Discussing PS4 hardware and manufacturing price

[kanageddaamen]

Andrespetmonkey said:

drkohler said:

Lol.. Just lol. Where do you people get these completely dumb ideas from?

A (technology) company that wants to stay in business has to sell its products at following margins when entering the market:

If you gadget is a high-end product selling in small quantities: 400-500% of manufacturing costs.

If your gadget is a moderately selling product: 250-300% of manufacturing costs.

If you gadget is a general product: 150-200% of manufacturing costs.

Anybody thinking that Sony will start manufacturing a product with $100 CPU and $100 GPU is seriously deluded. Whatever Sony is planning to build (possibly by mid 2013), they will have to wait until manufacturing costs have come down, way below what is suggested here. TSMC is not ready yet with 28nm, GF is struggling even with 32nm yields, and other fabs are wild guesses.

Wait, you do realise many if not most consoles sell at a loss in the first couple years right? Selling the actual unit is only one source of income, it's supposed to be made up for by software sales and other paid services like netflix and PS+

E.g PS3 cost $800 to manufacture, sold for $600 in 2006 and I believe 360 cost around $500 to manufacture back in 05, but sold for less. I may have to double check on 360 though.

Maybe I've misunderstood your post, could you explain?

The problem is Sony Corp can't afford to take a loss.  They just can't.  The company is in serious financial turmoil and can't afford a 150 - 300 Million dollar year one loss on hardware (assuming 6 million sold year one, $25 - $50 loss per console) on top of R&D and Marketing costs.  

Also, Keep in mind Sony does not GET the MSRP, they get a smaller percentage so retail stores can mark them up to the MSRP so THEY can make a profit.  Somewhere along that chain, shipping costs are paid too.

Financially, Sony NEEDS this:

Retail Price - (R&D Cost+Marketing Cost+Total Shipping Cost+Total Manufacturing Cost)/Consoles Sold - Retail Markup >=0