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PlayStation 3 Delayed, Over $800? 487

AWhiteFlame writes "Cnet is reporting that a research report issued by Merrill Lynch suggests that the Sony PlayStation 3's American release may be postponed until 2007. From the article: 'The analyst firm proposed the idea that high costs and Sony's decision to use an 'ambitious new processor architecture--the Cell' is making it look like the company might not be able to meet its goal of getting the PS3 out in the U.S. this year.' Sony did not immediately respond to a request for comment." The official report (pdf) would also seem to indicate that the console will be somewhere in the neighborhood of $900 when it launches.
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PlayStation 3 Delayed, Over $800?

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  • Apple to Sony? (Score:5, Interesting)

    by Yocto Yotta ( 840665 ) * <catapults.musicNO@SPAMgmail.com> on Saturday February 18, 2006 @04:53PM (#14751221)
    I'm not an insider by any means, nor a PS "fan boy," but isn't it likely that this is just very intelligent marketing by Sony? It's generally accepted that a game console launching at $900 (hell, $600), isn't going to happen in this day and age of mass market acceptance being an essential requirement of the development of any piece of electronics. This falls right in line with the Blueray machine costs . . . make it seem like astronomically expensive hardware fit for a king, and then release them at a fraction of the price, and sooner. I don't care when they release it, but I'm betting it will be this year, and at a $500 price point or lower.

    Apple just did it with the Intel switch. First they've started releasing the stuff 6 months earlier than they said they would, and now their upgrading the processor clock speeds for free. Who wants to bet that wasn't in the writing already for the entire gestation of their Intel plans. If there were two companies I would compare hype-capabilities apple-to-apple (sorry), it would be Apple and Sony.
    • Re:Apple to Sony? (Score:3, Insightful)

      by Yocto Yotta ( 840665 ) *
      To clarify: by "intelligent marketing by Sony," I mean, "paying money to the analysist that wrote this piece."
    • Re:Apple to Sony? (Score:2, Interesting)

      by dslbrian ( 318993 )

      A tough decision, mabye a breakdown will help:
      +1 its a playstation
      +1 got the cell processor

      -5 its from Sony
      -10 blueray
      -20 $900

      Hmm, I think the cons are winning

      • The article states that $900 is the cost to Sony. It won't cost that retail, they always take a hit. The original Xbox cost more to make, than it sold for. It's called a loss leader, look it up.
        • I'm definitely going to get the console and then not buy any games (new Linux box!). What better way to fuck Sony and their DRM?
          • If you weren't a man, I'd marry you.
          • by CastrTroy ( 595695 )
            if it costs them $900 to make, and you pay $800, then they've lost $100. If you don't buy it, then they've lost $900. You tell me which one hurts sony more.
            • Re:Obligatory RTFA. (Score:5, Interesting)

              by NoMoreNicksLeft ( 516230 ) <`john.oyler' `at' `comcast.net'> on Saturday February 18, 2006 @06:03PM (#14751626) Journal
              This is counter-intuitive, so you don't lose points. But they lose more if he does buy it. Why? Because in the initial frenzy for the machine, there won't be enough. If someone buys one like he suggested, that's a machine no one else can buy. He's keeping it off the market, in effect. Depending on how demand goes for games, Sony may not be able to justify making any more of them.

              Where as if he lets a hardcore gamer buy it, sales might be so brisk of games, that Sony decides they will eventually make a profit, keeps going.

              So during the debut of the thing, it's entirely possible that him buying the machine could hurt them worse than not buying it (since he has no control to keep everyone from buying his unit). What you say only becomes true if he can convince others not to buy it either, an unlikely proposition.
        • by romiz ( 757548 ) on Saturday February 18, 2006 @05:54PM (#14751592)
          The PS3 may be a loss leader, but there still is a limit. If the manufacturing cost is $900, and sony sells its console at only $500, it means that the company estimates that it can get at get back those $400 in a way or an other.

          Given the fact that the usual margin for the console manufacturer on game sales is 20%, that makes only $12 for each $60 game. Simple maths says that in those conditions, sony would have to sell in average more than 30 games per customer to break even on the machines it sold with a so large discount.

