Originally posted by: Rangoric
The PS3 is the first console by Sony to be sold at a loss. The PS2 was sold at a loss early on, but the intial design was a net gain per system sold. The other Big Name that was sold at a loss was the XBox. The FIRST system was the Saturn.
Here is a fun read on the subject
http://www.actsofgord.com/Proclamations/chapter02.html
Huh, I would have figured at $400, the Saturn was at least breaking even. Though it did have an awful lot of hardware in it, didn't Hitachi sell a version of the Saturn for $800 that provided GPS functionality?
Dreamcast was sold for a loss? That surprises me for 2 reasons..
1. The hardware, though powerful, was rather barebones, it had a simplistic design and saved some money on fast ram by using a TBDR.
2. Sega was very, very aggressive with price cuts, didn't they cut $100 off the price within the first year in America? Actually I think it was more like the first 9 months. I don't think they'd have cut prices so fast unless the system was cheap to make.
BTW, did Sega really buy parts from someone else, or just contract someone else to fab the parts, because they're a huge difference between the two. Buying parts from someone else has proven to be inferior (you save on R and D, but you don't get price cuts), but outsourcing fabbing (like Nintendo has always done, and like Microsoft did with the 360) doesn't seem to work out badly, especially with econmoies of scale as large as consoles. That article is a bit too excited about outsourcing production being the reason for high costs, it's buying parts out right that screws you over, something which I'm not sure if anyone other than Microsoft has ever done. Maybe sega has, but most of their parts tended to be generic that were already massively and cheaply produced, and could be had from multiple manufactuers. Well, except for the dreamcast, I don't know how they worked that one, but the Saturn and the Genesis both used fairly generic parts. (except for the cpu and graphics processor, the dreamcast was all generic parts due that benefitted from being mass produced whether sega used them or not)
The article also mentions how long it takes sony to recoup the losses from building the foundries and what not for their products. Considering Sega, Nintendo, and Microsoft haven't sold anywhere near as well as Sony's consoles have, it probably works out better economically for them to outsource production anyway, since as long as they're not buying specialty parts outright (like microsoft with the xbox), it's going to be fairly cheap anyway.