Forums - Sales Discussion - BOLD PREDICTION: PS5 and PS5D to be $399 and $349 respectively

My first and second thought about these prices:

https://www.youtube.com/watch?v=_n5E7feJHw0



Last edited by Conina - on 12 September 2020

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drkohler said:
Intrinsic said:

Reasoning...

  • 350mm2+ 28nm APU ($100)
  • <325mm2 7nm APU ($110)
     due to being on 4 times smaller fabrication process, from a wafer standpoint alone you should be getting around 4 times more chips from the same-sized wafer. 50 more.

WTF?

A 325mm2 chip is a 325mm^2 chip. No matter what. Roughly same number of chips/waver than a 350mm^2 chip.

The 7nm node currently is considerably more expensive than the 28nm node, hence a 325mm^2 7nm PS5 SoC is considerably more expensive than a 350mm^2 28nm PS4 SoC.

I don't see what the issue is.

On 28nm, sony made a 350mm2 APU that ost them around $100. With the PS4pro, they made a 325mm2 APU on a 16nm process. Smaller chip,bt way more powerful.Sae with the PS5, I am expecting it to be another 30 - 325mm2 APU on the 7nm process. And yes, while 7nm fab is more expensive than 28nm, what makes it more expensive is the technology and not the wafer itself. Hence the "tech tax". But sony putting in orders for the PS5 APu (just as was the case with the PS4) isn' like most other companies. While the likes of AMD/ NVIDIA would putting orders for only like 4-10M chips on any give fab process per year, sony would be putting in an order of around 30-40M chips. 

Trust me, that changes the cost conversation a great deal.

But what really feeds this estimate here is actually with me looking at the $499 Nvidia RTX3070. That's a 390mm2+ chip on a Samsung 8nm process, and its cooling system, board, RAM...etc and being priced at $499. And with things like GPUs, be rest assured that there is a very hefty mark up on that MSRP. Case in point, Nvidia is known to sell stuff for as much as 2-2.5x times more than what it actually cost them to make it. 



Not a chance it comes in that low imo. Rumor was Sony would still be selling at a small loss even at $500, due to the BOM being in the upper 400's range, plus shipping costs and the retailer cut. I can't see pricing lower than $500/$400 for physical and digital personally, it's totally unnecessary for Sony to go lower than that and sell at a huge loss, they were the market leaders this gen, and have a strong 1st party, so PS5 is going to sell well even if it's $500/450 for physical and digital. Sony can only afford to eat but so much of a loss on hardware, they have already spent probably over $600m on all the timed moneyhat deals and marketing deals they have (more than that if some of the rumored moneyhat deals that haven't been announced yet are also true, like FF16), they'd have to eat another $2 billion+ loss selling PS5 at $400/350.

It's just unnecessary. Look at all of the advantages Sony already has going into this gen over MS:

  • Market leader last gen, which helps them because some Sony gamers won't want to change platforms and lose trophy progress or friends lists
  • Stronger brand presence in Europe, Japan, and many other markets
  • Stronger 1st party AAA franchises and AAA studios in terms of sales and reviews
  • More 2020 and 2021 exclusives announced so far, especially AAA exclusives

Why would they need a pricing advantage on top of those others in order to sell? And if they don't need a pricing advantage to sell, why would Sony choose to sell at a huge loss? 

Last edited by shikamaru317 - on 12 September 2020

sales2099 said:
Ps4, for as weak as it was (Xbox One was weaker) launched at $399. For what PS5 offers, no way it’s that low. The specs aren’t on Series X level, but the gap isn’t THAT big.

Don't look at the power... thats really nothing at all. Look at the component costs.

eg.. in 2013, $35 would have got them a 500GB HDD. In 2017, that same $35 would get them a 1TB HDD.

In 2013, sony's 8GB of RAM, made from 16 x 512MB chips in a clamshell config cost them $88. so that's basically $5.5/chip. or $11/GB. Then in 2016, they were using 1GB chips on a smaller fab process instead of 512MB chips and that cost them $6/GB. 

In 2018/2019, 1GB 14Gbps GDDR6 chips (the type the PS5/XSX uses) had a component cost of $11. And that was before they shited fabrication to 7/8nm processes. Once they did, they now have 2GB GDDR6 chips, which with how these things typically go will just end up costing around $12/$13 per chip while 1GB chips dro in prie instead.

And what prices sony/MS (more sony than MS) would get from these vendors would be better than you ould find almost anywhere else in the industry. And that has more to do with the volume of orders they would be making at once.

Or more on the chip... a 325mm2 APU on a16nm process takes up the exact amount of space a 325mm2 APU on a 7nm process takes up. But when they say this process is more costly than that, its not like they mean its like two times the price something. Its more like a 20 - 30% premium that comes down over time as the fabrication process matures (aka yields improve). 

Another way to look at all this is, in 2013, it cost sony $380 to make a PS4. In 2016, the same $380'ish would have made them a PS4pro. What do you think $380 would make them in 2020?



Sony might be able to afford this, but pricing of the competition and the current strong position in the market allow Sony to go higher, and I think they will try tto not lose too much money. I imagine Sony is confident enough to match XSX at 499 and lose more money on the discless model at 399 because there's more profits to be had there from games. I do think 449 for the disc model sounds like a pretty sweet spot otherwise, but it's only 50 less than 499 (so possibly not much advantage against XSX) and it looks way worse than 399. I think it's either 499 or 399, and I'm leaning towards 499.

That said, by now Sony is probably very well aware of the importance of price, and a price of 399 could win some marketshare. I think all things considered, Sony will still choose short-term profits, but I wouldn't be too surprised at 399 either considering XSX isn't higher than 499.

