Sony Corporation (NYSE:SNE) has been able to drop the cost of materials to manufacture the Playstation 3 console by about 35%. In the first generation of the PS3, the cost of the components were $690.23. In the next genereration, costs have been dropped to $448.73 according to a study conducted by iSuppli. For each sale of the PS3, Sony loses money. As costs continue to drop and sales continue to increase, Sony hopes to break even by 2009.
Sony was able to drop the cost of the components by using more advanced parts. Now they are using an advanced Cell processor with a 65 nanometer manufacturing process. Before they were using a 90 nanometer process. This reduces the manufacturing cost for each chip and lowers the power consumed. This saves money for their subtier suppliers as well.
The Playstation 3 retails for about $400 on Amazon.com, but Sony is offering it for $250 if you sign up for their Playstation credit card.