Kutaragi's big plan (Why the PS3 could be priced under $399)

[ihamoitc2005]

Cheap PSP and PS2 manufacture

I didn't say Toshiba fabbed the chip. I said Toshiba designed it. Fabbing a chip yourself doesn't save you THAT much money, at least not as much as KK likes you to believe. Again look at PS2, nothing cheap to manufacture about it. Kinda ironic KK is boasting about designing and fabbing the chips themselves to lower costs yet PS3 is using a GPU designed by Nvidia and a CPU designed mostly by IBM. PS3 sounds like it'll cost more to manufacture than even PS2 which is totally opposite of what he's trying to say.

PSP is not so large chip no? So likely cheap to manufacture. LCD is most expensive component and available at retail for $45.

PS2 is even less manufacturing cost due to lack of LCD. Latest fully-integrated all-in-one chip is very cheap. PSTwo will be like PSOne in later years as very cheap introductory console with game choices of thousands.

Of course, very many other costs in running a console busines such as R&D, marketing, debt, packaging, etc... but in part-fabricating cost aspect, PS2 and PSP are very cheap units.

PS3 will be expensive to manufacture due to very large size of chips and inexperience in fabricating new design of CELL and RSX, just like Xbox360. But in total console division, Sony can match Xbox360 price because of PS2 and PSP hardware and software profits while Microsoft has only Xbox360 software profits and eventually hardware profits.

Overall, Microsoft can accept even more loss because of other divisions profitability and large cash holding but will not lower price too much because lower price does not guarantee more sales. Good example is Gamecube.

 

[rusty]

this whole europe vs US price thing is simple... and the 360 really isn't ripping off europe - a refreshing change.

lets take the premium pack as the example, i'll also use the blanket figure of 17.5% VAT although some european countries have higher than this.

US price = $399 (bear in mind this is before tax, and they will have to pay a variable tax depending on what state they are in) if we take the figure of 17.5% VAT as in the UK/most of europe that comes out at $468.82

UK price = £279.99 ($482.731) including VAT tax at 17.5%

European Price = 399 euros ($470.152) also including VAT.

so there we have a taxed price (assuming an equal 17.5% - the tax rate really isn't microsoft's fault afterall.. if the americans end up paying less than 17.5% tax, blame your own government for making you pay more) of $468.82 for america, $470.15 for Europe and $482.73 for the UK.

Now i'm from the UK and i'm hardly gonna bitch about having to pay an extra 13 or 14 dollars (about 8 quid)... and people who have it priced in euros reeeally shouldn't bitch about it being 2 dollars more. and we are getting a near as dammit simultaneous launch...

compare this with the original xbox launch where it came out at $300 in the US and several months later came out at £300 in the uk and things are just totally different this time around.

 

[hey69]

yup 21% over here in belgium. 399euro for premium pack
16% i believe in germany but the same 399euro price


the biggest difference in price was with the ps2 launch
299$ VS the equavalant of 518 euro in euro currency here in belgium (20750 belgian Frank to be exact . 21% tax included)

but back in those years.. 1.2 euro was 1 us$
now 1.2us$ is 1 euro

that would mean a 299US$ (USA price) VS a 399Us$ (EUROPE PRICE)
100$ difference!
europe helped subsidise USAs ps2 consoles

 

[Platon]

yup 21% over here in belgium. 399euro for premium pack
16% i believe in germany but the same 399euro price


the biggest difference in price was with the ps2 launch
299$ VS the equavalant of 518 euro in euro currency here in belgium (20750 belgian Frank to be exact . 21% tax included)

but back in those years.. 1.2 euro was 1 us$
now 1.2us$ is 1 euro

that would mean a 299US$ (USA price) VS a 399Us$ (EUROPE PRICE)
100$ difference!
europe helped subsidise USAs ps2 consoles

That has always been the case . I wonder how it will be with PS3...

 

[Nesh]

During product launch...highly doubtful.

yes it does.If cost was less MS would have risked to sell more because risk would have been lower.If you want an extreme example to understand the opposite well, imagine if each console costed $10000 to produce.I know its impossible but I am using an extreme example to get the picture better.If that was the case MS would have still sold XBOX360 at a loss due to expectations that in the future it will do better but dont expect that MS would have shipped and produced the same numbers they have now at launch.Like fo every company cost minimisation always play an important role.

If they can ship the same numbers with a manufacturing cost of $10000 why not ship twice the number if the manufacturing cost is only $500?
See the paradox there?

Add on top statistics of how many games at certain price are being sold with each console sold at launch and things are getting worse(very important at estimating how much should be produced if they want to achieve cost minimization).

No company can rely only on expectations.Also from an accounting standpoint, since nobody can predict the future 100% correctly for a company to be safer it is wiser to underestimate the best case scenario, and overestimate the worse case scenario.

 

[Joe DeFuria]

yes it does.If cost was less MS would have risked to sell more because risk would have been lower.

