MS to lose $75 per X360

[Kolgar]

After a quick scan, I think I like jvd's numbers a little better.

Sony KNOWS they can't price this thing at much more than $299. Maybe they'll go $349, or ship a model with a hard drive for $399. But beyond $350 for a vanilla model, they're asking for trouble.

I ALSO don't think they can price PS3 $100 more than 360. That'd be like saying, "Hey, Microsoft, come on in! We don't need all this steenking market share. Take ours, please!"

Finally, I don't think they can drop the price so soon after launch - say, within months, as somebody else suggested. The last thing you want to do is burn your early adopters - especially once you've already made them shell out more than that magic $299 price point you've conditioned them to expect.

 

[jvd]

your right they have to try to stick with year drops not months . So like 8-16 months would be a good time frame from drops .


Although i do belive that for awhile they can keep it at 400$ and sell out here in the states . If they hit in a holiday season . If they do launch this spring hte unit has to be 300$ . Though at 300$ they may end up eating into psp sales

 

[Teasy]

I'm not so sure that Nintendo will release its system at $199.99, I think $249.99 is more likely.

I also think people are making a big mistake dis-counting Revolution (this isn't aimed at you jvd). For all Nintendos words about doing things differently they will have a competetive system. They will have their system selling games, and they will have a lot of third party support.

Also considering what we're hearing in this thread MS won't have the ability (or more accurately the inclination) to throw away billions just to beat the other guy this time around. Which can only help Nintendo compete.

 

[jvd]

i think the ns5 will do great . I think both nintendo and ms are going to grow thier market share while sony looses some of thiers .

However your wrong about ms imo . Ms is still willing to loose money . But they aren't willing to loose it on stupid things . If its true and the x360 is only 375$ to make with the process drop looming at the end of 2006 mabye 2007 that should shave alot of money off the system price and if they are able to keep pace with sony selling systems they may even get away with keeping the console price higher and loose less money .

I think ms fixed alot of thier weaknesses this round .


Nintendo on the other hand i think just hit the mass market with perhaps the greatest idea ever. Anyone i talk to about it love the fact that they can get the classics they grew up on and buy systems with new cutting edge graphics . Its just hard for me to say much about them in this thread beause there is still to much uknown to fairly judge the system

 

[wco81]

Bach: I think some of those will end up being a material source of revenue. Advertising is another opportunity. Sponsorship. As an example, spectator mode. People run (online) tournaments, and people are going to sponsor the tournaments. That's another opportunity for us and for our publishing partners.

So I think the combination of all those different opportunities probably adds up to a meaningful addition to the business model. Any one of them, you'd say, well, that's a segment. But when you add them all up, you say, wow this is going to be a different business than it was before.

[source: http://www.sci-tech-today.com/news/...t-the-Games/story.xhtml?story_id=11300CM6RHJE ]

Talk about depending on unproven revenue models.









(I first found about that interview from here: http://www.rage3d.com/board/showthread.php?t=33816573 )[/quote]

 

[Teasy]

However your wrong about ms imo . Ms is still willing to loose money

I'm sure they'll spend money, just not anywhere near as much as last generation. After all the plan this time around is to be profitable (even if its only a little bit of profit they just don't want to end with a loss this time). So as far as selling consoles I think that's an advantage lost compared to last generation. Of course they're in a better way in many other ways compared to last generation. They have a better designed console which won't lose close to as much as XBox did on hardware over the years. They've also got a foot in the door with gamers. Wether what they've gained from last generation will easily offset the ability to throw money at the situation is something we'll have to wait and see. But either way I'm sure they'll at least do ok.

 

[jvd]

However your wrong about ms imo . Ms is still willing to loose money

According to Allard and Bach this generation is supposed to be a profitable one though, that's the plan. I'm sure they will spend money, but they still want to end the generation in the black. So as far as selling consoles I think that's an advantage lost. Of course they're in a better way in many other ways compared to last generation. Wether what they've gained from last generation will easily offset the ability to throw money at the situation is something we'll have to wait and see. Either way they're going to do ok.

iff the 375$ price is right thats already 50$ less than the xbox (425$ ) . The system should also scale quicker in price than the xbox . So i think while they will take a hit early on that hit will quickly disapear . That was the smart thing about this set up

 

[Teasy]

To be honest I really find the $375 price hard to believe. But I have no doubt that 360 won't lose MS anywhere close to as much money as XBox did.

