A Nikko Citigroup analyst says that Sony has successfully cut PS3 production costs in half.
Speaking to Business Week, analyst Koto Ezawa estimates that Sony Computer Entertainment will lose USD 1.4 billion this year, down from last year's loss of USD 2.1 billion.
He notes that the manufacturing cost per machine is now around USD 400, as opposed to USD 800 per machine when the PS3 launched in November 2006.
"We think the biggest factor here is that simplification has become possible through a reduction in the parts count, leading to a reduction in costs," he wrote.
Ezawa doesn't expect the PS3 to be profitable until 2009.
At the recent CES in Las Vegas, Sony Computer Entertainment president Kaz Hirai said that Sony was hoping that the PS3 would become profitable during the next fiscal year, which begins in April 2008.
Late last year, Sony CEO Howard Stringer told reporters that his company was still on course to post a 5 per cent operating profit in its fiscal year.