| auroragb said: In terms of Sony profitability with PS3, You guys are thinking about the top line too much. If they can make the cost of PS3 < $300 in the next 4-5 months, they'll make a killing even if they make a 200$ price drop. Cell and BR are the largest parts of the cost. If they then sell it at $300 in the next 4-5 months, I can see it encroaching on the Wii, especially if they have a high profile game released. However, I'm not optimistic about that happening |
They've probably accomplished most of the cost cutting they're going to be able to do anytime soon. It takes years to do really effective cost cutting -- IBM has to be able to move to a smaller fabrication process for the Cell, for example, and that will result in some cost reduction (but it will still be an expensive processor). The Blu Ray stuff was approximately $100 to start, so cost reducing that won't result in more than $80 or so in savings.
I don't think Sony will be able to produce the PS3 internally for less than $450 before 2009, very likely even later. Cost reduction isn't magic -- there are certain things that can be reduced certain amounts, and other things (like hard drives) unlikely to reduce significantly. They're already using an inexpensive hard drive, inexpensive wireless, etc.
The PS3 was as close to failure as it could get at launch. There's no way for Sony to get the cost under what the public will pay for it en mass within several years, so they will be taking a significant loss on it for quite some time if they want to get it into homes. Sony is in a very difficult spot with the PS3: wide spread acceptance is a 50% price reduction away and, at that rate, profitability would be a 150% cost reduciton away. Futher, it's an esoteric architecture with too little general purpose CPU power that stretches development cycles and budgets.
Too many serious engineering mistakes were made.
