So says the analyst’s report. The gist seems to be that the component prices are too high ($900 BOM) for a North American launch in 2006; Sony will have to wait for component prices to fall before they can launch in volume.
<nelson>HA HA!</nelson>
That would be freaking funny. With the reports that the PSP is getting its ass kicked by the DS, this would be a double failure.
Don’t forget Everquest. :)
That report is pretty laughable, and it’s just enother example of how the financial community simply makes bad predictions when it comes to the games industry.
First, they can’t even add. They say the total BOM cost is $900 (several times) but if you actually add up the items in their list, it’s $800. Whoops! Hey Merrill Lynch, can I get you to handle my retirement funds, please? ;)
Second, some of their costs are just rediculous and unfounded. $230 for the cell processor seems like a stretch, especially since Sony will improve yeilds by using only 7 of the 8 SPEs per chip - you can have a bad SPE on the wafer and just choose that as the one that is disabled. Cost to Sony will probably be $150-200 tops, moving to $100 or so in the first year.
$350 for a blu-ray drive? No way. Sony is their own manufacturer of those, and while stand-alone players which have their own video processors and so on, and are sold at significant markup, might cost $500-1000 at launch, the drive itself, in a read-only capacity, won’t be so pricey to Sony. Sure, Microsoft probably spends $20-25 a piece for that 12X DVD-ROM drive and that’s way cheap compared to blu-ray, but I doubt the drive will cost Sony more than $100 to manufacture.
Their price on the RAM actually seems a bit low. $50 for the fast GDDR3 and XDR RAM combined seems cheap. I’d give it $30-40 for the GDDR3 and twice that for the XDR, for a total of maybe $80-100 at launch. They’re going to be basically the only buyer of XDR RAM, there’s no economy of scale at all, and it’s completely unproven so they have no idea what the yeilds will be like. The XDR is the real wildcard.
The analog and I/O stuff won’t be $80 worth of components, either. That stuff is usually tightly integrated into a single chip, with an couple of DACs for audio. Figure $20 tops.
Oh, and they totally left off the power supply and circuitry, and cables (wireless controllers, but do they have recharge cables or use batteries? What about the A/V cables?).
They’re probably getting the RSX chip slightly cheaper than $70. That would be a full wholesale price buying it from Nvidia, but they’re not. They got the design from Nvidia, and are sourcing out the manufacture themselves, then paying Nvidia royatly on shipped consoles (or sharing game royalties, something to that effect).
I’d put Sony’s BOM cost in the $500-550 range for the first run if they have no hard drive. Tack on the cost of manufacture and testing and shipping, of course. They’ll be taking a bath on PS3 for quite awhile, of course. We all knew that. $900 though? It’s hard to believe it from a financial analyst that can’t even add up its own list right. ;)
Analyst made similarly ludicrous claims about production costs for the PS2. Fact is they don’t have any better access to inside information than anyone else with an intarweb connection. Plus these investement firms always seem to assign the stupidest intern they have to come up with a figure. It’s a list of pretty ill informed guesses and there’s no reason anything in the report should be taken seriously.
Don’t most estimates put the 360 in the BOM $500 range though (which seems fairly reasonable to me) ? If so, I would say something in the $600-700 range seems reasonable considering how Sony is dealing with both Cell and the Blu-ray drive.
I dont see how the RSX chip which is supposed to be a version of the 7800 only costs them $70. The thing is as big as the latest CPU’s out there and as complex in design.
Well, Sony fabs their own stuff so they save money by getting chips at cost, and I’d say a $500 BOM is on the high side for the 360.
Well, it’s the 7800 (basically) only at 500MHz and on a 90nm process, which is relatively easy. You should be able to get a LOT of good GPUs per wafer at that speed on 90nm.
7800 cards cost so much because there’s the chip, which Nvidia sells at a profit, and then the high-speed RAM - 256MB of pretty high speed RAM on a 256bit interface - which is sold at a profit. And then they put the board together and sell it at a really significant markup.
Sony’s just contracting a chip partner to build the chips for them, so the costs are much leaner.
You’d be surprised what the actual cost to manufature a high-end graphics chip or $800 CPU is. There’s a huge markup. Huge.\
FWIW, I think the $500 previous estimate of the 360 costs is maybe high. It might be $450 or so for the hard drive version, $380 or so for the core unit.
Once you have your design and your fab in place, that is :)
Oh, sure. Each CPU costs $50 to manufacture, but the FIRST one costs $800 million. ;)
But Sony is paying Nivida for the design on a royalty basis (plus probably some one-time fee they’ve already paid), and TSMC is gonna make the chip, at least at first. For the CPU, IBM is gonna make it out of East Fishkill, and who knows what the costs are associated with that, since the Cell is an IBM/Sony/Toshiba joint venture thing.
One of the great hidden costs with the PS2 that is never really mentioned is how they designed their own graphics chip and built a fab to produce it. It cost like a billion dollars or something. But that was a rediculously huge and complex chip for the time. I think .18 micron, IIRC, with a ton of embedded DRAM (for the time). It would have been a challenge for Intel or IBM to produce. Sony had terrible yeilds on the PS2 graphics chip, and that’s one big reason why the launch quantities were so poor. I seem to remember reading that they eventually sold the plant over to new management, but it’s so hard to find articles from that year online anymore. All the search hits pull up more recent stuff, and some of the sites that carried those articles have changed their databases or whatever and the article’s gone. :/
And made similar claims about the PSP. I wonder whether Sony encourages this sort of speculation, so that the buyer is impressed by all the VALUE he is getting for his money.
I remember way back when the original Playstation was going to cost $800 to $1000 dollars.
I predict the ps3 will: Come out this year and cost $299 for the base model. It will have a live like service that isn’t as good as Xbox 360 Live but is “free” (need the $100 Hard drive add on access it) The launch games will not look as good as those on the 360 but there will be more of them and of more popular brands. The Ps3 will not have production issues like the 360 and avoid significant shortages that still plague the 360. Blue Ray will somehow be crippled in the ps3 to justify it being in a lower cost combo unit.
WTF is this about???
Disagree. The PS3 will have significant production issues. There’s even more new tech in there than there is in the 360, and even more components. Can’t see why Sony would/could do better than MS on getting their pipeline together for launch.
#1 - They’ve been in the hardware business for way longer, and have done orders of magnitude more product launches.
Didn’t stop them from running into product shortages with both the PSP and PS2.
As of Wednesday, MS will have its third complete month of extreme scarcity for the Premium system. Cores are less rare, but that just means they stay in stores for hours rather than minutes. Sony hasn’t had nearly this degree of problems.
Talk at DICE was not optimistic about a 2006 US launch for the PS3. Almost everyone seems convinced that Japan will see it this holiday and we’ll get it Spring 2007. That would shock me, because I can’t see Sony giving Microsoft a second Christmas alone with the 360. But if they really are having the hardware finalization and production problems the people I’ve talked to say they are, Sony may not have a choice in the matter.
If I were them and that situation was the case, I’d rush to get maybe 100,000-200,000 systems made for North America and launch anyway. The shortages would be horrible, but you’d make the PS3 the hot new item and take the luster off the 360 in the mind of the consumer. Since the 360 already had shortage problems in 2005, the customer base probably wouldn’t react as badly as one might think, especially if Sony spun it as “Well, this is just what happens with next gen systems and their cutting edge technology” or something similar.
The article does state the highest BOM estimate I’ve ever seen for the PS3. I don’t know whether it’s accurate or not, but so far I’ll be pleasantly surprised if the system’s MSRP is below $699.99.