 

[jvd]

To be honest I really find the $375 price hard to believe. But I have no doubt that 360 won't lose MS anywhere close to as much money as XBox did.

eh i don't think its that far fetched . Its only a 50$ price diffrence from the xbox 1 which we all have heard about the horrible deals that happened there

 

[Teasy]

The component deals for XBox weren't horrible as far as their initial launch costs though. The Nvidia deal was bad because Nvidia weren't passing on cost savings on to MS as the chip became cheaper over the consoles lifespan. But I'm sure Nvidia's initial price on release was very competetive, otherwise they wouldn't have gotten the contract. Same with Intel and all the other suppliers. That's why I'm saying that I can't believe that 360 will be cheaper to produce at launch then XBox was. But at the same time I'm sure that within a couple of years 360 will become cheaper then the original XBox ever was.

 

[Acert93]

I just hope that in MS goal of profitability for fiscal 2007 that they do not sell themselves short in the long run.

Console sales really pick up in the 3rd year as they hit mainstream prices. In the longterm a larger install base will mean more profits. So going for profits too early could limit their longterm success. Staying aggressive early I think will be the key.

As cold as this sounds, it is not only about making a profit but putting a squeeze on the competition. If you know your competitor cannot tolerate as many losses and has a more expensive machine then you hit them where it hurts.

I just hope some genius at MS gets the wise idea that "hey we can break even in 2007" and burn out early. This gen will last until 2010, and maybe even 2011/2012 if the HW fairs well and HW advancements slow down due to process issues. Consoles make money on software. Software sells well on a platform with more consoles sold (unless your name is Nintendo and have a strong handheld market and a ton of 1st party games that sell well).

Same goes for Sony. I hope they do not overprice themselves and make themselves irrelevant to the casual gamer. I doubt they would do this, but there is always that fine line.

But in the era of $300 iPods, maybe a $300 console is finally a mainstream product? It used to be $199 and $149, but maybe the market has grown up?

 

[Carl B]

Microsoft can drop their price to squeeze Sony if they want upon PS3's release, but I see them as losing more per console by doing so - still they might be willing to take that hit. Remember that the costs of console components have much less to do with the amount of time the console has been out and much more to do with the straight process tech available at the time. Meaning, I think that as soon as 65nm comes on both console makers will begin to save a good bit of money. For Microsoft, it may be 9 months after they launch, for Sony, three months. The cost cuts will come at about the same time though, completely independent of who's been out longer.

The 360 will still cost less than the PS3, but I don't believe in the scenario where Microsoft 'forces' Sony to cut prices, thus throttling them. As soon as Microsoft is in a position to make a price cut, presumably through cost cuts, Sony should be in a position to cut their costs as well.

 

[PARANOiA]

I don't think Sony *need* to cut costs for the consumer, though. The PS2 was the least powerful (please don't labour on this point), most expensive machine on the market this gen, and it trounced the other machines this gen.

The other machines undercut its price, but couldn't dent the PS2's momentum and sales.

 

[Acert93]

The 360 will still cost less than the PS3, but I don't believe in the scenario where Microsoft 'forces' Sony to cut prices, thus throttling them. As soon as Microsoft is in a position to make a price cut, presumably through cost cuts, Sony should be in a position to cut their costs as well.

Maybe, maybe not. I think this is the X-factor this generation.

Xbox 360's GPU is 332M transistors, XeCPU is 165M. Total: 497M.

PS3's GPU is 300M and the CPU is 250M (if DD1 as one mentioned). Total: 550M.

They both are very similarly clocked (Xbox 500MHz/3.2GHz; PS3 550MHz/3.2GHz). They both seem to be in the same ballpark. But it will be interesting to see how much die realestate they consume. e.g. eDRAM is much more dense than logic. But then you have the bus. Ht next question is: How much heat does each chip produce and what is the power consumption? And how quickly will these chips be able to be put onto one die?

Both will obviously begin to save money when they get down to 65nm, but whoever can get the GPU and CPU on the same IC will be in a very good position. Without knowing heat and power issues it is hard to say. But I do wonder: Will MS be able to maybe put the CPU and GPU on the same die, and make the eDRAM separate, and then package them together? i.e. instead of fitting a 332M GPU and a 165M CPU, maybe they will go for a 232M GPU and a 165M CPU, and do what they are doing now with the eDRAM? And maybe aim to get them all on one chip at 45nm?

Another issue is memory. The Xbox 360 having a UMA of the same memory I think is a positive. Not only is XDR more expensive, but there are a lot more GDDR3 makers. Allard specifically mentioned reducing the number of DRAM modules, and that may happen quickly.

It is too early to tell who will do what when. Obviously process shrinks will come into play. Abviously the HDD on the Xbox 360 adds some expense, just as WiFi/BR/media ports do on the PS3.


