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[SlimySnake]

Well that slide from Sony which is in writing clearly says its expected to break even in June 2021. If anyone has any receipts to prove anything different, then Im more than happy to accept that but I can promise everyone that even shipping doubled in December 2021. It's improved now but until proven otherwise I honestly believe the ps5 is selling at a loss.

Sony has airlifted consoles before for launch. That costs double if not triple the standard shipments via containers. Even if shipping costs doubled they are only a fraction of the overall costs. You are looking at $2 per console instead of $1. Just look up how cheap the shipping is per container. those big ships carry 50,000 containers. The shipping costs are a fraction of the BOM. The BOM would largely be unaffected by shipping costs anyway.

Sony ships large TVs all across the world. Their TV prices have remained mostly the same. Why are we assuming that only consoles are affected by shipping costs?

PS5's BOM according to bloomberg's early reports was $450. After the retailer cut and shipping costs, Sony was losing money, but not by much. The fact that they started making a profit within six months tells me that they went down to $420-430 pretty fast. If Phil is telling me that the BOM for his 12 tflops console was $650, im gonna call bullshit. For $200 more, im expecting more than just 10-15% better performance.

 

[Klayzer]

Agreed... but...

"It's only okay when we do it." - adamsapple

I was like, "dude you do that shit regularly." Lack of self-awareness is amazing.

 

[DeepEnigma]

To be fair, I've never sided against any company eating costs for a consumer. But if we're talking about the PS5, reporetedly it was already selling at a profit as of June 2021, so that increasing in price is a completely different thing.

Granted we can't say for sure whether PS5 (or even Switch) is *still* selling at a profit right now, with the way everything is fucked up.

My fucking car insurance went up $200 in 2022 compared to 2021 and I haven't even had a single fucking ticket or accident. It's pure inflation.

In general, mate. In general.

Yeah man, don't get me started on insurance rates. Insanity, especially in the real estate/mortgage industry. HOIs have been off the chain.

 

[FearlessBelgian]

We should all thank Microsoft for their charity.

Even knowing that i don't want a shity Xbox in my house

 

[Zathalus]

None of those things matter when their $200 loss console performs roughly the same as the other console that has been profitable for a year and a half.

No one here has insider knowledge of how much parts cost. What we know is that one console is profitable while the other isnt. What we know is that the biggest disaster in the last 30 years was the PS3 which sold for a $200 loss thanks to Sony's insistence on shoving $250 bluray discs down everyone's throat. If what Phil is saying is true then this would be a fuck up of PS3 proportions, the only difference is that Sony won the bluray war thanks to taking a $200 loss while Xbox is still in third place with no secondary market win it can call its own.

Sony was crucified for that and rightfully so, but here we are, making excuses for Microsoft? Why?

The XSX has taken the performance crown more often these days compared to the PS5. It is also not the only thing that makes a console more expensive or not. It is also cheaper in most markets.

Once again, unless we have the bill of materials for each console and the context surrounding them (is Phil including R&D costs?) we cannot claim any console is badly designed.

 

[onQ123]

Yeah not buying it. Sony was breaking even months after launch and they are losing $200 Two years after launch?? Nonsense.

Sony was smarter & only have one chip to make vs MS making 2 different chips & on top of that they was pretty much testing the design with the PS4 Pro

 

[DenchDeckard]

Sony has airlifted consoles before for launch. That costs double if not triple the standard shipments via containers. Even if shipping costs doubled they are only a fraction of the overall costs. You are looking at $2 per console instead of $1. Just look up how cheap the shipping is per container. those big ships carry 50,000 containers. The shipping costs are a fraction of the BOM. The BOM would largely be unaffected by shipping costs anyway.

Sony ships large TVs all across the world. Their TV prices have remained mostly the same. Why are we assuming that only consoles are affected by shipping costs?