          And except for the rare hardcore gamer, how many people buy 30 games for a machine in one generation ?
          • by C0rinthian ( 770164 ) on Saturday February 18, 2006 @06:41PM (#14751856)
            If the given scenario is true, one would imagine that Sony is banking on more than game sales to recoup losses. Online serice subscriptions, and Blu-Ray royalties are possibilities.
            • Re:Obligatory RTFA. (Score:3, Interesting)

              by Babbster ( 107076 )
              Sure, they have other revenue streams but when put together they all have to have a margin, and a consumer market, that can at least recoup the costs of research, development, production, marketing...

              In other words, let's say that they lose $400 per PS3 sold (that would be stunning to me, but I'll go with it) intending to make up the difference through game sales. Now the game sales (talking first-party here) have to not only recoup their own costs but they have to cover the losses from the console itsel

          • Re:Obligatory RTFA. (Score:4, Interesting)

            by PixelSlut ( 620954 ) on Saturday February 18, 2006 @06:45PM (#14751870)
            Keep in mind that the online platform is a huge part of both PS3 and Xbox360. We know that this won't be a free service, this is something players have to pay for on a monthly basis, just like your existing MMOs. Most likely you pay $60 a game, then another $15 or $20 a month to give you access to all the online game services or whatever. Not everyone will be willing to pay that at first, but as the game library builds and as more people see how cool it is at their friends' house or whatever, the subscriptions will increase. Plus, manufacturing costs will not always remain $900 a unit. They'll go down, just like they always do with PC hardware. I think Sony can easily take a $400-500 hit per unit long enough to get the costs down and get the online business booming.
            • ...then another $15 or $20 a month to give you access to all the online game services or whatever.

              Considering the Xbox Live service costs $49 for 13 months (12 paid, 1 free), do you really think that Sony could get away with charging (what amounts to) $180 to $240 a year for their service? Especially when you factor in that by the time PS3 launches, the 360 will have a much larger catalog of online capable games, not to mention a more opponents. And the Xbox Live service has had a lot of time to mature, wit
          • by sqlrob ( 173498 ) on Saturday February 18, 2006 @06:53PM (#14751894)
            And except for the rare hardcore gamer, how many people buy 30 games for a machine in one generation ?

            Let's see...

            Current gen lasted 5 years, that's 6 games per year, or a on average, a game every other month. How is that "hardcore"?
            • Re:Obligatory RTFA. (Score:3, Informative)

              by freeweed ( 309734 )
              It's hardcore because systems are lucky to sell games at a 10:1 ratio.

              You seriously think most people have 30+ games for their game consoles?

              You assume people buy games throughout the life of a console (most don't after the first year or 2), that they buy games on a regular basis (most people buy a game or 2 a year TOPS after the first year), and that "a game every other month" is normal purchasing.

              "Hardcore" refers to those gamers who buy excessive games in comparison to the general public. Like more than
          • PS3=Sega Saturn (Score:3, Insightful)

            by elucido ( 870205 )
            PS3 is looking more and more like the Sega Saturn.
          • And except for the rare hardcore gamer, how many people buy 30 games for a machine in one generation ?

            For that matter, who but a hardcore gamer would by a launch system, especially one priced at $500? The '30+ titles' gamer and the 'early adopter' gamer are one and the same.

            Later on down the road, costs are reduced and the losses to Sony go down. The gamers that buy in at that point are less committed, and thus will be the ones that will probably buy fewer games. And of course there are the royalties from t
        • The question is how much of a loss can Sony accept given their meager cash resources (relative to Microsoft). Let's agree to an arbitrary ceiling for an acceptable console price - let's say $500. How long can Sony absorb $400 loss per unit? And $500 won't be competitive considering that the 360 will have dropped $100-150 by the time The PS3 drops.
        • It also won't cost Sony $900 to manufacture one when it goes to market. Congrats on knowing what a loss leader is, but there's no way Sony would give away that much.
        • Re:Obligatory RTFA. (Score:5, Informative)

          by Total_Wimp ( 564548 ) on Saturday February 18, 2006 @06:12PM (#14751689)
          The article states that $900 is the cost to Sony. It won't cost that retail, they always take a hit. The original Xbox cost more to make, than it sold for. It's called a loss leader, look it up.

          Then someone, probably many someones, are smoking crack.