As for the discless model, it's probably either 349 or 399 depending on the price of the disc model. 299 is out of the question because all the discless model lacks is a disc drive so no cutting other costs there, and 449 in case of 499 for the disc model is way too close to the disc model and way too high compared to XSS at 299. If the discless model is 349, I imagine Sony would prefer to price the disc model at 449 instead but like I said, due to competition I imagine Sony won't do that.



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I just read that Sony has had major losses across the board due to Covid-19 and that they are short term not doing well. Game department was pretty much the only profit. While selling PS5 at a lower price than they would have will help them a lot more in the long run, selling the device at a loss or significant loss may put their short term finances, as a whole company, into dangerous territory.

I don't particularly like PlayStation brands/products, and have never bought any, but I want them to be in a healthy situation as they push Nintendo and Microsoft and the whole gaming industry forward, just as the other two do as well.

If Covid-19 keeps up, Sony may have to do a lot of restructuring to stay afloat at this rate. I could see PlayStation spinning off to some other company in order to get the cash they may need. Movies are bombing left and right or simply being delayed from release. PlayStation is safe regardless, but I'm not so sure about Sony.

https://www.google.com/amp/s/www.marketwatch.com/amp/story/sony-profit-revenue-fall-below-expectations-2020-05-13

https://sonyreconsidered.com/sony-q1-2020-earnings-overview-revenue-2-profits-1-f467dafe5609



shikamaru317 said:

Why would they need a pricing advantage on top of those others in order to sell? And if they don't need a pricing advantage to sell, why would Sony choose to sell at a huge loss? 

First off, what is a "huge loss"? If my estimates are accurate, they would be losing $70 on the $399 PS5 SKU and $90 on a PS5D SKU. When people talk about the loss I don't think they really take the past into consideration. Do you know how much sony lost on the sale of every PS2 back in 2000? $150. That's a $150 loss on a $299 console!!!! Then with the PS3, they bit a $200+ loss on every unit sold. And my estimates has the loss they would take range between 70 - $90. You can even tack on another $20 there just in case and its still only $110 loss max. That's not even as much as they lost on the PS2 back in 2000. That's $230 in today's money.

History dictates that at the very least, a $150 loss isn't of the table especially considering how much more profitable the plantation divisions now compared to in the PS2/PS3 generations.

Secondly, Sony has actually come out and said they want this to be the fastest transition into a new gen ever. How else do they manage that if not aggressive pricing? And why would they do this? They aren't doing this to "sell", they can sell just fine at $399/$499. They are doing this to sell "quickly". Its like people forget that the console is just a gateway to an ecosystem. I sony could somehow manage to sell 100Mconsolesin 3 years and not sell more tan 5M consoles a year for the next 4 years? Trust me, they would be very very very happy.



I think 500 for the regular PS5.
And 450 or 400 for the digital version.

There's also a theory that they will be the same price, but that the digital version will have a larger SSD instead.

Last edited by Hiku - on 12 September 2020

I don't think Sony is going to want to lose 100 eurodollars with each sale, or they'll be right back to where they were during the PS3 years, so I doubt it.



Intrinsic said:
shikamaru317 said:

Why would they need a pricing advantage on top of those others in order to sell? And if they don't need a pricing advantage to sell, why would Sony choose to sell at a huge loss? 

First off, what is a "huge loss"? If my estimates are accurate, they would be losing $70 on the $399 PS5 SKU and $90 on a PS5D SKU. When people talk about the loss I don't think they really take the past into consideration. Do you know how much sony lost on the sale of every PS2 back in 2000? $150. That's a $150 loss on a $299 console!!!! Then with the PS3, they bit a $200+ loss on every unit sold. And my estimates has the loss they would take range between 70 - $90. You can even tack on another $20 there just in case and its still only $110 loss max. That's not even as much as they lost on the PS2 back in 2000. That's $230 in today's money.

History dictates that at the very least, a $150 loss isn't of the table especially considering how much more profitable the plantation divisions now compared to in the PS2/PS3 generations.

Secondly, Sony has actually come out and said they want this to be the fastest transition into a new gen ever. How else do they manage that if not aggressive pricing? And why would they do this? They aren't doing this to "sell", they can sell just fine at $399/$499. They are doing this to sell "quickly". Its like people forget that the console is just a gateway to an ecosystem. I sony could somehow manage to sell 100Mconsolesin 3 years and not sell more tan 5M consoles a year for the next 4 years? Trust me, they would be very very very happy.

Alot depends on which bill of materials rumor was true. One leak said it was around $450, while another said that it was around $480 as I recall. And the rumor was that covid might increase the bill of materials due to reduced manufacturing and increased competition over available parts. And of course you have to remember that there is more to the cost of a console that just the bill of materials, there is also the cost of shipping the console to retailers, and the cut of the sale that the retailer gets. The break even point for Sony would likely be about $30-40 above the bill of materials I'd guesstimate. So in the neighborhood of  $480-520 in order for Sony to break even selling PS5 physical. Digital would have the same BoM as PS5 physical, minus the disc drive, which considering that some regular blu-ray drives can be firmware updated to play 4K Blu-Rays, may mean that the BoM on PS5 digital is only about $25 less than the BoM on PS5 Physical. So at $350 digital and $400 physical, Sony could potentially be looking at a loss of about $120 or more on PS5 digital, and a loss of about $80 or more on PS4. That adds up quickly over time, say they sell 10m PS5 physical units and 10m PS5 digital units before production costs start to go down, that amounts to a $2b loss for Sony, and of course they would still continue to lose money even after that until production costs lower to the break even point after a couple of years.

And while it is true that Sony was willing to sell hardware at a loss in the past on PS2 and PS3, that policy changed with PS4, with Sony specifically saying in interviews that they didn't want to sell hardware at a loss anymore.