Sony committing career suicide with the new PS3

[Trauma-san]

700 dollar price tag for a system only marginally more powerful than the Xbox 360, which is also overpriced.  Hard to develop for, plus it's likely getting released AFTER the Nintendo Revolution which is slated for fall.  Sony's really shooting themselves in the foot on this one.

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http://www.gamespot.com/news/6144600.html

PS3 launch, price doubts batter Sony stock
Share price sinks 3.6 percent on predictions of $900-per-console manufacturing cost, spring 2007 US launch; contradictory corporate statements follow.
Across the United States, most Americans were relaxing this Monday, courtesy of the long Presidents' Day holiday weekend. Not so across the Pacific in the corporate offices of Sony. The electronics and entertainment giant saw its stock price sink 3.6 percent, dropping to 5,300 yen ($45) per share. The fall affected the entire Tokyo stock market, with the Nikkei index dropping 1.75 percent to 15,437.93 yen ($130.57).

Monday's drop follows a 2.8 percent decline in Sony stock on Friday, after Wall Street stock-brokerage firm Merrill Lynch published a report skeptical of the company's next-generation console plans. It predicted that the launch of the PlayStation 3 console could be delayed by 6 to 12 months from its current spring 2006 window, resulting in an autumn launch in Japan and a late-2006 or early-2007 launch in the US.

"We wrote last November that Sony’s design choices for the PS3 had resulted in an expensive and difficult-to-manufacture product," read the report, "and we think that we're seeing the consequences of those choices play out now. In particular, we think the problem points are the Sony Cell processor and the Blu-ray drive." Merrill Lynch also cited heat-generation issues with PS3 hardware and the far-from-finished state of most games for the platform as factors.

While other analysts have predicted that the PS3 might not hit North America until Q4 2006 or Q1 2007--which would miss the all-important holiday shopping season--Merrill Lynch's stature made many a trader skittish. The fires of unease were fueled further by another component of the report, which predicted that the manufacturing cost of the console could be much higher than previous estimates of around $500 per unit.

"Our updated analysis indicates that the initial bill of [production] materials for PS3 could approach $900," read the report. The report said that the production cost of a single Cell processor will be $230 at launch, with the Blu-ray drive setting Sony back $350 per unit. However, the $900 price tag presumably includes a $100 optional hard drive, as a breakdown of component costs in the report totals just $795.

If the $900 estimate is correct, that means the PS3 would have to sell for around $775-$800 to maintain a $100-$125 per-unit loss similar to that of Microsoft's Xbox 360. If the $795 estimate is correct, the console could sell for around $699--within the range recently forecast by a group of analysts and developers polled by CNN/Money.

Merrill Lynch expects that PS3 production costs will start falling after 2007, when Sony can shift the Cell chip's manufacture from the complex 90nm process to the more cost-effective 65mn process. Scaling Blu-ray to other devices will also bring down the drive's price. Merrill Lynch predicts that the PS3's production cost will fall to $320 in the three years after its launch, by which time the Cell will cost only $60 per unit and the Blu-ray drive only $100 per unit.

In the wake of the report, Sony issued a series of contradictory statements. In Japan, Sony Computer Entertainment spokesperson Kei Sakaguchi flatly denied that there would be any delay to Bloomberg News and other press outlets, saying, "There isn't any change in our plan to release the console in spring 2006."

However, a Sony Computer Entertainment America spokesperson was more cautious when she spoke with USA Today. "We're aiming for spring, but we haven't announced specific regions," she told the daily broadsheet. "We're waiting for [final PS3 specifications] until the last possible minute, but the launch could be pushed back if they're not decided soon."

By Tor Thorsen, Hirohiko Niizumi -- GameSpot
Posted Feb 20, 2006 1:39 pm PT
666 Comments  |  Post a Comment

[Teddy Roosevelt]

If the $900 estimate is correct, that means the PS3 would have to sell for around $775-$800 to maintain a $100-$125 per-unit loss similar to that of Microsoft's Xbox 360. If the $795 estimate is correct, the console could sell for around $699--within the range recently forecast by a group of analysts and developers polled by CNN/Money.

Fuck that, I ain't planing on buying a PS3 anymore if that's true.

[acbaylove]

I ain't buying shit if that's the price.
How is the PSP anyway? Is it worth the price?

