According to marketing research firm iSuppli, Sony has cut the cost of materials used to make its PlayStation 3 console by 35 percent, compared to the prices of mid-2007. The news was not officially confirmed by Sony, and it probably never will, but it seems to be as solid as a rock.

iSuppli checked all the components inside of second-generation PS3s and calculated the total cost of the manufacturing process: $448.73. By comparison, the components used inside the first generation of the PS3 cost $690.23, based on mid-2007 prices, which means that now PlayStation 3 consoles are 35 percent cheaper.

However, this decrease in production costs doesn’t seem to announce a price drop of the PS3, since Sony still makes a loss on the sale of each PlayStation 3 console. The good news for the company is that the loss is narrowing down and, according to iSuppli, later in 2009 the manufacturers might even be able to break even if they make further hardware revisions.

Sony has managed to reduce the costs by using more advanced (and fewer) components: the most important change is that the consoles use a more advanced version of the Cell processor and other chips made using a 65-nanometer manufacturing process, instead of the older 90-nanometer process, which means lower power consumption, therefore less money spent. Now all it’s left to see is if Sony manages to turn things around or not.