a teardown conducted by iSuppli Corp.

Based on pricing from October 2008, the latest version of the PS3 carries a combined Bill of Materials (BOM), manufacturing and box-content cost of $448.73, a 35 percent reduction from $690.23 for the first-generation model, using pricing from mid 2007, according to iSuppli’s Teardown Analysis service. This total doesn’t include other costs, including software, box contents and royalty expenses.

A portion of the cost decrease is attributable to normal learning curve and supply/demand factors that bring component prices down over time. A more significant factor is the clever integration of discrete components into the core silicon of the PS3, dramatically reducing the component count. The new generation PS3 contains an estimated 2,820 individual parts, compared to 4,048 in the previous-generation model with a 60Gbyte hard drive. This also dramatically reduces the overall cost of the console, says iSupply.

While the previous generation PS3 was sold by Sony at a significant loss, which the company made up for via game title sales and royalties, the new version may help stanch the hardware red ink. “With its new-generation PS3, Sony has come closer to breaking even, although it probably hasn’t quite reached that mark yet,” said Andrew Rassweiler, director and principal analyst, teardown services, for iSuppli. “With our estimated PS3 cost at $448.73, the product retailing in the United States at around $399 and taking into account other expenses, the PS3 may be able to break even in 2009 with further hardware revisions.”

The PS3 accounted for 16.4 percent of global video game unit shipments in the second quarter of 2008, second only to the Nintendo Wii, which accounted for 54.2 percent of the market.

Story filed 19.01.09