          Explain to me how Sony is going to make up $400 per console on average if it costs them $900 and they sell for $500? A loss leader is not some magical thing where you sell a $900 item for half price and make a profit. The way it works is that you somehow manage to make more than the cost of the item through some other kind of sales. My question to you is: give me some kind of business model where Sony is going to make $400 bucks per console off some other kind of sales? Put another way, that's about 7 games. If the games cost nothing to make and Sony took home 100% of the profit, they'd have to sell 7 games for each console to break even.

          Sony is participating in a mature business where it is the market leader. Market leaders don't give away very much in order to gain market share, because they already have market share. They're in the business to make a profit. They may, in fact make more of a profit off blades than razors, but they won't give away a razor that costs them more than they can make in blades.

          That said, TFA is counting costs from a place that is not based in reality. As the IP owner and manufacturer of the Blue-Ray drive, it will not cost Sony anywhere clos to $350 to manufacture a drive and put itinto a Playstation. Their R&D and manufacturing facilities costs can not be put into a per-unit cost in the same way as if they were buying the drives from Toshiba. You can make any kind of argument you want here about 3-year right-offs and the like, but the fact is that those dollars are in reallity going into a whole industy and not just the PS3. Claiming the Blue-Ray drive as a $350 manufacturing cost of the PS3 is like claiming it costs $350 per unit to manufacture Windows Vista. You may be able to cook the numbers that way, but that kind of per-unit cost just isn't relevant to this particular kind of manufacturing.

          • Bear with me, I am no economist... but:

            Let's use small numbers to make things clearer. You are Soby, maker of this crappy little video game machine. It will be a big hit, but it costs $100 to make. Only, no one is willing to pay more than $50. No big deal. If you can get it to be a big enough hit, you can ramp up production, and sometime next year you can be making the things for $50, or maybe even less. The thing is, will it be a big enough hit?

            If you go forward now, you might make up a little of the $50 d
      • by Citizen of Earth ( 569446 ) on Saturday February 18, 2006 @08:00PM (#14752221)
        Hmm, I think the cons are winning

        I think you're overestimating Microsoft's chances.
    • Re:Apple to Sony? (Score:5, Informative)

      by ThisIsForReal ( 897233 ) on Saturday February 18, 2006 @05:19PM (#14751370) Homepage
      No, it's not an exaggerated look at the cost of blu-ray. When DVD players first became available in the consumer market around 1995, the players all cost over $1k. Sure, the drive is $30 now, but not back in the day. I remember in 1997 when the first DVD-R drive was made, it was marketed to the military and retailed for $16k. $350 for blu-ray is the truth, not a marketing ploy.
    • yeah. We all remember what happened to the NEO-GEO. It was a great system, but i remember it retailing at $700, and nobody wanted to spend that much on a gaming system. I don't think things have changed much since then.
    • Re:Apple to Sony? (Score:4, Insightful)

      by bbzzdd ( 769894 ) on Saturday February 18, 2006 @06:05PM (#14751640)

      This has always been Ken Kat strategy from day one. Hype the PS3 as a supercomputer and go on record that it will be "expensive." Then when all looks dire (and just in time for E3 '06) expose the true price point for $399 USD -- "Yes $399, to let it go at this price is killing us. Did I mention it's a supercomputer?"

      If Sony knows one thing, it's how to hype a product.

      • Re:Apple to Sony? (Score:5, Insightful)

        by macshit ( 157376 ) <.snogglethorpe. .at. .gmail.com.> on Saturday February 18, 2006 @07:09PM (#14751976) Homepage
        If Sony knows one thing, it's how to hype a product.

        I think it's more accurate to say "If Kutaragi knows one thing, it's how to hype a product". Until Kutaragi came along, Sony was a very different company: very good industrial design, solid and sometimes innovative technology, understated marketing.

        The PS line turned all that on its head, and given other changes which have loosened the company's traditional moorings (e.g. Sony's founder retiring), Sony itself seems to have drifted in that direction too. [It's hardly a sure thing -- apparently the "mainline" management at Sony loathes Kutaragi -- but I guess in the absence of a strong leader, they end up following the money in the end...]
    • Re:Apple to Sony? (Score:3, Interesting)

      by ceoyoyo ( 59147 )
      I find it kind of refreshing when a company delivers more, earlier than they promise. As opposed to the standard line of delivering less, later than promised.

