FinalEvangelion said: The PS3 has alot more tech (like Blu-ray) that starts at a very high price, but declines very quickly after its introduction. Similar to what happened to LCD displays a couple years back - went to half price in one year.   It would be a $150 drop for PS3 (if my predictions are true), if you consider the 20 gig started at $500 and 60 gig started at $600.

The cost is not dropping as fast as the price. There is more hardware to the PS3 than there was to the PS2, so there will likely always be significantly higher cost associated with producing the console.

Sony is struggling to compete, and removing BC compatibility was a strategy to increase revenue while also increasing losses on the PS3. Case in point: it saved them ~$6 to remove the PS2 GPU but they stated that it was to increase PS3 game sales. PS3 game sales are more profitable for Sony than PS2 game sales -- so while they may be taking a much larger loss on the 40GB PS3, they're also nearly assured to sell PS3 games with each PS3 sold. Those games bring quite a bit of licensing money in for Sony if they're $60 each (the licensing teir is adjusted for the price of the game).

LCD tech comparison is not appropriate because there are many more components within the PS3, and many of them will not price reduce as nicely.  Even if they did, it would still likely cost Sony $400 to produce the PS3.   Sony introduced the 40GB model because they realized that they were charging more than the market can bear.  They knew it would lead to big losses, which is why they've been selling so many assets lately (they need money).

TheBigFatJ said: Lafiel said: @ TheBigFatJ ) And what do you think they should have said to not be liars "ohh we'll drop the price of this one in mid october and introduce a new sku in mid november , so plz don't buy consoles now , but rather wait for the price drop" ?? I'm sorry , but Sony actions here were just usual business - if you want to call them "LIARS" for that , then plz don't restrain yourself , but don't expect the other companies to act differently in a similar situation. In the second part it clearly says "entry-level PS3s" , so I guess they will still offer PS3s with PS2 BC for those who want them ,but not at "entry-level". Your harsh conclusion "it was removed so people wouldn't be able to buy a PS3 and play PS2 games on it" doesn't seem to be quite right there in my opinion. They could say, 'we have nothing to announce at this time' rather than lying outright. *we* knew there was a price drop coming anyway -- they were just trying to convince others that there wouldn't be. How do you think those customers will feel when Sony said there would be no price drop and then there was one? It's a very short-term strategy to lie like that. The bolded part of the quote suggests that Sony wanted people buying PS3 games, not PS2 games. Tretton himself said it. He conceded that the cost wasn't reduced significantly -- estimates are about $6 -- less than half the amount of money Sony makes per full price PS3 game sold. They said they're doing it encourage a higher PS3 attach ratio. Mr. Tretton conceded that removing that capability, along with a few other features, isn't dramatically reducing Sony's cost of manufacturing the console but will instead encourage buyers of the entry-level PlayStation 3 to purchase more games designed specifically for the new system.

Well, that only upgrades it from "incomprehensibly bad idea" to "terrible idea" IMO. I think that it will cause backlash and confusion on par with the "no hard drive" Core. Up to this point the PS3 had not had a SKU with significantly compromised hardware -- going from hardware BC to software was criticized fairly harshly but the quality of the software BC actually proved to be good. There is little upside to this, except for those people who use it as a Blu-ray player.

[edit: on the other hand, PS3 PR is about at rock bottom anyway, so maybe they really have nothing to lose on that score. Might as well do whatever the hell they want, I guess.]

Another thing I wonder about is when the new Dual-Shock controllers come out, what will happen. Will they offer trade-ins for people or are they going to stiff retailers with unsold units? I don't think anyone is going to want to buy systems with the older controllers without trade-ins or yet another price cut.

I can't remember a console ever having so many different versions before. It's possible that as many as six different hardware configuations could exist in the retail space at once. And that's not even including all the software bundles.

1) 20gb
2) 40gb
3) 40gb w/Dual Shock
4) 60gb
5) 80gb
6) 80gb w/Dual Shock

FishyJoe said: Another thing I wonder about is when the new Dual-Shock controllers come out, what will happen. Will they offer trade-ins for people or are they going to stiff retailers with unsold units? I don't think anyone is going to want to buy systems with the older controllers without trade-ins or yet another price cut. I can't remember a console ever having so many different versions before. It's possible that as many as six different hardware configuations could exist in the retail space at once. And that's not even including all the software bundles. 1) 20gb 2) 40gb 3) 40gb w/Dual Shock 4) 60gb 5) 80gb 6) 80gb w/Dual Shock

While the PS3 has had a ridiculous number of SKUs, it's really unfair to call a different controller being packed in a "different hardware configuration".  Also, where the hell are 20GB models still being sold?  IMO, it's just going to be 40/60/80 -- three SKUs, the same number as the 360 is fielding, not counting Halo edition. 

kn said: I also think it is interesting that Sony got out of the RSX and Cell business and "recouped" some cash in the process. That money could technically be put right to the bottom line of the entertainment biz since technically this is all PS3-related. That would help offset losses rather significantly.

Selling part of the manufacturing business does help their cash situation, but it doesn't translate directly into a positive on the bottom line.

For example, if the factory asset was valued at $1 billion and they sold it for $1 billion, the total worth of all assets in the company will remain the same. It is simply a conversion that does nothing for the result.

Now if they take that $1 billion and spend it, they will have added a billion is losses to the bottom line.