Sony PS3 Drops: $840-Worth of Machine for $600

Microsoft's Zune wasn't the only gadget to hit the street this week. The New York Times has this story on the launch of Sony's PlayStation 3:

Angel Paredes, who otherwise lives in a Manhattan apartment, spent three nights this week on a sidewalk at 56th Street and Madison Avenue. That is the price he paid to be first in line at Sony Plaza to buy a new PlayStation 3 — that and the $600 cost of the video game console.

“Everybody in my family thought it was pretty crazy,” said Mr. Paredes, a 31-year-old stock-market day trader. It could have been worse, he said: Sony left the bathrooms open.

And at least he had company. Die-hard video game players began standing in line over the last few days in New York, San Francisco and elsewhere to be among the first owners of the Sony PlayStation 3 when it went on sale at midnight last night.

Sony may be a minor player in PCs, and a has-been in portable music, but they've still got a massive franchise in console gaming, so they too have a strong position in the battle for the digital living room.

The pricing of the PS3 looks like a giant weakness: Microsoft's Xbox 360, which has had a year-long head start, sells for $399 (the Xbox 360 Core doesn't have a hard drive, and goes for $100 less), and Nintendo's Wii (to be released this Sunday) undercuts them both at $249. Moreover, Microsoft has had a year to get their production to scale and for their component prices to drop. At this point, iSuppli estimates that Microsoft's costs per Xbox 360 are actually lower than the retail price. Sony may get there in time, but the same iSuppli teardown report has Sony losing $241 on every 60GB unit they sell for now.

On the other hand, it sure makes the PS3 look like a bargain: $840-worth of computing power for only $600.

Hey, kids! Go tell Mom and Dad about the great bargain you found them!


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