PS5's BOM according to bloomberg's early reports was $450. After the retailer cut and shipping costs, Sony was losing money, but not by much. The fact that they started making a profit within six months tells me that they went down to $420-430 pretty fast. If Phil is telling me that the BOM for his 12 tflops console was $650, im gonna call bullshit. For $200 more, im expecting more than just 10-15% better performance

I like you, man...but there is absolutely no evidence that Sony has ever started to gain a profit from a console sale.

 

[John Wick]

Is it?

That's what Phil was saying in the interview. They are not losing $200 on the S.

 

[SlimySnake]

I like you, man...but there is absolutely no evidence that Sony has ever started to gain a profit from a console sale.

Sony Believes Its Standard Edition PS5 Will Break Even Next Month

Jim Ryan has revealed the standard edition of the PS5 will be turning a profit just seven months after it launched.

www.thegamer.com

May 2021.

 

[DenchDeckard]

Sony Believes Its Standard Edition PS5 Will Break Even Next Month........................can we please read?​

 

[Banjo64]

Show me a 4tf RDNA 2, Zen 2 PC with a 500gb NVME drive and a controller for £250.

 

[jaysius]

There is no need to start fake concern trolling, MS understands markets probably better than anyone else, their goal is blanketing the market, to try and brute force some share, this is how you do it.

Also when you're as big as MS there are all kind of loopholes that help you make money through losses, money just kind of goes wacky at their level.

 

[ReBurn]

That's what Phil was saying in the interview. They are not losing $200 on the S.

He did not say they are losing $100 on Series S and $200 on Series X. He just said that they lose somewhere between $100 to $200 per Xbox console. For all we know they lose more on Series S.

 

[SlimySnake]

Sony Believes Its Standard Edition PS5 Will Break Even Next Month........................can we please read?​

That article is 1.5 years old. May 2021. Next month would be June 2021, some 16 months ago.

 

[Zathalus]

That's what Phil was saying in the interview. They are not losing $200 on the S.

He said between $100-$200. The range is likely due to them not raising prices in markets where the value of the currency has dropped significantly such as in Japan.

Assuming the XSX cost $550 to manufacture back when it launched it would have sold at a $50 loss in japan. Now that the yen has lost a ton of value it would mean the XSX is loosing almost $250 per console sold because Microsoft has not increased the price.

Even if the XSX now costs $450 to build it would still be a $150 loss per unit sold in Japan while being profitable in the USA.

Hence why making any judgment calls about Phil's statements is silly.

 

[Tripolygon]

Sony Believes Its Standard Edition PS5 Will Break Even Next Month........................can we please read?​

If you are going to tell people to read at least do so yourself. What you quote is the article title. What Jim said was.

Jim Ryan: "I’m pleased to say that the PS5 standard edition will break even from next month’s production," Ryan revealed. "From then on, we project that it will gradually become increasingly profitable."

They broke even and have since made 2 cost reductions in design changes and is not far off to believe that the console is making a small profit from each sale. That is something Sony has been doing since they got into console business, they lose money but start making profit over the life of the console.

 

[sendit]

If you are going to tell people to read at least do so yourself. What you quote is the article title. What Jim said was.

Jim Ryan: "I’m pleased to say that the PS5 standard edition will break even from next month’s production," Ryan revealed. "From then on, we project that it will gradually become increasingly profitable."

They broke even and have since made 2 cost reductions in design changes and is not far off to believe that the console is making a small profit from each sale. That is something Sony has been doing since they got into console business, they lose money but start making profit over the life of the console.

Sony has iterated the internals of the PS5 at-least 2 times now in efforts to reduce cost. Are you saying Microsoft has not done this?

 

[Tripolygon]

Sony has iterated the internals of the PS5 at-least 2 times now in efforts to reduce cost. Are you saying Microsoft has not done this?

Nope, Microsoft has not. They are still on the same launch model.

 

[Eddie-Griffin]

Sony was losing money too, and raised the prices to try and reduced the negative impact on the margins. But given they were already $500 in those countries they raised the price of, or higher, it means Sony outside the US, does not view it feasible to take a loss on the hardware with inflation and higher production costs.

