Read what I wrote. The manufacturer has to recoup his costs before he can lower his price significantly. If the manufacturer is sure he has a long term contract with the customer, he can determine the time frame to recoup the costs which utlimately determine the new price range he can charge. He can try to keep the price high if there is no competing manufacturer - that's just the way all business works. If he keeps the price up and the customer switches to another (now cheaper) manufacturer (even if this manufacturer still uses older technology), the original manufacturer risks of sitting on brand new equipment he can't use..

Man people were so off. Sony CEO said only 10% lost on Ps3's after the last financials.

This is why I find a $299 PS3 less credible at this point. Perhaps the new chips will be cheaper, but not, I think, enough to offset a $100 reduction in retail price. Sony has lost enough money at this point. $50 seems more likely to me, though it does depend on just how desperate the big S is.

So.. bringing back the never ending discussion of how much the manufacturing costs of a PS3 are.

In various threads, I have given a few estimates during the past year and have occasionally been ridiculed about my $330-$350 estimates (particularly by two circle jerks). We have the direct answer from the earnings conference call that just ended:

Sam Levenson (Execcutive SVP of IR), Quote:

"The competitive cost versus the price, as of September, the cost is probably higher a little over 10% compared to the price. But we are expecting towards the end of our fiscal year, which is March next year. The cost is probably one digit higher than the price, in other words, probably somewhere in the middle of the 5% or 6%. So therefore, we are expecting that sometime following fiscal year, relatively break even across the profit for PS3 operations."

So adding around 15% to the selling price for a PS3 Slim ($300).. we get almost exactly the estimated $350.

The quote uses bad English, but anyway it looks like it's saying the current cost is 110% of the price, or $330 not $350, and then in March the cost will be 105-106% of the price, and then next fiscal year they'll break even.  That right?

btw your quip on the 65nm to 45nm process neglects that the move to a smaller architecture helps them recoup costs faster.  You set it up by saying that they are not "saving" anything until costs are recoupped, which may or may not be true depending on your definition and accounting methods used, but Sony most certainly is receiving the hardware at a cost savings for each unit.  Thus your point has zero, zilch (<--correct spelling), nada merit.

Wow.. and another circle jerk pops up. Seriously, why can't you people understand a few simple points about mass manufacturing?

a) My estimates were $330-$350 (for a standard PS3) which is pretty close to your $330 number (for the current slim batch). I'd even go as far as wager that my lower bound $330 estimate is pretty close to your $330 number (just in case you are mathematically challenged).

b) "btw your quip on the 65nm to 45nm process neglects that the move to a smaller architecture helps them recoup costs faster."

This sentence makes no sense at all. Who is "them"? Sony ED does neither manufacture the cell nor the graphics chip - it buys them from some manufacturer(s) - even if the manufacturer(s) were partially owned by Sony. Sony pays market prices like every other customer. If the manufacturer changes the processing structure (and we are talking large sums here), he has to pay for it upfront, because it's his factory and his new machines. So if Sony wants some cell chips (and producing 10 mio cell chips per year nowhere keeps a factory running profitably), then the price will essentially stay the same until the costs are recouped by the manufacturer (give or take a few $ cosmetic changes). 

Still apparently making a loss. If the price had not been dropped they would now be making a small profit but they chose to drop the price to stay competitive.

Give it another 24 months and break even should be close.

Your new nickname on this site should be Circle Jerk, since you seem to love using the term!

Your last post before my response said $350 which doesn't equal $330 and that's what I correctly pointed out, to spell it out for you since you are mathematically challenged, Circle Jerk.

As for b), I'm referring to costs to Sony.  You earlier referred to "development" costs, which was misleading if you were intending to refer to manufacturer's costs in switching to a new fabrication method.  As for that, the manufacturer can put out more chips per sheet once the new process is in place...that's what's in it for them.  The fact that there are upfront costs is vacuous when you consider that the move to a 45nm method was certainly made in the knowledge that it offered a cost savings (yes, to Sony) in the long run. 

Sigh.. let me spell out the reality for you (I'm not even going to explain why my previous estimates of $330-$350 for the old model are insignifcant differences to the $330 projected now).

"As for that, the manufacturer can put out more chips per sheet once the new process is in place".

On the old 65nm process, approximately 320 cell chips fit on a wafer. On the new process, approximately 400 chips fit (given the known die sizes). This means, in theory, that manufacturing costs per chip decrease by 25% (or roughly $8). Unfortunately, there is a problem when we enter the real world. The 65nm process is now several years old and the engineers know how tweak the steps to get maximum yields out of the assembly lines. This is not true for a new process which results in lower yields (the cells for the PS3 had yields around 40% initially and are probably now >85%?). So initially, the manufacturer will likely get the same amount of cell chips out of the wavers with the new process. These are the new cell chips the manufacturer sells to Sony now.. notice the simplified fact: same number per waver, same selling price.

"The fact that there are upfront costs is vacuous.." I can assure you that setting up new assembly lines is certainly not "vacuous" for the manufacturer. Somebody has to come up with those costs and the manufacturer has to charge somebody for them. (There are other factors in the equation like the simple fact that no manufacturer would have switched to 45nm for the measly 10 mio cell chips per year - why do you think Sony had to resell their brand new 45nm cell factory last year?).

"..that it offered a cost savings (yes, to Sony) in the long run." And when do you think this long run will start? When Sony starts buying 45nm cell chips? Keep dreaming, the first ten or so million cell chips will cost Sony exactly the same as the old cell chips (and now you maqy start to realize why Sony stated many months ago that the PS3 will not reach break-even until next fiscal year - roughly when 10 mio 45nm cell chips will have been soldered into PS3s....nice coincidence, isn't it?).