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Forums - Sony - Will Sony ever make money off of PS3 hardware sales?

HappySqurriel on 29 June 2009
NJ5 said:

Profit from hardware sales? Not sustainably, since they keep cutting the price to a value under production cost, and this will likely continue to be the case.

For example, now they're almost breaking even, but a price cut is needed... So the price gets cut, they go back to losing money, then after a while production cost goes near the price, but another price cut is needed again. Lather, rinse, repeat.

 

I think it is entirely possible that Sony might make the unpopular but necessary decision to not cut the price of the PS3 ... Marketshare is a great way for companies to brag but profitability is more important to Sony in both the short run and the long run.

 



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NJ5 on 29 June 2009
HappySqurriel said:
NJ5 said:

Profit from hardware sales? Not sustainably, since they keep cutting the price to a value under production cost, and this will likely continue to be the case.

For example, now they're almost breaking even, but a price cut is needed... So the price gets cut, they go back to losing money, then after a while production cost goes near the price, but another price cut is needed again. Lather, rinse, repeat.

 

I think it is entirely possible that Sony might make the unpopular but necessary decision to not cut the price of the PS3 ... Marketshare is a great way for companies to brag but profitability is more important to Sony in both the short run and the long run.

 

I had the same opinion a few months ago, but I think their HW shipment forecasts tell us they're planning a price cut...

I still think it's foolish to cut the price when the company may face cash problems in the short/medium term, but I don't think they'd be doing a 13 million forecast (30% increase over the previous year) in a recession unless they were planning something... Price cut or not they'll likely miss the forecast, but without a price cut they'll miss it by a huge margin.

 



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almcchesney on 29 June 2009

idk sony isnt really looking for the short term they are more or less trying "future proof" the system and also the psn downloads help keep the ps3 profitable also.



HappySqurriel on 29 June 2009
NJ5 said:
HappySqurriel said:
NJ5 said:

Profit from hardware sales? Not sustainably, since they keep cutting the price to a value under production cost, and this will likely continue to be the case.

For example, now they're almost breaking even, but a price cut is needed... So the price gets cut, they go back to losing money, then after a while production cost goes near the price, but another price cut is needed again. Lather, rinse, repeat.

 

I think it is entirely possible that Sony might make the unpopular but necessary decision to not cut the price of the PS3 ... Marketshare is a great way for companies to brag but profitability is more important to Sony in both the short run and the long run.

 

I had the same opinion a few months ago, but I think their HW shipment forecasts tell us they're planning a price cut...

I still think it's foolish to cut the price when the company may face cash problems in the short/medium term, but I don't think they'd be doing a 13 million forecast (30% increase over the previous year) in a recession unless they were planning something... Price cut or not they'll likely miss the forecast, but without a price cut they'll miss it by a huge margin.

 

I'm certain they will try something, I'm just not sure it will be a price cut ...

In previous years major retailers had "sales" where Sony would include one of their low end surround sound systems with one of their TVs as a way to encourage people to buy the TV. I wouldn't be (that) surprised to see every 1080p HDTV from major retailers having a PS3 bundled with it this holiday season.



TWRoO on 29 June 2009
czecherychestnut said:
TWRoO said:

Yes, but a change from 60nm to 45nm isn't going to save them $100.... maybe $50 at best but that still isn't including the cost to change everything to the new process (changing moulds etc)

Probably not, but remember a shrink from 65nm to 45nm results in a 50% reduction in chip area, hence twice the number of IC's per wafer, hence half the cost per unit (quite broad assumptions, but its a guestimate). So with the extra cost of 45nm fabrication, lets say each 45nm cell costs 60% of a 65nm one. So you are nearly halving the cost of two of the most expensive components in the PS3, even before you factor in all the other cost savings I mentioned previously. Sure it might cost $100million to redesign the masks for 45nm, but over the next 20 - 30 million PS3's, its wittles down to bugger all per unit, and insignificant compared to the savings involved.

The major CELL chip I think I remember hearing it had been reduced from the original $150-$200 price down to like $20 already.... so even if they manage to half that is is only a $10 saving....obviously there are other things than the CELL but simply changing from 60nm (I thought it was 60 not 65.... I could be wrong though) down to 45nm is not going to save anywhere near $100 even when you factor in everything else.

If a Slim version comes out, with 45nm and the extra cost saving from smaller casing and whatever else hey cut out of the system, as well as lower shipping and storage costs etc.... then I could see the overall cost reduction coming down enough for Sony to consider cutting the price to $300 (whether it would save a full $100 on the current model i don't know... but it would be enough for Sony to warrant a price cut)