      Sony hasn't done that... they've promised nothing regarding cost and only vague release dates. If they've paid off this "market research" firm then they get no credit for more, earlier because I don't consider fake studies ethical.
  • No worries (Score:4, Funny)

    by Squishy Eyeball Jeff ( 796823 ) on Saturday February 18, 2006 @04:54PM (#14751228)
    Maybe by 2007 Xbox 360s will actually be in some stores around here, and then I can have my choice.
  • So.... (Score:4, Insightful)

    by gclef ( 96311 ) on Saturday February 18, 2006 @04:56PM (#14751237)
    ...the report says basically "we don't know anything, but we think it's hard, so they won't make it."

    Right. Remind me to call them nextx time I need random guesswork done.
  • This sounds... (Score:3, Insightful)

    by demondawn ( 840015 ) on Saturday February 18, 2006 @04:57PM (#14751242) Journal
    ...more than anything like Merril Lynch is trying to get people to dump Sony stock so they can buy it up, then make a killing if the PS3 matches their REAL expectations. Or maybe I have my tinfoil hat wrapped a little tightly?
    • Re:This sounds... (Score:3, Informative)

      by Joffy ( 905928 )
      I know someone that works for Merril Lynch, and a few years ago I started to become a big Sony fanboy because in my expierences the quality was worth a few extra bucks. I asked them if I should buy some Sony stock and I got a big fat NO. This was before the rootkit, PS3 worries, and that interview with the white guy Sony brought in to *fix*(ie layoffs) the company.
    • ...more than anything like Merril Lynch is trying to get people to dump Sony stock so they can buy it up, then make a killing if the PS3 matches their REAL expectations. Or maybe I have my tinfoil hat wrapped a little tightly?

      If you really believed this you would have put your money where your mouth is and bought Sony stock; not put a post on Slashdot.

    • Read the fine print: "Merrill Lynch does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report."

      Also read this earlier ML report [charter.net] on Xbox 360 vs. Playstation 3, gushing about how Microsoft has so much money ("nearly unlimited ability to loss-lead".) ML might be able to swing the stock prices in their favour, but FUDing for dollars is a well known way to
  • $900? (Score:3, Funny)

    by general_re ( 8883 ) on Saturday February 18, 2006 @04:57PM (#14751245) Homepage
    Damn, my first car cost less than that. Granted, it was a piece of shit, and it didn't have the latest and greatest Cell HypeEngine® built in, but it did have a nice big back seat (wink, wink), which produced a lot more fun than any Sony equipment I've ever owned.
  • Great Marketing (Score:2, Insightful)

    by Anonymous Coward
    Excellent post above about Apple to Sony.

      Hype how expensive the machine is and how much good stuff is there, and then make it look like a bargain when they come out as 600 dollars! Look you saved 30%!

  • $900???? (Score:5, Interesting)

    by phlegmofdiscontent ( 459470 ) on Saturday February 18, 2006 @04:58PM (#14751247)
    Shit, for that amount of money, I might as well just get a new PC.
  • by Trespass ( 225077 ) on Saturday February 18, 2006 @04:58PM (#14751248) Homepage
    Maybe call it the 'Neo Geo'. :P
  • by Snamh Da Ean ( 916391 ) on Saturday February 18, 2006 @04:58PM (#14751251)
    ...pointing out that this is clever marketing from Sony, or this is just some whacky stuff from Wall Street, remember that the analysts who wrote this report make their livings and substantial salaries from analysing their target companies. They know these companies inside out, because if they didn't they would be out of a job before they knew. When you consider their balls are really in a vice grip because if they get their predictions their wrong, their companies stand to lose a lot of money, then you give a bit more credence to reports of this nature.

    Having read the pdf file, the analysis seems quite reasonable, and well considered, and utltimately quite persuasive. Whether it persuades you is a different matter, but before you dismiss the report out of hand, remember that the authors spend a lot of time trying to understand and predict what Sony is going to do, and therefore are better qualified than most third parties to reach conlcusions about slippages and prices.
    • by Anonymous Coward on Saturday February 18, 2006 @06:08PM (#14751661)
      mmmmm, these highly trained professional's you speak of seem to have trouble doing simple arithmetic. If you examine the pdf, the prices add up to 800$, not 900$
    • You might be right if these boys were specialist IT analysts, but they aren't they are financial analysts making a series of pretty big assumptions that don't match reality. These are also the folks that hyped the .com as the future and didn't spot the gaming market or mobile markets (don't believe me go and look at the reports from 1999).