Microsoft has slightly stronger hardware, but with a simple square build with the X, and an even smaller simple build for the S with cheaper insides. It's clear based on recent promos that MS isn't losing that much on the S, it's the X that one has to wonder if it will receive a price raise.

If Microsoft isn't seeing any changes in margins for the X they may just permanently keep it at $500. Instead, they may just increase the price of gamepass, or maybe combine XBLG into gamepass at a higher price.

But between the Series X and the PS5,I don't expect any price drops this gen. I suspect that the slim models will be cheap enough only to keep the $500 prices the same. This is also why I do not believe we are going to see any pros this time around.

 

[Tripolygon]

Sony was losing money too, and raised the prices to try and reduced the negative impact on the margins. But given they were already $500 in those countries they raised the price of, or higher, it means Sony outside the US, does not view it feasible to take a loss on the hardware with inflation and higher production costs.

The price increase is a result of the strong dollar vs other currencies. That is why the price in the US stayed the same vs other countries.

 

[Eddie-Griffin]

The price increase is a result of the strong dollar vs other currencies. That is why the price in the US stayed the same vs other countries.

Other strong currencies also saw a price raise, it's only the US that didn't get one, converted almost every currency that had a price raise was raised the same.

 

[DenchDeckard]

If you are going to tell people to read at least do so yourself. What you quote is the article title. What Jim said was.

Jim Ryan: "I’m pleased to say that the PS5 standard edition will break even from next month’s production," Ryan revealed. "From then on, we project that it will gradually become increasingly profitable."

They broke even and have since made 2 cost reductions in design changes and is not far off to believe that the console is making a small profit from each sale. That is something Sony has been doing since they got into console business, they lose money but start making profit over the life of the console.

Have they commented since then that they actually started making a profit?

Jeez man, let me break it down for you....

I make a product it uses a few components....I have orders booked in for the components at one price....I do the math and with the component costs and shipping I calculate that I will start breaking even a month from now. I then tell my shareholders and public that I am projecting I will make a profit next month...I am not lying. 2 months later I am given 30 days notice that all my pricing is going up exponentially.....I am no longer making a profit at all on the hardware but luckily the profits from other parts of my business that uses the hardware is offsetting it.

It's not difficult to grasp. This is why I wish someone would ask them if they are making a profit on the ps5 hardware, a lot has happened in the last 16 months. Especially with TSMC.

 

[John Wick]

He did not say they are losing $100 on Series S and $200 on Series X. He just said that they lose somewhere between $100 to $200 per Xbox console. For all we know they lose more on Series S.

Highly unlikely they lose more on the S because seriously your telling me that the S is costing MS $500 to make? Sometimes you guys need to seriously engage your brains before responding.

 

[Tripolygon]

Other strong currencies also saw a price raise, it's only the US that didn't get one, converted almost every currency that had a price raise was raised the same.

The price increase was announced for Europe, UK, Japan, China, Australia, Mexico, Canada.

Currently the US Dollar Index is 111 (96 in Jan) vs 105 Euro (114 in Jan), 115 Pound (135 in Jan), 67 Japan (87 in Jan) you can look up the rest. The price increase was due to how strong the dollar got vs the rest of the currencies. The redesign of the system was to reduce manufacturing cost, copper for instance increased in price almost 70% and the redesigned heat sinks uses much less copper than the launch model. The entire bottom copper plate was replaced with an even smaller amount of different metal.

Have they commented since then that they actually started making a profit?

Jeez man, let me break it down for you....

You make a habit of being condescending. You quoted the title of the article and were asking people to read. The content of the article stated they were breaking even starting with the next production run and are projected to be profitable thereafter.

Let me break it down for you.....

They have made 2 revisions to cut manufacturing cost to that effect.

