When a new console hits the market it generally sells for a loss and makes up the losses through software and other peripherals. Up until recently the PS3 had been selling at a estimated $200 US loss with every console sold. But now with it's new redesign Sony have halved the PS3's production cost from $800US to $400US.

It's a general way of doing business in the gaming hardware marketplace, you sell your console at loss and make back on that through licensing. That is except for Nintendo that is who is able to make something for every unit sold from the get go. Some companies take a bigger hit than others, take the PlayStation 3 for example. For each console that Sony sold, they were taking a close to $200US loss despite the high RRP and when you consider the amount of units assembled, that's a considerable hit to the company's bottom line.

With Sony experiencing what can only be described as disappointing financial reports for quite some time surrounding the launch of the PlayStation 3, it's understandable that they would feel compelled to reduce the loss made by each console sold. Nikko Citigroup has reported that by shrinking the chip sizes, re-evaluating parts (ie removing the Emotion Engine) and various other design tweaks, Sony has been able to bring the production cost of each console down to $400US from what was pre-November pre-40Gb model, $800US.

Bale Fire via mygen.com.au »