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What Your Gadget Really Costs

Discussion in 'News' started by D_o_S, Feb 23, 2007.

  1. D_o_S

    D_o_S Moderator

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    Ever wonder how much profit companies are making on your purchases? Have you considered building products from parts, and saving a lot of money? Or are there some things where the company selling the product is at a loss?

    Business Week has posted an article about how much profit or loss companies like Microsoft, Sony and Apple are making on their products - definitely worth a read here.

    While Apple seems to be making a profit on all of its products, Microsoft and Sony are both at a loss with their gaming consoles - we must remember, however, that most of the money will come from the games purchased for the consoles.

    Source: Xtreme Systems and Business Week
  2. newtekie1

    newtekie1 Semi-Retired Folder

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    I hate things like this. They actually expect the readers to believe that companies like Sony are paying near retail pricing for components. Does anyone actually believe Sony is paying $54 for a 60GB laptop hard drive? Newegg sells them to the consumer for $56. Do they really believe Sony is paying $54 for them directly from Seagate when they are buying them in quantities of 1 Million+ units at a time?

    Hell, they list the 20GB hard drive for the PS3 as costing $43. Sony would be better off going to Newegg and buying 40GB drives for $46 and doubling the storage capacity for virtually no cost increase.

    They don't have a clue what Sony is paying for its parts. I don't believe they are making a profit on each console, but I certainly don't believe the loss is anywhere near $300 per unit. The same goes for all the other products they analyze.
    Last edited: Feb 23, 2007
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  3. jocksteeluk

    jocksteeluk New Member

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    what you have to look at is the costs are a based estimated retail cost if a regular person were to put these component together themselves, i very much doubt they would even comprehend to think that these prices would be in any way representative of a bulk purchase negotiated direct from manufacturer. Also price reductions and when these results were investigated should also be taken into account regarding these estimated costs.
  4. newtekie1

    newtekie1 Semi-Retired Folder

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    I would almost agree with you if it wasn't for the fact that at the end they give an estimation of what Sony(or whoever) is actually losing on the console. They don't put these together to say what it would cost John Q Public to build one, they put them together and then actually claim that is what it is costing Sony to manufacture.

    http://www.isuppli.com/news/default.asp?id=6919

    You can see there, they aren't estimating how much it costs a regular person to put these components together, they are estimating what it costs Sony and how much they are losing per console but they are using near retail prices for a lot of the hardware.:shadedshu
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  5. WarEagleAU

    WarEagleAU Bird of Prey

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    If John Q Public could get a bluray dvd drive for 125 dollars...that damn thing would have won the war already. This is showing what Sony Pays per part, based on what they were told and their own research. I dont find it a stretch to believe sony is losing roughly 300 USD per console. In fact, I would think they were losing more, if not for this article. To believe they arent is kind of ridiculous to me. But to each his own. I just find it odd that sony can get some shit so cheap, the bluetooth module, wireless 802.11agb thing...Im jealous.
  6. mysticjon New Member

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    ive always respected MS even though theres times where their crap is so faulty but this article just re-inforces my respect for MS, seriously there will be a lot of people who will disagree with me. MS may suck to most computer users, but i like them over mac/apple products, i kinda figured out that apple ripps me off but just couldnt pin-point what it was, and i find out there products is made cheaply and they ripp the consumer off with their extremly insane prices. In the other hand MS makes actually decent products that doesnt pocket off of their users/clients/consumers....even though i wish MS would get the hint that WGA is crap and is making even more windows users pissed off........anyways good to know what im actually paying for lol....hmm maybe i can persuade/convince the guy at my local electronics store to give me some good deals lol..........it may work
  7. newtekie1

    newtekie1 Semi-Retired Folder

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    So you think it is completely realistic to believe that Sony is paying $54 per hard drive directly from seagate in quantities of 1 million+ units, when I can go over to Newegg and buy the same drive for $56? Something tells me that Sony is getting a slightly better deal than $2 off per drive.

    I also highly doubt it costs sony $125 to build a blu-ray drive, the basic components aren't that much different than your $25 DVD-Rom. I highly doubt Sony is paying anywhere near $125 per Blu-Ray drive, especially since they are making them themselves. The high price of new technology is usually always due to the price of developement, but the actual parts and labor probably amount to less than $50 to actually make the drive.

    We can agree that Sony is losing money on these thing, I just think it is ridiculous to believe these reports of Sony paying near retail prices for some of the parts. No one but Sony has any clue what they are actually losing per console, my guess is that these reports are drastically overestimating what Sony is actually paying for their parts, the fact that they claim near retail prices for some is proof of that.
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  8. ryboto

    ryboto New Member

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    If a blu-ray player costs $900 for us consumers, you really think it only costs sony $50 to make? There's been a ton of news about the shortage of lasers for the drive, which is why it does indeed cost them over $100 per blu ray drive. At one point Sony was even paying IBM extra for any Cell processors it could get them by a certain date(or so a source inside IBM told me, not sure how trustworthy the info is).
  9. newtekie1

    newtekie1 Semi-Retired Folder

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    The $125 isn't for the whole player itself, it is just for the actual drive. There is more to a Blu-Ray Player than just the drive. And yes, I do believe that the actual drive itself costs about $50 to make. The basic components are really are only slightly different than a DVD-Rom. New technology is always expensive because the companies that make it need to make back all the money they have spent on research and development, they are rarely expensive because they are actually expensive to manufacture. So they take what costs them $50 to make and sell it for 10 times the amount.

    But again, I am just guessing, just like isuppli and anyone else is. The only people that really know are the people that run the books at Sony. Personally I refuse to believe anything that isuppli says, they are about as reliable as The Inquirer. If they can't even get how much Sony is paying for their Hard Drives right(and it is obvious that they are way off on that number) then I can't trust any other numbers they put out either.
    Last edited: Feb 24, 2007
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