      So we have the Cell... currently for sale on development boxes... so not quite experimental

      We have blue-ray price of $350 a unit, some what odd given that you can alread
      • You might be right if these boys were specialist IT analysts, but they aren't they are financial analysts making a series of pretty big assumptions that don't match reality.

        This is perhaps partly true, however I skimmed the PDF and one bit that did stick out which I thought was pretty insightful was this:

        The die, at 235 square millimeters initially, is large, and Sony plans to manufacture it on a leading-edge 90nm process. Add to that the fact that the die is mostly logic, not memory arrays that can easi

  • Those are just speculation. Facts are, there isn't a release date nor a price set. That's all.
  • Price (Score:3, Informative)

    by truthsearch ( 249536 ) on Saturday February 18, 2006 @04:59PM (#14751254) Homepage Journal
    the console will be somewhere in the neighborhood of $900 when it launches.

    Somewhere in the neighborhood of $900 to build when it launches.
    • If that turns out to be the case, Sony is looking at some painfull losses, and a lot of risk. Of the three, they hve the most justification to do that, as it's also a loss leader for Blu-Ray.
  • Remember: Sony, unlike Microsoft, is a hardware company, and it still owns its own chip fabs. In fact, its a direct investor in the IBM East Fishkill Fab where the Playstation processor will be made. [techweb.com] That would suggest that Sony will be getting their Cell processors at pretty cost to cost.

    • Well, have you considered that "investing" in fabs usually comes with money being spend, which in turn has to be got back somehow?

      A modern fab cost 2-3 billion. Thats quite a few $ per cell to get a break even.
    • Additionally the cell will be used by IBM for things like blade servers and medical devices. So while the initial launch may be rather painful for Sony and cost Sony a lot of money, economies of scale do apply, and the cost will fall. With the use in medical devices for example, I would suspect that Sony and IBM will use that as a major source of revienue to help pay back development costs.
  • by maynard ( 3337 ) <j.maynard.gelina ... Rl.com minus cat> on Saturday February 18, 2006 @05:01PM (#14751262) Journal
    IBM must be having fab problems with Cell at 90nm. Perhaps they want to wait for the transition to 65nm for better quality control. I bet if IBM and Sony had decided to go with six SPEs per Cell rather than eight, and cut the die down in size, they wouldn't be having these problems.

    If this is true it will give MS and the 360 a huge advantage in the marketplace. Further, I don't think Cell is going to be significantly more powerful than the Xenon, even with single precision floating point (the vast majority of Cell die space). I think IBM and Sony really stumbled here, both from a technology perspective - and now from a manufacturing and quality control perspective.

    Wow. Maybe Microsoft really has kicked both their asses. In everything, from new technology, manufacturing, and time to market. Sheesh!
  • by Absolut187 ( 816431 ) on Saturday February 18, 2006 @05:02PM (#14751269) Homepage
    Don't worry. By 2007, a Big Mac will cost $35.

  • Good for Nintendo (Score:5, Insightful)

    by diamondmagic ( 877411 ) on Saturday February 18, 2006 @05:02PM (#14751271) Homepage
    The Revolution is definitely coming out before at least thanksgiving, and definitely under $300. Why get somthing with fewer but more expensive games that, all on top of that, costs 2-4 times more?
    • I think Nintendo's already won this round before they're even out the door.

      Combine the 360's supply problems with the Price/delays of the PS3, as long as nintendo plays its cards right, the revolution will be a winner fairly easily.

      Most of the hype the revolution's been recieving has been a result of the sheer mediocrity of the other offerings at this point. Additionally, it's the only console that's made any sort of substantial innovation other than "marginally better graphics" this time around.

      As long a
      • I would have to agree. This is an incredible opportunity for Nintendo if they can get to market before Christmas, and all indications are that they will. I do think Microsoft has enough time to get their supply issues out of the way and perhaps become the domainant game platform in the US. However, Nintendo is primed to take a much larger share of the US market than the GameCube got them and totally own the Japanese market.

        I've got a 360 and I do like it. I am also planning to buy the Revolution. I was
      • I think Nintendo's already won this round before they're even out the door.