1. Replacing the copper plate entirely which saw a 70% price hike
2. Reduction in motherboard size
3. Node reduction which increases yield per wafer
4. NAND prices has dropped so again reduce cost.

They are more than likely profitable now per console sold. Unless you can point to something in the design of the console that says otherwise.

 

[Eddie-Griffin]

The price increase was due to how strong the dollar got vs the rest of the currencies. The redesign of the system was to reduce manufacturing cost, copper for instance increased in price almost 70% and the redesigned heat sinks uses much less copper than the launch model.

This is a contradiction.

It has been long confirmed that the dollar story didn't hold up when people converted the price increases based on the currencies that saw the PS5 price rise, which ended up nearly all being the same amount which doesn't make sense if it's about strength of currencies alone.

Regardless if it was, Sony has given the PS5 iirc 3 revisions to make it cheaper to produce, I don't think they would do it that much in such a short amount of time if they weren't losing money on the PS5 consoles like Microsoft is Xbox.

Imo, I don't expect any price cuts this gen.

 

[Tripolygon]

This is a contradiction.

How is that a contradiction?

It has been long confirmed that the dollar story didn't hold up when people converted the price increases based on the currencies that saw the PS5 price rise, which ended up nearly all being the same amount which doesn't make sense if it's about strength of currencies alone.

Confirmed by who?

Regardless if it was, Sony has given the PS5 iirc 3 revisions to make it cheaper to produce, I don't think they would do it that much in such a short amount of time if they weren't losing money on the PS5 consoles like Microsoft is Xbox.

Yes, they will do it that much in a shorter amount of time. There have been no less than 10 revisions over the life of Sony home consoles. And yes, the point is to reduce cost. The price increase is unprecedented if I recall correctly for Sony. And that's a company that ate over $200 for every launch PS3 sold, PS4 was something like $50 which broke even when you purchase a game with the system and shortly became profitable.

Lets take a look at PS4 1000 vs 1100 changes = 10 months after launch.

1. CUH-1000 has a two-phase circuit between the power supply and the CPU and a four-phase one with the GPU. The CUH-1100 has a one-phase circuit with the CPU and a three-phase circuit linking to the GPU

2. The power supply is now 24 grams lighter and the overall output rating has slightly reduced.

3. The biggest improvement is the heat sink, weighing 324 grams against 298 of the old one. The old model the heat sink had fins change angle and size and were smaller in the low air flow area whereas the new one all of the fins are the same.

 

[Dick Jones]

He did not say they are losing $100 on Series S and $200 on Series X. He just said that they lose somewhere between $100 to $200 per Xbox console. For all we know they lose more on Series S.

So 500 console with 100 subsidy = 600
300 console with 200 subsidy = 500

If there is only 100 bucks between the production cost of the S & X models there are some questionable decisions made. A 400 Series X would have done a more serious impression on the market than a 300 Series S.

I can't see anything but the bigger subsidy on the Series X.

 

[BadBurger]

I know they (and by they I also assume Sony) were losing some on each sell - razorblade theory or whatever and all - but I wasn't expecting upwards of $200 USD. I'm just glad the super rich corpo is eating that and not us.

 

[Tripolygon]

He did not say they are losing $100 on Series S and $200 on Series X. He just said that they lose somewhere between $100 to $200 per Xbox console. For all we know they lose more on Series S.

That's not possible if you look at the components and design of both consoles.

 

[In Cold Blood]

No way it's that great.

 

[lh032]

its ok, small change for Microsoft.

 

[justiceiro]

Bizarre how the only machine that has a fair price is somehow losing the company money. Gotta love those bizarre margins.

 

[The_Mike]

Dont worry MS is paying the bill for the xbox division.

Xbox is lucky to have Microsoft as a sponsor.

Imagine the support they could have had if Microsoft purchased xbox so they were under the same company.

 

[DaGwaphics]

I don't know how this thread could get to 4 pages. The consoles are always sold at break even prices or at a loss, with the money made on software and services. Between $100-$200 is higher than I imagined it would be, but maybe having the two products with distinct components hurts the BOM a little on both.