[BizzyR.I.P.]

  It's just these so called experts estimating a price tag. I'm not paying attention to any price tags put on the PS3 until they come out of Sony's mouth.

[Sikotic™]

LMFAO @ that article. Sony would never sell a console for $700. If anyone believes that they are the king of all dumbasses.

Now, if Revolution gets released before PS3, then Sony will get fucked since Nintendo is offering something 'Revolution'ary (if ya will) while it seems as if Sony is just crapping out just a more refined PS2.

[The Watcher]

microsoft are selling the xbox 360 for like $600-700 in australia, sony will do the same thing

these consoles are gonna cost them alot to make. microsoft did the same thing with the first xbox, and they hope that they sell enough games to make money on it rather than people pirating them

[js83]

Trauma your assuming all this based on some bullshit info? sony didn't even announce the price for the ps3 yet...and why the fuck would they put a 700 dollar price tag on ps3? sony aint that stupid...

at most, ill bet its gonna be around 500 bucks...even then people are gonna buy it just cuz its SONY...they own the console market and i dont see that changing anytime soon.

[NiCc_FrUm_ThA_nO]

If the $900 estimate is correct, that means the PS3 would have to sell for around $775-$800 to maintain a $100-$125 per-unit loss similar to that of Microsoft's Xbox 360. If the $795 estimate is correct, the console could sell for around $699--within the range recently forecast by a group of analysts and developers polled by CNN/Money.

Fuck that, I ain't planing on buying a PS3 anymore if that's true.

Damn that's alot, fuck it i'll still get it I got 2 jobs I aint even trippin off that.

[Don Jacob]

wow even if it's 900 i ain't buying one til it's 150 or somethin.....shit i'll wait 4 years i don't care

[Trauma-san]

Trauma your assuming all this based on some bullshit info? sony didn't even announce the price for the ps3 yet...and why the fuck would they put a 700 dollar price tag on ps3? sony aint that stupid...

at most, ill bet its gonna be around 500 bucks...even then people are gonna buy it just cuz its SONY...they own the console market and i dont see that changing anytime soon.

Bullshit info that I've known for a year now.  Since the system was first announced, everyone in the industry has been doing the math and Sony can't build the thing for less than 900 bucks.  Now if you think it's a smart business move to sell a system for half of what it costs to build, then that's one thing... but there's no way Sony's gonna survive a 4-500 dollar hit on each system sold.  200 bucks would be more believable.  This thing will drop for around 600 bucks, maybe more.  In my opinion the 360 is too much to pay for a system, much less what Sony wants.

Sony hasn't made an official annoucement because they don't know how to spin it.  It isn't hard to figure out though, the Xbox 360 loses 150 bucks on every system sold, Sony won't allow themselves to lose much more than that. 

[MIC]

^^

Yep, losing $400 on every PS3 would be a suicide.
Of course, they're supposed to make profit by selling games but it'll be really hard to do
unless they rise the licensing fees on games (which would hit developers, who already have to cope with skyrocketing budgets)
or plan to keep PS3 on the market as their main video game system for at least 10 years.

[Trauma-san]

^ As I predicted long before the 360 came out, the 360 will clearly win the 'console war' this time around, and Sony may even lose 2nd place to Nintendo.  Nintendo's Revolution is going to be extremely attractive to gamers, and to developers.  First, it'll have a lower price than either competitor's system, 2nd, it'll cost about half as much to develop for, and third, it has a revolutionary control system that will render every Revolution game exclusive to the system.  If the Revolution has 1 game you like, you'll have to own a Revolution because it'll be impossible to make the game for either other system without the controller.

Of course you may see Sony or Microsoft copy the controler, just like they copied Nintendo's analog stick for the N64... but the controller is so unique it'll be hard to mimic it without being sued. 

[Now_Im_Not_Banned]

A PS3 cost $900 to make? WTF? That shit better take me to the moon...

[Trauma-san]

That's the whole problem.  It doesn't.  Like O has demonstrated with the specs in here before, it's only marginally more powerful than the 360. 

[gav09]

I read in a mag (woz either NUTS or ZOO) that the PS3 woz bout 3 times more powerful than the 360 n that Sony wud definately b sellin em at a loss. But as 4 wen n price, ill guess we'll just hav 2 wait n c wen Sony decide they wanna sell it 2 us!