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Forums - Sony - PS3 Manufacturing Costs

SlorgNet on 19 April 2009

In addition to what's already been said in this thread (i.e. manufacturing costs are well below $400, the strength of the euro means extra profits in eurozone countries, and the fact that most of the parts are made in China, not Japan, means the PS3 is insulated from the strong yen), Sony has two additional sources of saving: (1) Bluray is now the official standard, so formerly expensive Bluray diodes are becoming much cheaper, and (2) energy and shipping costs have declined considerably from their 2008 peaks. Of course, the second factor helps all the consoles and not just the PS3, but considering the size and heft of PS3 units, this means real savings.

Bottom line: a $299/299EUR PS3 is coming this autumn, and it will be slightly profitable for Sony.



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rafichamp on 19 April 2009

thanks guys, BTW, do you think that if the manufacturing cost goes down, will they set higher budgets for their first party titles?



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scottie on 19 April 2009
Max King of the Wild said:
scottie said:
I just presented two proofs as to why it must be much higher than that.

1) Judging from iSuppli estimates, sensible approximations as to reductions in cost, and the effect of the strengthening Yen, the loss will be very high.

2) If the loss was not high, SCE as a whole would be running at a significant profit

You're going to have to rebut those two points, not just say "I think ..."

PS - Perhaps this conversation would be easier if we talked in terms of Yen, instead of dollars

1. how is isupply getting their estimates? im pretty sure its from retail prices of each item. there is no other way of knowing these prices. this would alreadty factor in storage, ratail cut, ect ect on each item. i dont think it factors in bulk pricing either which only benefits sony.

2. in the month of december sony practically lost 100million dollars on HW alone only in NA do to the weak dollar. something which should be done by now.

 

I honestly don't know how iSuppli get their estimates. It clearly isn't retail because, well not all of these components are sold at retail. I don't believe you can go into the shops and buy the cell processor that powers the PS3 for example, nor the exact graphics card, nor just a PS3 case. A PS3 power supply you can buy from retail I assume, but you're buying it from Sony so that doesn't count. And I will point out I was only talking about iSuppli because others were, not because I'm a fan of the place. So I do think this price includes bulk discounts.

 

I also am certain it does not include the costs of manufacturing the PS3 from components, nor of shipping it to a retailer, nor does it include the retailer taking a cut. iSuppli always has presented it as the price to buy the individual components.

 

The dollar is still very weak, and the yen very strong. Much more so than when the PS3 first came out



rafichamp on 19 April 2009

Agree, Isuppli's numbers have always been high, where other sites show that sony is losing about $30 on each console.

 

 

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1337 Gamer on 20 April 2009

i know theyre getting close but i dont think theyre quite profitable yet



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scottie on 20 April 2009
Fei-Hung said:
1) your shipping costs are way to high. the average cost of a 40ft container to america (the most expensive ) is about $4000. if you devide that by the number of ps3s you can fit inside, you will get a more accurate shipping cost.

2) didnt sony sell of the cell shares to ibm or toshiba? if that is the case then sony dont need to wait for recovering costs to get a smaller chip. why would they buy a smaller chip at the same price? besides previous reductions saved money, more than likely further reductions would to.

3) isupply based costs on assumptions and some of the costs seemed a wee bit pricey. everyone knows bulk buying saves money and bulk buying with a +5yr agreement might save more money.

4) the ps3 maybe breaking even in some regions or making a little profit or loss, but you forget to look at the bigger picture. the ps3 devision has merged and the BR costs which were part of R&D costs are making decent profit. a lot of little factors are aiding ps3 costs, savings and or pprofit making.

imo they maybe making little profit on the 160gb, and breaking even on the 60&80gb. after all, something is paying all the sony devs or they wouldnt be on fire this year the way they are. if they were still losing so much money, 2009 wouldn't be shaping up as well as it is so far.

Sorry I didn't reply earlier, I only just noticed it.

 

1) Shipping costs is a misleading term, sorry. I also include trucking costs under shipping costs. You have to get the components from the various factories they were made at, truck them to a dock, ship them to the country the Ps3s are assembled in and truck them to the factory where they are assembled, then truck the assembled PS3's from the factory to a dock, then ship them to the right country, then truck them to the retailer's warehouse. Does the price seem more fair now?

 

2) I agree that reducing to the 45 nm node will save money, but Sony have gone on record saying they expect to break even on PS3 hardware in March 2010, and that they plan to move to the 45 nm node some time in 2009. Clearly, moving to the 45 nm node will not be enough to make them break even. Straight from the horse's mouth.