        I find that comment somewhat perplexing. Nintendo has stated that they do not see the Revolution as direct competition to the PS3 or 360. They haven't announced specs, games, pricing, or even a launch date.

        How can you say that they've "won this round"? Remember:
        - The Gamecube was $100 cheaper than the PS2 or XBOX on launch
        - The 'Cube had a lot of excellent games including plenty of Nintendo exclusives
        - The 'Cube also didn't focus on
  • Cost estimates (Score:4, Insightful)

    by Jarlsberg ( 643324 ) on Saturday February 18, 2006 @05:05PM (#14751289) Journal
    I'm not surprised by these numbers, though I'd point out that the report provides only rough estimates of the costs to build the units. Still, Sony is building this unit with a new unproven processor, a first-to-market Bluray drive and some expensive ram kits, on top of everything else, so I'm not really blown away by these numbers.

    Of course, to stay competetive, Sony will never sell the PS3 for what it cost to build it, but this really does put a question mark on how low they can afford to go.

    The report also speculates on the ramifications for other companies, such as Nvidia, ATI, EA and others. It's a good read.

  • by G3ckoG33k ( 647276 ) on Saturday February 18, 2006 @05:09PM (#14751308)
    Anything above 600$ will hurt, as my wife would try to kill me...
  • The report comes up with the $900 estimate by summing up cost estimates for each of the components, but its estimates for the prices of those components is overly pessimistic. In particular, it predicts that the Blu-Ray drive will cost $350 initially (!?), that the CPU will cost $230 initially, and that the unit will not be sold at a loss. They don't say how they arrived at those, but $350 for an optical drive in bulk is not believable at all. If Blu-Ray drives cost anywhere near that much, then the PS3 will ship without them. A more reasonable estimate is that the PS3 will cost $500 at launch, and come down to $300 quickly.
    • by Keeper ( 56691 ) on Saturday February 18, 2006 @05:20PM (#14751376)
      You're guilty of the same thing. You don't state why their numbers are not believable, nor how you arrive at your $500 estimate, nor the reasoning for how it would be easy for them to cut the price by 40% quickly.
    • by MMaestro ( 585010 ) on Saturday February 18, 2006 @05:37PM (#14751483)
      The Samsung BD-P1000 the first Blu-Ray player will be first out on the market. It is due out in early Spring and is expected to be priced at around $1000. Assuming Sony somehow managed to pull of a manufacturing miracle and Blu-Ray drives only cost 25% what Samsung is selling it for, it'll still cost around $250 to manufacture.

      These $300 or $500 price estimates are nothing more than Sony's hype machine working overtime. A top of the line, brand new PC video card costs about $500 USD manufacturer recommended. The PS3 is expected to have a top of the line Blu-Ray player, the virtually experimental CELL processor and PS1 and PS2 backward compatibility all rolled up into one neat little package.

      • by MBCook ( 132727 ) <foobarsoft@foobarsoft.com> on Saturday February 18, 2006 @09:09PM (#14752460) Homepage
        Don't forget, that Samsung has to make money on those players, where Sony can do the loss-leader thing with the PS3. That said, the Samsung unit needs to have processors to decode and play the video and do whatever else. It needs the output connectors, the HDMI encoder, etc. The PS3 already HAS all those things. The PS3 just needs the bare drive to read the data, all the other stuff in the Samsung player (the sound circuitry, the power supply, the video circuitry, etc) is already accounted for in the rest of the PS3 price.

        Plus, everyone knows that the first people to buy something like that Samsung player is paying a large premium. I would be amazed if that player cost them over $500 to manufacture.

        And of course, Sony will benefit from economies of scale on the PS3 faster than that Samsung player will.

        The PS3 will be sold at a loss. But I bet it will be less than $200 per unit (I'm guessing at a $400 price point myself).

    • The first CD-R drive I ever bought (HP IIRC) cost something like $400, and that was from a discount box shifter. I'm sure the bulk price was over $300.
  • $900? Not a chance. (Score:3, Interesting)

    by YrWrstNtmr ( 564987 ) on Saturday February 18, 2006 @05:12PM (#14751328)
    If that's what it will cost to build, then Sony will sell it at a significantly lower price. If that's what the retail price will be, then xbox sales will skyrocket.

