We all knew Sony was going to lose a bit of cash to push the PS3, with all its new features and bumps in the road to launch. But nobody knew it would lose this much
The losses are almost painful to look at. After a 2nd Quarter 2006 loss in video game revenues, Sony has cautioned that the upcoming PS3 will likely not break even for 5 years
. The Cell processor alone has been over $2 billion in cost, and Sony mentions that the "increasing cost of microchips" will bring profits down further initially.
Which microchips are costing so much? Though costs of all chips are indeed slightly up due to fuel and material prices, one has to wonder if such increases are indeed what Sony is talking about. The only major press-generating deal struck recently was with NVIDIA for the graphics...could it be that NVIDIA has driven a hard bargain? We suspect that is the case.
It seems that at this point, the only console expected to make any profit is the Nintendo Wii. Saturo Iwata, the company's president, must find this almost as entertaining as the console he'll soon be releasing...
Got a thought on Sony's latest announcement? Drop it in our forums