 

3) I'm not here to defend iSupply, and I'm certainly not here to make a claim as to an exact dollar figure as to how much Sony is loosing per PS3. Other people used isupply figures to claim that the PS3 was approximately profitable, I was merely saying that that is not what those figures mean, and that the PS3 is still selling at a large loss.

 

4) I agree that I am missing the big picture, because the thread is entitled 'PS3 manufacturing costs' Obviously Sony is making money on games, accessories and on Blu Ray sales, both from Sony pictures and from licencing fees. But that is not relevant to this thread so it doesn't concern me



rafichamp on 20 April 2009

Ya its better.



Alby_da_Wolf on 20 April 2009
NJ5 said:
Alby_da_Wolf said:
The $40 loss in December 2008, based on last iSuppli estimate abstract (I guess you have to pay them to get the complete papers) is based on October 2008 cost estimates (and it affects units sold in December as obviously Sony started stocking units for Xmas some time before). Being Xmas stocks cleared and stocking smaller during slow seasons, it'quite likely PS3 is already breaking even, components cost drops as times goes by, although die shrinks, the next one still to happen, make it drop more. This said, in EU, thanks to strong € and usually overpriced list price even when € is not so strong, PS3 was most probably breaking even at Xmas and is earning some $ now.
NB All this reasonment assumes iSuppli estimate is near enough to reality, but to Sony advantage is that last time I read a complete iSuppli estimate, they postulated an HDD cost far too high, higher actually than end user price for a single unit at most online stores.

Your post is proven wrong by Sony's official information posted previously in the thread.

 

Which is the link to previous and current PS3 cost amongst all the links posted in the thread?

 



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Squilliam on 20 April 2009
drkohler said:
Seihyouken said:
NJ5 said:

@Seihyouken: Do you really think they can save $75-$125 just from reducing the Cell to 45nm, or did I misunderstand your post?

Anyway I don't give much importance to those iSuppli reports, for starters they don't even state their assumptions on the exchange rates. And they're pretty clueless in their predictions which doesn't give much credence to their analysts.

I'm sure I don't need to tell you of all people that the revision coming later this year isn't simply swapping the 65nm Cell for the 45nm one. It goes a lot deeper than that. Pretty much the entire innards of the console will be restructured. Heatsinks, outer air vents, and other internal components will be reduced in number, reduced in size, and in some cases removed entirely

ok, some reality check here:

a) Going from 65nm to 45nm, the die size is reduced by about 30% (175 to 120 mm^2) so you get roughly 25% more dies out of your wafer (more dies means more safety area waste). Running a wafer through the fab cost you around $10'000 per wafer and you get about 320 (65nm) or 400 (45nm) dies out of it. So the pure difference in manufacturing cost of a PS3 cell chip is around $5-$15 (times 1.yield differences which number noone ist going to tell you). Now if you go from 65nm to 45nm as a customer (as Sony is one, actually the _only one_ for the cell chip), you pay production costs, not manufacturing costs, as a rule. It takes _a lot_ of money to research and develop and test a 45nm fab line, and you as the customer have to pay for that, too (you don't think the fab throws up a cool $1b for free?). In essence, the savings will be zero for Sony for the intial few million cell chips (until these setup costs are recouped by the manufacturer).

b) The new 45nm dies will be put into the very same chip carrier the 65nm dies use. That's just the way it is, chip carriers are normed (and basically the size is defined by the pin count of the die inside of it). So the geometry inside the PS3 stays the same - until Sony decides to redesign the entire unit. This likely happens when all components have reached their final design stages.

c) Changing heatsinks, vents, or case as a whole leads to an _increase_ in costs for the first batches. That is simple logic since you need new manufacturing tools to make the new stuff. In any case, we are talking cents to a few dollars max for the entire plastic and metal shielding stuff.

So what does Sony save by going from 65nm to 45nm ? The surprise answer is zero, ziltch, nada. Until the development costs are recouped. Once there, the cost savings will be in the order of $30-$50 (for both chips together). And finally, manufacturing a PS3 costs around $350 now (my estimate from industry experience, no sources available).

 

If the Cell is being produced on behalf of Sony for the PS3, wouldn't economic theory dictate that much of the savings will be kept by the producer of that product?

 

 



Tease.

Snake612 on 20 April 2009

I think are making good profits at this point. Its just that the sales with all consoles are very slow and a bit week.



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