    The playstation is primarily a games machine. As such, it's parents buying them for their kids. Once you include a couple of initial release games, dropping $1000+ on the new console is not gonna happen. No matter how much little Johnny screams. $400-500, maybe. A grand? Not a chance.
    My son is firmly entrenched in the playstation camp. PS1, PS2, PSP. Given the choice between a 360 now, or a PS3 later, he'd rather wait for the PS3. But for $1000? Tough luck, dude. Not happenin'.

    (Yes, there are the fools who bought PS2 and 360 consoles for $1000+ on release day from some guy on eBay, but those are abberations.)

  • What did we do for amusement before SONY started putting on slapstick shows?

    Ob SONY joke:
    SONY="Soon Only Not Yet"

  • While xbox 360 is positioned decently well, it hasn't had the landslide success people were expecting. At the price point sony may come in at, and the lateness... nintendo may well regain the home-console throne, at least in numbers. Mass appeal to non-hardcore gamers, low entry cost, *REAL* backwards compatibility are going to make the revolution an easy sell.
  • Let's say the console costs Sony $750, because they get deals for bulk-buys, co-investment with IBM, etc. Now, I'd say that $500 is the maximum market price, because I'd be able to get a 360 and a Revolution together for about that in 2007. So Sony takes a $250 loss on the units. Let's say they get liscense fees of $20 per $50/60 game. That means that the consumer is expected to buy 13 expensive games at retail price? Some how I don't see that. I mean, that requires a lot of "must-have" games. That's
  • by mcc ( 14761 ) <amcclure@purdue.edu> on Saturday February 18, 2006 @05:39PM (#14751492) Homepage
    The thing that is interesting to me here is this: For the last year, people have been repeating the factoid that the PS3 will apparently cost $500 to produce. If you spend a little bit of time digging, though, you'll find that all such claims ultimately stem from a single oft paraphrased-and-then-meta-paraphrased report by Merrill Lynch about halfway through last year.

    Now Merrill Lynch says the PS3 will cost $900 to produce.

    I can only conclude that the amount Merrill Lynch believes the PS3 will cost to produce approximately doubles every nine months. At this rate, by the end of 2006 Merrill Lynch will believe the PS3 costs $2000 to produce, and by the end of the PS3's lifespan Sony will be paying a full $4,551,111 per unit to manufacture the PS3.

    Clearly, Sony has a serious problem here.
  • There is no way a game machine can sell for $900. You can buy a new, full PC for 1/2 of that price. You can buy new Playstation 2 or XBox for $199, used for $79. Basically I think public perception expects a $200 machine, maybe $300 but not beyond that as it's becoming close to the price of a full desktop computer which can be used for other things too.
  • by YesIAmAScript ( 886271 ) on Saturday February 18, 2006 @05:44PM (#14751530)
    Add up the numbers in the column. It only adds to $800.

    This report is way way off.


    The only thing worse here than M-L's estimate of the price of the PS3 this year is their estimate of it in 3 years.

    Let's start from this year.

    $230 seems high for just the CPU. I couldn't say how much, but I can say that Sony wouldn't even bother to make their console if the CPU cost half over half of the expected selling price.

    The Blu-Ray drive price is WAY too high. Philips is going to ship a Blu-Ray writer drive for $500 in May. That's $500, retail. That includes retail markup, and cost of shipping to retailer. Also, Philips pays Blu-Ray license fees to produce units and Sony doesn't. And did I mention the Philips writes and the PS3 only has to read? And I can buy a quality DVD-Writer for under $40 retail right now. A Blu-Ray reader drive is a little different, but not a lot. It cannot cost much over $100, and it'll be well below that by fall, when the PS3 production ramps up (or perhaps just begins in earnest, I dunno).

    6 USB ports? It will not have that many. 4 tops (2 front, 2 back). And the connector cost seems high, I'd say $3 today for USB ports, maybe $2.

    For 802.11g and ethernet, Sony is using IP from Marvell that is normally used as an 802.11 access point. So it has all 3 ethernet ports and the 802.11g (and an ethernet hub) in a single chip (or less, see below). I'd say $5 for the ethernet and 802.11g together, maybe a bit more if they really leave 3 connectors on the back.

    If the $100 was for a hard drive, they're the dumbest people alive. I can get a 40GB 2.5" drive for well under $100 retail. The OEM price cannot be over $50, and they could always go to under 40GB if it saves money. I'll just assume they added wrong.