 

[TheThreadsThatBindUs]

When is the last time a launch box made a profit?

Like every Nintendo console ever. But that's not the point.

The ONLY other console to sell with a loss as much as $200 was the PS3 and that was universally seen as a disaster.

 

[feynoob]

Hope this puts this worthless debate in to rest.

 

[Reallink]

Hollywood accounting, they're rolling a bunch of unrelated expenses and bloat (like paying an army of these people) into the "cost" to arrive at a loss, and/or not properly amortizing heavily front loaded expenses (e.g. R&D and initial production setup) over the expected 7-10+ year XXX million unit life cycle. Nintendo does the same thing, which is how they always claim in their financials to be selling their half decade out of date Fisher Price hardware at a loss. There is no chance whatsoever MS is paying a $700 BoM for SX, or $500 for a SS. Cooking the books is the oldest recipe in the world.

 

[adamsapple]

Hope this puts this worthless debate in to rest.

?

It's just saying the same thing that's already in the OP. Nothing new there.

 

[DavidGzz]

Where’s the incentive to even make compelling games, when your entire business model is just set up for loss and has to be maintained by another part of your business?

The console is just the Trojan horse to get you spending money on their ecosystem. Kind of like a free to play game. Those games are not free to make, just like the console isn't free to make, but they get you spending money that makes up for the development and then some. MS sees it as worth it to them and they've done the same since the original console.

 

[sinnergy]

The console is just the Trojan horse to get you spending money on their ecosystem. Kind of like a free to play game. Those games are not free to make, just like the console isn't free to make, but they get you spending money that makes up for the development and then some. MS sees it as worth it to them and they've done the same since the original console.

That’s how most consoles work .. only Nintendo is really cheap with technology.

 

[Gameplay Gods Bless]

Please tell me Jimbo is losing less per PS5 sold.

The PS5 physical is making a profit on sales.

 

[Gameplay Gods Bless]

Yeah not buying it. Sony was breaking even months after launch and they are losing $200 Two years after launch?? Nonsense.

DF has said since launch that the Series X is a more expensive machine. Please don't fanboy that's not supposed to mean better it just means it's more expensive for MS to produce. Part of the reason was their desire to make it a smaller box than the PS5.

 

[DenchDeckard]

The price increase was announced for Europe, UK, Japan, China, Australia, Mexico, Canada.

Currently the US Dollar Index is 111 (96 in Jan) vs 105 Euro (114 in Jan), 115 Pound (135 in Jan), 67 Japan (87 in Jan) you can look up the rest. The price increase was due to how strong the dollar got vs the rest of the currencies. The redesign of the system was to reduce manufacturing cost, copper for instance increased in price almost 70% and the redesigned heat sinks uses much less copper than the launch model. The entire bottom copper plate was replaced with an even smaller amount of different metal.

You make a habit of being condescending. You quoted the title of the article and were asking people to read. The content of the article stated they were breaking even starting with the next production run and are projected to be profitable thereafter.

Let me break it down for you.....

They have made 2 revisions to cut manufacturing cost to that effect.

1. Replacing the copper plate entirely which saw a 70% price hike
2. Reduction in motherboard size
3. Node reduction which increases yield per wafer
4. NAND prices has dropped so again reduce cost.

They are more than likely profitable now per console sold. Unless you can point to something in the design of the console that says otherwise.

Didn't mean to be condescending and I apologise for that. Too many annoying people on the internet and I wouldn't want to act that way to add to it.

you could absolutely be right, I wqs just trying to say that it was never commented on after that statement by Sony and I would love for them to clarify if they are actually turning a profit on individual console sales. If they are I accept it, I just can't see how they are that's all.

