HD DVD and Blu-ray drives cost over US$400 to build

[expletive]

Sorry for not being clear. What I'm asking is if Cell and RSX had logic built in to handle the decoding for Bluray, or if there isn't any dedicated logic and they're just using the brute force computational power of both to handle the audio and video decoding.

Cell should be plenty on its own to decode HD-DVD or BR codecs. Either of these CPUs should be.

Given the problems with the xbox 360 launch, i.e. the shortages, why wouldn't they start, say, now?

Well in that case, they could launch in Spring...

 

[Natoma]

Well, I think that the PS3 hardware itself will probably be sold at a profit after ~two years or so though. I figure initial losses will be steep-ish, but as 65nm comes on and BD costs start to plummet - and I mean the costswill start to plummet at some point - PS3 will take it's place among previous profitable Sony consoles.

How long did it take for PS2 to turn a profit hardware wise?

 

[Natoma]

Cell should be plenty on its own to decode HD-DVD or BR codecs. Either of these CPUs should be.



Well in that case, they could launch in Spring...

With shortages. I'm asking why they don't begin production well in advance so that rather than having, say, 1 million units at launch, they start 4 months earlier and have 5 million units at launch. Something like that. Shortages resolved. That's what doesn't make sense to me.

For example, MS knew they'd have problems with Xbox 360 supply. Why wouldn't they have started manufacturing 3-6 months earlier to alleviate that supply problem?

Are we so used to absurdly short supplies at launch that this is just an accepted bit of the lifecycle of a console?

 

[randycat99]

What then are the criteria for determining the cost to produce something if not aggregating the costs of the components?

You are asking me to build a better mousetrap? My only intent was to inform that the existing mousetrap isn't an exact science, to begin with, so don't get too sold on one person's value x vs. another one's value y.

The only better way to really broach the subject would be to become Sony and note where/how/what context/by what business deal every component will be acquired through their infrastructure. If somebody outside of Sony really had that level of information and wrote an analysis article about it, there wouldn't be anything to question, but then that would be too good to be true, right?

 

[randycat99]

With shortages. I'm asking why they don't begin production well in advance so that rather than having, say, 1 million units at launch, they start 4 months earlier and have 5 million units at launch. Something like that. Shortages resolved. That's what doesn't make sense to me.

I'm sure there is a storage logistic and capital liability involved in deciding how much can/should be stored practically. Warehouse space isn't free. Security and operations to protect and run that warehouse isn't free, either. Finally, the incidental fire, flood, or natural disaster could make that warehouse of goodies a fatal liability at the drop of a hat. All of those factors become that much more critical, the more you intend to store...and then you won't need any of that (or maybe only a tenth of that) once things get underway as launch date has passed further into history. So that brings to question the justification for all of that preparation that only pays off for a very short and single moment punctuating the beginning of the console's overall lifespan.

 

[Nesh]

Due to market competition, figure that Sony will sell at a loss for a good part of its lifespan, lets say on average they lose 100 per unit over the next 5 years (figuring more at the beginning but less at the end, averaging $100)? With that, if they sell 80 million units, thats 8,000,000,000 lost over its lifespan. EIGHT BILLION. Can Sony really afford to lose that much over the next 5 years? Thats 1.6 billion in losses per year. Forget the games and the demos, this it the biggest piece of info we should be interested in because of its long term ramifications on the market.

A three word answer: Economies of scale

 

[expletive]

A three word answer: Economies of scale

Obviously the BOM will drop in price over time due to EoC, we're debating how long it will take for the console to break even at $149. When youre starting point could be as high as six, seven, or even eight hundred dollars, 149 is a LONG ways off...

 

[Carl B]

Ok that doesn't make sense. Why start production so close to launch? Given the problems with the xbox 360 launch, i.e. the shortages, why wouldn't they start, say, now?

Well I'll happily answer this for you Natoma - it's because they can't start production yet. This BD thing has been a problem in more ways than just price, and SCE and the gang are waiting presently for both BD standards finalization and HDMI whatever-the-hell version finalization as well.

Beyond that I'm sure they're giving it a little bit of leeway to make sure the sourcing channel is good to go before they actually begin production, but I wouldn't be surprised if they start hording the Cell and RSX chips well before they begin formal mass production of the consoles themselves.

How long did it take for PS2 to turn a profit hardware wise?

I forget, but it was one-and-a-half, two years... thereabouts.

 

[Nesh]

Obviously the BOM will drop in price over time due to EoC, we're debating how long it will take for the console to break even at $149. When youre starting point could be as high as six, seven, or even eight hundred dollars, 149 is a LONG ways off...

It doesnt matter. The real catch doesnt fit well with the logic you used.

for example ( of an imaginary product with imaginary elasticities, economies of scale and competition reactions) :
initial Price: $500 losses on hardware: $150

3 months later price $400 losses: $150

3 months later price $300 $100 losses

3 months later price $250 $70 losses

3 months later price $250 $0 losses

3 months later price $250 $10 profit

6 months later $200 $30 profit

6 months later $150 $30 profit


Add also revenues from software and things arent that bad

(mathematical relations in my example could be wrong but I was only trying to give a general idea)

 

[expletive]

It doesnt matter. The real catch doesnt fit well with the logic you used.

for example ( of an imaginary product with imaginary elasticities, economies of scale and competition reactions) :
initial Price: $500 losses on hardware: $150

3 months later price $400 losses: $150

3 months later price $300 $100 losses

3 months later price $250 $70 losses

3 months later price $250 $0 losses

3 months later price $250 $10 profit

6 months later $200 $30 profit

6 months later $150 $30 profit


Add also revenues from software and things arent that bad

(mathematical relations in my example could be wrong but I was only trying to give a general idea)

I understand the concept but i dont think you can just use EoC as carte blanche for price reductions of any CE device produced. Why not just put 1 G of RAM? 2 Cell chips, etc? I mean, after all, we've got EoC to make it all better in a short amount of time. At some point you make product that will not get to a critical price in an appropriate timeframe. A lot of people seem to feel Sony may have done this with the PS3. In the case of the PS3, BR drive propagation is so critical that i think Sony may have been willing to eat more per console but the question is how much?

That aside, the discussion is also about a competitive price advantage betwen the 3 units and it seems that the Revolution/360 will have that up to 3 years into this gen.

 

[one]

It's just like the PS2 business that could actually make a profit, nothing to see here move along.

Oh but one thing, as the PS3 launch was delayed it's at least cheaper than what Merrill Lynch alluded before.