    I think also M-L doesn't understand that when you make a custom chip you can put a lot of stuff on it. The link (brains) for the USB, 802.11 and ethernet are probably on the main chip in the unit, bringing the cost of them down to nearly free. The 802.11 PHY/radio will probably be a separate chip, but the USB PHY is certainly on board, maybe the gigE one too.

    So M-L is well over the initial price here.

    Now, let's look at the future prices.

    $100 for an OEM Blu-Ray reader in 3 years? Unpossible. Blu-Ray would have to be the biggest flop in the world for this to happen. My guess is you'll be able to buy a Blu-Ray writer drive for less than $60 in 3 years at retail. Look at how DVD writer prices collapsed. Readers will probably be under $40 retail. OEM prices for either will be even lower. And again, Sony doesn't have to pay license fees, so that lowers their prices even further.

    $60 for the main chip in 3 years seem high too. It'll be on 65nm or lower then, yields will be way up, chip size down, and they might even combine chips (like the GS and EE were combined into a single chip on PS2 in under 3 years). I couldn't say how high though. Maybe it'll be $50, but include the functions of some of the other chips in it.

    $30 for 512MB of RAM 3 years from now. Seriously? That's way off. GDDR3 will not be special anymore, and Sony won't be paying much premium for XDR, since they'll have enough volume to make a market in it. Right now you can get 32M of mobile SDRAM for $4 in big quantities, 64M of mobile SDRAM for $5. And I'm to think 512MB of commodity RAM will be $30 in 3 years? Nope.

    Again, they don't know the PS3 uses a single set of IP for Ethernet and WiFi, $7 between the two 3 years from now is way too high. I'd say $2 for the PHYs, links will certainly be on with another chip.

    $5 for Bluetooth in 3 years? It won't drop at all? Smooth move.

    These companies stink at estimating parts costs. Just remember, these are stock brokers, not engineers, not parts buyers. They just don't have any clue at all.
  • by lancejjj ( 924211 ) on Saturday February 18, 2006 @05:51PM (#14751569) Homepage
    a research report issued by Merrill Lynch suggests that the Sony PlayStation 3's American release may be postponed until 2007 [...] The official report (pdf) would also seem to indicate that the console will be somewhere in the neighborhood of $900

    Is this the same Merrill Lynch that was accused of lying about the health of corporations such as Worldcom and Enron? The same Merrill Lynch that agreed to pay $100 million in fines? The same Merrill Lynch that may owe several billions of dollars to institutional shareholders and others for gross deception?

    Remind me why I, you, or any news outlet for that matter, should have any faith in their statements?
  • Blu-ray suicide (Score:3, Interesting)

    by PrvtBurrito ( 557287 ) on Saturday February 18, 2006 @06:21PM (#14751740)
    If this really retails for more than $500, Sony stands to lose more than the game market. HD-DVD is getting ready to debut, with a Toshiba player having an opening street price of around $400 (or less). Blu-ray is opening with a price target of $1000, probably a little less. If the PS3 does not succeed, Blu-ray is, in my opinion, likely lost. An expensive PS3, will limit adoption of Blu-ray and of the PS3. Sony will be ready to take a huge loss on its initial release, and take a huge gamble. But with a cost of $900, there may be no hope.
  • by murderlegendre ( 776042 ) on Saturday February 18, 2006 @08:42PM (#14752384)

    The first game title to be released for the Sony PS3 will be titled "Wall Street Fighter". In this multiplayer game, players use a virtual "Internet" to discuss, predict and ultimately manipulate the retail price of unreleased video game consoles, amassing vast fortunes by buying and selling futures.

  • Wow. (Score:3, Interesting)

    by Perseid ( 660451 ) on Saturday February 18, 2006 @08:54PM (#14752419)
    Wow. Who wrote this thing? Ballmer? Anyway, two points:

    How does Merryl Lynch know how much components cost Sony? They can know how much a Cell processor would cost you and me, but don't you think IBM would be cutting them some sort of deal? Has this deal been announced to the public so as to allow a specific cost per unit? Maybe. Sounds odd to me, though.

    And secondly, I refuse to take seriously any video game article that call this next round the fifth generation of consoles. I guess Meryll Lynch thinks video games started when the NES did.

The intelligence of any discussion diminishes with the square of the number of participants. -- Adam Walinsky