 

[Heisenberg007]

Didn't mean to be condescending and I apologise for that. Too many annoying people on the internet and I wouldn't want to act that way to add to it.

you could absolutely be right, I wqs just trying to say that it was never commented on after that statement by Sony and I would love for them to clarify if they are actually turning a profit on individual console sales. If they are I accept it, I just can't see how they are that's all.

You're looking at it incorrectly.

Jim has already confirmed that PS5 is now being sold at profits. They will not reaffirm every month that they are still selling at a profit. Unless Sony comes out and says to their investors that, contrary to the previous claim, they are back in red with PS5 sales, everybody should continue to assume that their previous statement still holds true.

If things change, they will inform their investors. If they haven't updated their investors, is it not safe to assume that what they told earlier is still relevant?

 

[DenchDeckard]

You're looking at it incorrectly.

Jim has already confirmed that PS5 is now being sold at profits. They will not reaffirm every month that they are still selling at a profit. Unless Sony comes out and says to their investors that, contrary to the previous claim, they are back in red with PS5 sales, everybody should continue to assume that their previous statement still holds true.

If things change, they will inform their investors. If they haven't updated their investors, is it not safe to assume that what they told earlier is still relevant?

But he didn't say that did he, I thought he only said it is expected to break even next month (June 2021) then nothing has been mentioned since.

That's all I was trying to get at. Microsoft made this comment literally 2 days ago, maybe they were breaking even mid 2021 too? How do we know?

 

[Panajev2001a]

But he didn't say that did he, I thought he only said it is expected to break even next month (June 2021) then nothing has been mentioned since.

That's all I was trying to get at. Microsoft made this comment literally 2 days ago, maybe they were breaking even mid 2021 too? How do we know?

Sony basically went public with their projected expectations to investors about breaking even with the HW and progressively kept cutting costs, improving manufacturing capacity, and also increase the price to match currency fluctuations outside of USD controlled areas.

Not only you are kind of saying that they lead the investors to potentially believe something that never happened and they just went quiet and stopped commenting on it (not sure how much that is legal/would be something hurtful to investors’ confidence in them) vs the company that sells most in USD markets (so it is shielded from currency fluctuations) that is saying that they are now losing about $100-200 per console but maybe they were also breaking even until now and then mysteriously went that much in the red per unit sold because… reasons? That sounds like grasping at straws sorry (how do we know? Common sense ? Jokes aside I get healthy skepticism, but this feels a bit too much)…

You can think of that as a positive, but cannot wait for your praise of how generous was KK because his Sony was subsidising almost $300 per unit .

 

[Kerotan]

Eating the costs. For the players.

You think they'd stand a chance if they sold them for a profit? Lol.

 

[Duchess]

But ... this has always been a thing. Sell the console at a loss, make up the revenue from the sale of games.

This time around there's additional revenue streams from subscriptions and that, but otherwise it's the same business model.

 

[Bojji]

Hope this puts this worthless debate in to rest.

It was always like that but usually within one year or so consoles started to break even. Only exception we know of so far was PS3 and it lost bilions of dollars in first years.

Microsoft having trillions in bank is making this possible.

 

[Heisenberg007]

But he didn't say that did he, I thought he only said it is expected to break even next month (June 2021) then nothing has been mentioned since.

That's all I was trying to get at. Microsoft made this comment literally 2 days ago, maybe they were breaking even mid 2021 too? How do we know?

A few things:

1. In August 2021, Sony (CFO, Hiroki Titoki) did confirm that the PS5 is no longer selling at a loss. Source.
2. Microsoft never made a comment like Sony that they were breaking even. There never was any hint.
3. And we can't assume this for Microsoft because they have confirmed that MS has never made any profits from selling Xbox consoles. So historical data doesn't support it either.
4. However, that's not how Sony operates. Apart from the early days of PS3, Sony has always made profits on selling hardware. For instance, the PS4 also started making profit per hardware unit sold 7 months after launch, confirmed by Sony CEO Kaz Hirai. That's very much in line with PS5's profitability, which started turning profits after 8 months.