No matter what it costs...there is only so much you can physically produce and distribute.

 

[Phil]

Joe, I replied to your post further up - I think you may have missed it. :smile: thanks

 

[Nesh]

No matter what it costs...there is only so much you can physically produce and distribute.

Ofcourse.Due to cost

 

[dubyateeeff]

Howard S. quote was a misquote but...

However, on closer inspection, the article was actually citing an anonymous source within Sony - a fine detail which the CNN article apparently missed, setting the whole rumour mill rolling once again.

So PS3 is still on for 300$-400$

EDIT: very weird... I dont trust that "hollywood reporter" at all.

 

[mckmas8808]

Howard S. quote was a misquote but...



So PS3 is still on for 300$-400$

EDIT: very weird... I dont trust that "hollywood reporter" at all.

Yeah that story is changing on a daily basis now. But this thread is talking about the news on how Sony's semiconductor business is looking to be one of the best in the industry as of late, which might or might not affect the price of the PS3.

 

[Jov]

Howard S. quote was a misquote but...


So PS3 is still on for 300$-400$

EDIT: very weird... I dont trust that "hollywood reporter" at all.

Not that anyone should trust a "Hollywood reporter" with these things, but it does make you speculate the possibility given how much connection the PS3 (i.e. BR) has with all the big movie publishers.

I would not be be surprised if Sony revealed their PS3 pricing to some publishers to push their case for BR support.

 

[jvd]

Don't see why sony will undercut ms on a product that they will most likely be able to sell out of at a 400$ Price point or even a 500$ price point (esp at launch)


Not only that but the ps2 at launch was not 299$ usd in japan . I believe it was about 349$ (or more been a long time) usd$ at launch and was reduced in price about 6-7 months later for the usa launch .


Anyway sony could sell the ps3 at 200$ , but i don't expect that because from a share holder perspective it makes no sense . Say you have 10k units . Based on past performance you know you can sell out of 10k units at 300$ a pop . Share holders and many others in the company would wnat to push up the price and rake in the money on the limited product . Saving the a price drop in the eyes of the consumer for a media blitz later on in the products life .

That way sony has the 400$ price point , 300$ price point , 200$ price point , 150$ price point and 100$ price point (or any inbetween) instead of just the 300$ , 200$ , 150$ and 100$ .

They also seem not to be shy about offering diffrent skus for thier product (core and bundle for psp in japan) and actually introducing newer and more expensive versions (giga pack for the usa 300$ usd instead of 250$ usd) .

So I don't see why they would introduce a brand new console at 300$ when they have a psp to sell at 250$ or 300$

 

[pc999]

I think they will base the price in the avaliability of the console, I mean the first 2M should sell even at 500$ and after that a first price cut to counter attack XB would made more sense, if they have plenty of consoles then put it a cheaper they can so everyone make a run to stores to get one, and make good money with the games/movies.

 

[rabidrabbit]

...

So I don't see why they would introduce a brand new console at 300$ when they have a psp to sell at 250$ or 300$

PSP pricecut next spring, $150-$200?
Anyway, I don't see why even if the PSP were still $250 why couldn't they price the PS3 $300-$400.

 

[PC-Engine]

A price cut is NOT going to happen in the first 6 months so they will need to stick to the high price if that's the price they plan to launch it at. Premature price cuts will only make for bad PR. The only other way around the sticky situation is to release 2 SKUs like MS.

 

[rabidrabbit]

A price cut is NOT going to happen in the first 6 months so they will need to stick to the high price if that's the price they plan to launch it at. Premature price cuts will only make for bad PR. The only other way around the sticky situation is to release 2 SKUs like MS.

PSP has meen on markets more than 6 months next spring...

 

[PC-Engine]

PSP has meen on markets more than 6 months next spring...

I wasn't talking about PSP...if you had read my post without jumping to point out nonexistent errors you'd would've understood. The fact the words "plan to launch at" and "2 SKUs like MS" point to PS3 apparently didn't click.

 

[rabidrabbit]

Yea sorry, I just assumed cause it was right after my post. no need to get aggressive.

 

[mckmas8808]

A price cut is NOT going to happen in the first 6 months so they will need to stick to the high price if that's the price they plan to launch it at. Premature price cuts will only make for bad PR. The only other way around the sticky situation is to release 2 SKUs like MS.

No you are wrong. Sony could launch with one SKU if they like, but a 2 SKU approach probably is a better choice though.

 

[jvd]

PSP pricecut next spring, $150-$200?
Anyway, I don't see why even if the PSP were still $250 why couldn't they price the PS3 $300-$400.

At the rate they are going i expect to see a 350$ psp

But no i odn't see sony wanting to drop the price much. Perhaps the giga pack would hit 250$ and the regular would hit 200$

As for psp pricing , it will directly be affected by ps3 price . Many people who would have bought a 200 or 250$ psp next year will skip it for a 300$ ps3 .

Fewer will skip it for a 400$ ps3