Hirai on Home Delay, future price cuts and MH3 going to Wii

[HappySqurriel]

ssj12 said:

HappySqurriel said:

Hirai also noted that the company’s long-term PS3 pricing strategy is to likely match that adopted for its predecessor, with price cuts brought into effect throughout the system’s lifetime, but price reductions won’t occur again until the next-gen console becomes firmly established as a mass-market system with a strong software portfolio.

I was thinking about this earlier today ...

If Sony has any intentions of turning a profit off of the PS3 it is fairly unlikely that we will see further price reductions in the next 12 months; they really need to reduce the cost of manufacturing to a level where the existing models are turning a profit before they cut the price again.

 well you should note that the CELL is running on a 65nm wafer now but the RSX is still at 90nm. Once the RSX drops to 65nm manufacturing costs will decrease quite a bit. 

I think people focus too heavily on the manufacturing process as some "magical" cost cutting procedure ...

By switching to a 65nm process from a 90nm process Sony will save about 50% on the physical manufacturing cost of the chip alone, but this is only one portion of the actual cost of the chip. Sony did not develop the RSX and it is unlikely that they bought the design from nVidia so they're probably paying a licencing fee on the chip; we have no idea what the terms of the licencing agreement are, but it is (typically) reasonable to assume that either the licencing fee is a flat rate (like it was with the XBox, which is why Microsoft did not use nVidia with the 360) or it is dependant on the volume of chips produced.

Now, we don't know what Sony actually spent on manufacturing the PS3 but a year ago it was rumored to be $800 to $900 per system; this means that in order for them to be breaking even on the 40GB model they would need to realize $400 to $500 worth of cost reductions which I'm certain they haven't (and probably won't in the near future).