Over the last few days there have been many skeptics about the report about PS3 cutting 70% from manufacturing. Now... these people are most likely they same ones who were skeptic about the isupply report when they said it only cost Sony $450 to manufacture a PS3 back in December. When that isupply article came out so many people were shouting "IMPOSSIBLE!" "Look at Sony's financials!" "They have to at least be losing $100 per console still!" a couple months later... Sony basically confirms it's even less than that. I think it's kinda funny people are still shouting impossible. People were so quick in claiming the Ps3 is the sole purpose of Sony's losses. Now in hindsight we are able to see things a little more clearly. Post E3 we can now see what Sony has been doing with it's money. On top of Ps3 losses there has been 2 PSP revisions in a year, 1 Ps3 revision, a PS wand, and I'm comfortable in saying they are in early stages of PS4 and PSP2... hell, the same people claiming it impossible are most likely the same people who are claiming 2011 new console... That would mean they have to almost be done with R&D to be able to announce it at E3 next year. So pick and chose naysayers. Is there a new console incoming 2011 or is it all the Ps3's fault for Sony's losses.
Now, that I've laid the ground work let me talk about why I think Sony could profit with $100 drop.
Since isupply was so accurate the second time I will use their number for the first time, but since more reliable data from Sony CFO came for the second number I will use theirs. Unless someone can provide me a source where Sony states the price of the Ps3 in the beginning. I supply estimated it to be at $840 from the beginning. Sony stated 10% loss on console. Which after taking retailers cut out a cost of PS3 would be basically $420.
So, Sony went from $840 - $420 in 2 years. We need to find $420 worth of cuts. Since then what have they done to cut the cost? One of the most significant changes that were made was taking out the Ps2 chip set. How much does it cost to manufacture a Ps2? I don't know. But at the time they made this move they were selling the Ps2 at $150. The Ps3 only had a few components of the Ps2. It didn't have the controller, the mobo, the power supply, the fans, the case. Also, now the Ps2 is selling at $99. After you cut retailers margin and Sony's profit margin you are most likely looking at $80 to manufacture a PS2. I think it's fair to say that Sony saved $150 taking out the card slot, the 2 chips, and the 2 USB ports.
Still $270 dollars worth of savings to find. What have they done since? The second most significant change they made is shrink both the RSX and Cell to 65nm from 90nm... With this change they were allowed to save on the mobo, heat sinks, fans, and other various components... Guess what people... Sony is now shrinking the RSX and Cell yet again. This time to 45nm. Guess what else they are doing on top of that. They are shrinking the case. With less power being taken from the chips you get less heat. Less power = smaller power brick. Less heat = smaller fans and heat sinks. These are probably the same things they were allowed to do with the previous shrinkage, but this time they are going further with it by shrinking the case. ONTOP of that guess what a smaller system means. It means cheaper to store and ship. Smaller boxes = less weight and more can fit on a create.
Isn't it at all plausible that with these revisions Sony did indeed cut costs by another 150 dollars or so? They are doing more than the last revision.
