It's a gloomy picture, but there is light at the end of the tunnel. When iSuppli tore down an Xbox 360 around this time last year, the firm estimated that Microsoft was losing $126 on each 360 sold. Microsoft is whistling a much happier tune now. Revised component costs for the Xbox 360 indicate that costs have dropped to the point where each $399 Xbox 360 sold costs $323.30 to makeleaving Microsoft $75.70 in the black on each system, before marketing and other costs are figured into the equation.
The two biggest points of contrast between the PS3 and Xbox 360 in terms of component costs are what iSuppli calls the "motherboard"CPU, GPU, memory, controllers, etc.and the optical drive. The PS3's "motherboard" costs $500 for Sony, while the Xbox 360 motherboard is only $200down from a $370 figure at launch. The Xbox 360's vanilla DVD optical drive is only $19.45, over $100 cheaper than the Blu-ray's price tag.
As we said in May, Sony's decision to use the PS3 to gain a Blu-ray beachhead is an expensive one. If the PS3 sells like gangbusters once the supply constraints evaporate sometime in the first half of 2007 and Blu-ray wins the battle against HD DVD, the decision will have been worth it.