So zeh PS3 is 840 dollars to manufacture.

To put it in simpler terms, take razors. Gillete doesn't make money selling the razor, they make money selling blades. They practicly give away the razors so that people will buy the razor blades, which are marked up practically 85%. Thats the simple way
 
This is nothing new. Consoles are almost always sold at a loss. Both PS1 & PS2 were huge money losers until about 2 years in when the hardware got cheaper and the installed base got huge reaping profits from software. PS3 will likely do the same. The consoles will become cheaper to manufacture and the user base will grow. The PStwo hardware is profit on itself even now at $129.

MS has yet to make a single dime off it's XBox division. The Xbox and the 360 were and are sold at huge losses and the division has lost over 500 million since 2001. They are planning on taking the loss until they are the leader and can prob afford to.

Nintendo...they actually make profitable hardware nowadays (cheaper not as expensive tech). The Wii is profitable on day one...how? Gamecube level cost components, no DVD playback, etc.

It's just that the stakes recently have become so high in this market and the tech so expensive that launching a console takes so muchmoney. That's a reason Sega got out of the hardware business...it's just too expensive. Nintendo cannot compete on a financial level with hardware against MS and Sony so they brainstormed and basically came up with a Gamecube that uses a new controller unlike the public is used to. Brilliant.

I honestly see Nintendo in a couple generations if they keep this route becoming a software publisher only someday though. MS and Sony will still be in the race next gen...gonna be hard to compete against boatloads of cash.

Bottom line is this is nothing new and the razor and blades comparo is spot on.
 
There seems to be a lot of arguing in this thread so I'll try to clear some things up. Japan got 80K PS3's on Launch. USA will get 400K. Both Japan and USA will be getting 100K a week for the rest of the year. As for the losing money on each console, the razor blade comparison is correct. Another example is printers. Printers are cheap as shit, but one ink cartridge cost like $40 and they don't cost anywhere near that to produce, so they make up their money.
 
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