Good news for Blu-ray fans. Sony's just announced that they're ramping up blue laser diode production yet again, which will lower the price to just around $8 each by June. What will this mean to you? Well, seeing as the diodes were the reason for the PS3 shortages this fall (and contributed to both the PlayStation's and Blu-ray players' high prices), this huge windfall of diodes could mean lowered prices for all Blu-ray related items.

Some analyst from Wedbush Morgan Securities agrees, saying "Sony is definitely in a position to cut price," and that prices will be lowered once costs hit around $499. So those of you who are on the fence about dumping $599 may want to wait it out just a little longer.

Also, since HD DVD also uses blue laser diodes (a different type, and they just don't call theirs blue), this news could also mean they will ramp up production of theirs as well. – Jason Chen

http://gizmodo.com/gadgets/home-entertainment/sonys-blue-laser-diodes-down-to-8-+-ps3-and-bd-player-price-cuts-soon-255592.php

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Now, wasn't the blu ray diode about $50 just 4 or 5 months ago?  $50 compared with $8 sounds great.  Perhaps it will drop to $3 or 4 dollars after sony wins the DVD battle-royale

I haven't found any info on how much those diodes cost before... I assume that they didn't go from $108 to $8 though, so I think this won't be enough for a $100 price cut, which will take a few more developments...

 And that's assuming that Sony is willing to take the same loss per console they're taking now, which is not a given...

 I wonder why those analysts are always saying that a price cut is coming almost for sure this year, while never giving any particularly strong reasons for it...

NJ5 -

Emotion Chip - 45$
BluRay drive - 200$
Original Cell cost - 95$

New costs.

Emotion chip - 0 removed.
BluRay drive - 50$
New Cell Cost - 60$

That's roughly a 150-200$ savings.

I'm sure the costs are down more than that. It wouldnt suprise me to see a 100$ price drop on the PS3 late 2007, however I expect it more early 2008. However if they did do a price drop in 2007, that would create an amazing stir, and possibly sell a few million consoles. 

My understanding was that the price of the diodes was $27.40 each (USD) or something similar or close to this, but due to the stringent quality standards required by the Blue Ray discs to read the ultra small disc details correctly there is very little room for error. Up until recently I believe that between 1 in 4 and 1 in 7 diodes that have been produced were being wasted and therefor the cost of each diode was technically $27.40 but when you are wasting up to 6 - 1 the calculated price from a production aspect goes up massively. If you have x yield and are inputting 6x parts then the final cost is quite high. I believe that this production 'failure rate' has been getting better as the production technology is upgraded and therefore the 'cost' of the diodes is going down from a quality and lowered wastage rate, and I also understand that the cost of the diodes dropping from $27 to $8 is completely respectable also.

Kwaad, where did you get those numbers? See this link:

 http://i.cmpnet.com/eetimes/eedesign/2006/chart1_111607.gif

According to that link, in November 2006:

Emotion chip: $27 (you said $45)

Blu-ray drive: $125 (you said $200)

Cell: $89 (you said $95)

So according to this and your new cost numbers (which I don't know where you got either), the current cost savings would be at 27+75+29 = 131, best case... Now give some sources for your current $50 price of the blu -ray drive please.

That's only an estimate. One of many teardowns out there.

HAHAHAHHAA...... Look… the Microsoft took two years almost to level price of cost with price of sale of Xbox 360… Now, you really believe that SONY will go to reduce its cost with the PS3 in USD 150/200? And more, that it obtains to reduce the cost in less than 1 year? Being that the proper PRESIDENT OF SONY already said that the price does not reduce until 2008 end. It is much ingenuousness… Same E that obtains SONY has a damage with the PS3 (60 GB) of USD 206,00… That is history innocent child to believe and to sleep.

I wonder if the rumor of an early price drop of $150 - $170 is in the near future for the PS3.

Kwaad, I don't believe for a second that Sony has cut the production price of BluRay drives by 75% in under 6-9 months. That $50 reeks of BS to me. But lets factor in that Sony were LOSING $200-$300 per unit... so with all of this (easy savings), they are still not at break even point. Either way, I won't be surprised to see a PS3 price cut soon - it desperately needs it (in the US & Japan anyway). As I said, wait till the sales for April US are announced, and PS3 dips under 100k.

Sony reducing the manufacturing cost of the PS3 does not necessarily mean that they will reduce the price of the system ...

I really don't know what Sony's plan is, but I'm reasonably sure that they initially intended to reduce the price of the system along side manufacturing cost reductions in order to maintain their per unit losses. On top of that I'm certain that Sony (Microsoft and Nintendo) do not want to reduce the price of their systems too early or too often because that will build an expectation of future price cuts.