The Yen is Killing Sony - Is a PS3 Price Cut Even Possible for 2009??

[Nidan]

NJ5 said:

Kyros said:
Again this is bullshit. I don't know who is manufacturing each PS3 part. But most likely its pretty much identical to the 360. Processor from IBM(USA?), GPU from NVIDIA(Taiwan?), put together in China? and so on and so forth. Yen-Dollar conversion may lower their profits in yen but it hardly makes manufacturing a PS3 more expensive for them. At least not much.

I don't think anyone said PS3 manufacturing is getting more expensive.

 

 

   Well let me be the first. "PS3's manufacturing cost in USD has become MORE expensive"

Now for the justification. Nintendo years ago changed many of their suppliers to offer pricing in USD, instead of YEN which most Japanese companies did. Sony However is still dealing with in suppliers in YEN Costs.

Since Nintendo and Sony use a lot of components which originate for JAPAN or from Japaneses based companies, this made sense for both Sony and Nintendo.

Sony and Nintendo have long term negotiated supply contracts with their suppliers, which makes it difficult for Sony. I would think that Sony execs are trying to negotiate with all their suppliers to get some price relief, however since a lot of the suppliers are Japanese based, the cost would be hard to trim (ie Japanese labour, raw materials and companies). The suppliers would be slow to reduce the pricing to Sony, if at all.

Nintendo (and Microsoft) on the other hand has negotiated it pricing in USD, so the shoe is on the other foot. The suppliers have to visit them with cap in hand to try and negotiate a new price for their goods.

So effectively in Japan, Sony will be ok, In Europe and the US however, Sony is taking a bath, while MS and Nintendo would be weathering the storm from a much better position.

 

Nidan