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Forums - Sales - Sony is tightening down costs for the PS3- a report on the blu ray diode

TheSource said:

 http://biz.gamedaily.com/industry/feature/?id=16056

Xbox 360 Costs Over $500 Less to Make than PS3, says iSuppli

Costs may soon be coming down for Sony's PS3, but they've already come down a good deal for Microsoft's Xbox 360, which costs significantly less to make according to research firm iSuppli. Now if only that would lead to a price drop at retail...

New data from the researchers at iSuppli (as reported in Digitimes) indicates that the production cost of the PS3 could be brought down by $100 thanks to the falling prices and increased manufacturing capabilities for blue laser diodes. This aligns with what GameDaily BIZ previously reported last month.

 

 

At the moment, however, iSuppli's estimates would suggest that the PS3 continues to be enormously expensive for Sony, while costs for Microsoft's Xbox 360 components are coming down. Main components in the PS3, including the motherboard, CPU, graphics processor, and chipset, total $352 compared to just $204 for the 360. Furthermore, the optical drive in the PS3 (a Blu-ray player) costs $125 compared to just $19.45 for the DVD drive in the 360.

 

Overall, PS3's total cost weighs in at $840.35 compared to a retail price of $599. Interestingly, the side-by-side chart lists a retail price of $399 for Xbox 360 Elite with a total cost of $323.30. Either it's supposed to be a retail price of $479 or the name should read Xbox 360 Pro. The hard disc drive is listed at $43, less than the $54 for the 60GB drive in the PS3. This would lead us to believe that the $43 is for the standard 20GB and not the 120GB found in the Xbox 360 Elite.

 

Regardless, it's a great sign for Microsoft if iSuppli's analysis is correct. Assuming iSuppli is referring to the 360 Pro, MS is profiting almost $77 on each Xbox 360 sold. And if the $323 is the cost of the Elite, then the profit is even higher of course. This news comes only a few days after Xbox executive Robbie Bach proclaimed that the Xbox 360 would become a profitable business next year.

 

I really think Microsoft is waiting to clear inventory with Halo 3 for a price drop.  Sony I think, is aware that Microsoft will clear inventory before the price drop, so it will try to reduce the costs without reducing the price for consumers this year.  That means when 360 drops say..$100 in early 2008 (I would guess early March or in May), PS3 will be in a position to follow suit.  Nintendo, can essentially drop price whenever it wants by cutting out Wii Sports.  By 2008, Wii (sold w/o Wii Sports) probably could sell at $150-$180 and still make a profit on each unit sold.


here you go:-

this is the ps3 production cost breakdown by Merrill lynch

http://www.engadget.com/2006/02/18/playstation-3-costs-900-sez-merrill-lynch-mob/

Cell according to Ml costs 230$ to make (initially) which is plausible because of high R&D of Cell.

Blue-ray according to Ml costs 350$ initially.

they predicted a 68$ pp for the diode.

so you have conflicting reports here.

a japanese analyst( forgot the name) claimed that by mid-2007 the pp of BD would come to the same level as that of a DVD....google for the info

 



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HappySqurriel said:

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.


 No, but since they have reduced the price of the ultra-successful PS2, reducing the price of the admittedly sluggish performing PS3 will make a price cut that much more likely. 

 Secondly, Sony knew that once the high def DVD's came into popularity, the price of that would decrease.  As the cell becomes outdated, rather than a really nice peice of hardware that it is today, then the price to make it will go down.  



All the costs of the PS3 are all speculation.  Yes Sony are losing money on the PS3's or were at one point obviously because of R&D etc, but I seriously doubt they are losing $200+ per unit.  Blu-Ray costs are dramatically reducing all the time and these costs alone IMHO will provide Sony with a profit per unit sale.  Also there are reductions on chip manufacturing costs and removing the emotion chip will reduce costs as well.

I honestly believe that Sony would be making a profit at the moment if they had only included a DVD drive instead of Blu-Ray....but seeing as Blu-Ray costs have reduced have halfed in less than a year, this bodes well for Sony in reducing the PS3 price as well as making a profit.

I still believe that Sony will reduce the PS3 price by the end of this year. 



Prediction (June 12th 2017)

Permanent pricedrop for both PS4 Slim and PS4 Pro in October.

PS4 Slim $249 (October 2017)

PS4 Pro $349 (October 2017)

davygee said:

All the costs of the PS3 are all speculation.  Yes Sony are losing money on the PS3's or were at one point obviously because of R&D etc, but I seriously doubt they are losing $200+ per unit.  Blu-Ray costs are dramatically reducing all the time and these costs alone IMHO will provide Sony with a profit per unit sale.  Also there are reductions on chip manufacturing costs and removing the emotion chip will reduce costs as well.

I honestly believe that Sony would be making a profit at the moment if they had only included a DVD drive instead of Blu-Ray....but seeing as Blu-Ray costs have reduced have halfed in less than a year, this bodes well for Sony in reducing the PS3 price as well as making a profit.

I still believe that Sony will reduce the PS3 price by the end of this year. 


Well, I have said for awhile that the losses on the PS3 were probably overestimated and I expect that after the early ("easy") cost reductions the PS3 will be nearly breaking even (including controller, cables, packaging and shipping). The reason I'm not expecting a price drop is that most of the "easy" cost reductions have (or soon will) have been made and it will take time to make the system dramatically cheaper. If Sony cuts the price of the PS3 they will be losing a pretty large ammount per system and as cost reductions alow them to break even they will be presured to cut the price again; in other words Sony would be forced into long term hardware losses. I could be wrong but I think a price cut would be an act of desperation from Sony.



HappySqurriel said:

Well, I have said for awhile that the losses on the PS3 were probably overestimated and I expect that after the early ("easy") cost reductions the PS3 will be nearly breaking even (including controller, cables, packaging and shipping). The reason I'm not expecting a price drop is that most of the "easy" cost reductions have (or soon will) have been made and it will take time to make the system dramatically cheaper. If Sony cuts the price of the PS3 they will be losing a pretty large ammount per system and as cost reductions alow them to break even they will be presured to cut the price again; in other words Sony would be forced into long term hardware losses. I could be wrong but I think a price cut would be an act of desperation from Sony.


I agree that it could look like an act of desperation, thats why I think first and foremost, Sony will be relying on the supposed AAA titles to be released this year.  If these don't help units sales in particular, then I think Sony will introduce a price cut.



Prediction (June 12th 2017)

Permanent pricedrop for both PS4 Slim and PS4 Pro in October.

PS4 Slim $249 (October 2017)

PS4 Pro $349 (October 2017)

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As much as I would love to see a price drop on the PS3, I think its unlikely we'll see one within the next year.

Even with everything that has been going on Sony has stated that their are no plans for a price drop and look at how long it took to get a price drop with the PSP.

If Sony was smart they would get the PS3 down to $400 by the holidays. If they could do that I would be all over buying one.

  

I wonder with the blue laser production costs coming down if Microsoft will slash the HD-DVD drive down below $100 



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