In light of the negative PSV threads undoubtedly tied to the uninspiring retail performance of the platform, there have been calls for everything from immediate price drop to ceasing the platform altogether in response.
Popular impressions among the platform's detractors seem to be that the hardware costs too much to produce while simultaneously being priced to high for consumers. So, a really quick check on the bill of materials for the PS Vita was quite enlightening.
The wireless card carries all sorts of chips, including the Qualcomm MDM6200 HSPA+ supporting speeds up to 14.4Mb/s (that data rate is available Japan, while US Vita owners are limited to AT&T's 3G HSPA 7.2Mb/s network according to PCWorld). These specs are in line with those previously reported by UBM TechInsights, which performed a teardown late last month and priced the Vita's bill of materials at roughly $159.10:
- Display and touchscreens: $50
- Battery: $3.60
- Cameras: $3.50
- Wi-Fi/BT/GPS: $3.50
- NAND: $6.00
- SDRAM: $9.25
- Processor: $16.00
- BB+XCR: $16.25
- Non-electronic: $11.00
- Other: $30.00
- Supporting materials: $10.00
http://www.ubmtechinsights.com/teardowns/sony-playstation-vita-teardown/?pi_campaign_id=13825
Quite a bit lower than I had expected. I think my original guestimate was closer to $200 way back when, just based upon smartphone BoMs. Just under $200 I think I said if I remember correctly.
Contrast the facts with early projections from a year ago that the PSV would cost 2-3 times over the estimated BoM and priced accordingly while still being sold at a loss by SCE and what you have is the reality that a lot of people making such projections (who are admittedly not professionals in field) simply have little to no idea what it actually costs to produce the hardware being sold at retail.
Does this mean SCE can sell the base PS Vita at $199 without taking a significant loss on each unit sold? Not exactly, since the base model can't depend upon additional charged services beyond PSN game/DD sales and the 3G service units seem to be both limited in sales as well as in actual subscribers (and again considering that AT&T provides the service and presumably receives the vast majority of the 3G service revenue). Official PSV peripherals (cases, chargers, etc.) are natural profit makers, as are the much maligned proprietary memory cards (more profitable than any other peripheral), but ultiimately, SCE really needs to be making a profit on each hardware unit sold until the software revenue (based upon installed userbase) is large enough to be the primary source of revenue for the platform.
But what it does mean is that SCE does have considerably more room when it comes to retail pricing that just about everyone who bothered to make a PSV prediction made before actual BoM estimates were performed.
When it comes to pricing hardware, it always pays to say "wait for industry BoM estimates on final retail units" before making wild, uneducated claims about what something will cost and what the company producing it can sell it for.