But one advantage MS has in the shrink game is that with the Xbox 360 parts now in production they can begin focusing on moving those parts over to 65nm. RSX is not even completed yet, so they will be a little behind the curve there. And with ATI pushing out two 90nm parts (Xenos and R520) common widsome (which could be totally wrong mind you) would be that they would be more prepared to start looking at their next process change.

But that is still a ways away. But Sony surprised everyone by breaking even with PS2 about a year after launch (US launch? Japanese?) so anything is possible.

 

[Chandler]

I think PS3's cell processor is actually less expensive than the 360's CPU. If not at first, then at least in the long run, when the cell gets implemented in fridges, TVs, clocks, etc. Sony wants to profit, the cell will definately be a cheap piece of hardware.

 

[jvd]

I think PS3's cell processor is actually less expensive than the 360's CPU. If not at first, then at least in the long run, when the cell gets implemented in fridges, TVs, clocks, etc. Sony wants to profit, the cell will definately be a cheap piece of hardware.

I highly doubt that .

first off no one is going to put a 250m tranistor chip in a fridge . I can see a 1x2 cell chip in there but its a diffrent isa and wont affect the price .

The cell chip in the ps3 will allways be more expensive because of its size. There is no other way around that fact . But it will also allways be more powerfull too .

The component deals for XBox weren't horrible as far as their initial launch costs though. The Nvidia deal was bad because Nvidia weren't passing on cost savings on to MS as the chip became cheaper over the consoles lifespan. But I'm sure Nvidia's initial price on release was very competetive, otherwise they wouldn't have gotten the contract. Same with Intel and all the other suppliers. That's why I'm saying that I can't believe that 360 will be cheaper to produce at launch then XBox was. But at the same time I'm sure that within a couple of years 360 will become cheaper then the original XBox ever was.

Well i don't know . remember the cpu is small its only around a 150m transistors if i'm recalling right , the gpu is in two parts which will greatly help yields , there is no sound chip unlike the xbox .

So i don't know , i don't see why it would cost more than the xbox and at the same time i can see why it will cost less. Remember this time around ms is making the deals with the manufacturers and they can get very very nice deals and the hardware isn't actually all that big on the current processes

 

[Carl B]

@Acert:

I see where you're going Acert, but the combined logic on one chip route probably won't be viable until 45nm, as you stated, so not really something that will come into play at the point of initial price drops, which was really the only point I was trying to convey; that Sony will be hot on the heels.

Microsoft probably will begin to focus on the move to 65nm fairly soon after they settle into the 360 launch, but in a way Sony is already working on it, as immediately after the 65nm fab line at Nagasaki becomes operational, Cell and RSX are to be it's sole initial product. So even though Kutagari admits that the Cell and such will likely launch at 90nm, I have no doubt that it is being viewed as a very temporary, and unfortunate, stage the PS3 must endure. Well so anyway, that's my reasoning behind Sony probably being right there behind MS on 65nm - and who knows, maybe ahead.

As for the system on chip solutions, I agree that Microsoft likely enjoys an advantage here as R500 and their CPU seem to communicate well with each other from the get-go, and UMA architecture is condusive to it. Still, without knowing much about RSX, just the fact that the combined EE+GS chip has been of such economic worth to Sony would lead me to believe that this must be a feat they wish to recreate in PS3 as well, and have likely planned for. Obviously if not, that is somethign that will hurt them down the line in their ability to price competetively.

 

[Chandler]

I think PS3's cell processor is actually less expensive than the 360's CPU. If not at first, then at least in the long run, when the cell gets implemented in fridges, TVs, clocks, etc. Sony wants to profit, the cell will definately be a cheap piece of hardware.

I highly doubt that .

first off no one is going to put a 250m tranistor chip in a fridge . I can see a 1x2 cell chip in there but its a diffrent isa and wont affect the price .

The cell chip in the ps3 will allways be more expensive because of its size. There is no other way around that fact . But it will also allways be more powerfull too .

Well, Toshiba will put the Cell CPUs in their TVs and IBM will put the Cell in their workstations. Also because IBM was part of the design of the Cell , they probably aren't charging a whole bunch to Sony for it since it's a huge favor by Sony to IBM for using it. The transistor count difference is about 70 million which is significant but having the 8th coprocessor disabled will help yields quite a bit.

When you add up all the costs together with Blu ray, GPU, etc. I don't think a $299 price point is unachievable. Imo, they should just up it to $350 with a hard drive but we'll see how Sony stands on that.

 

[jvd]

Well, Toshiba will put the Cell CPUs in their TVs and IBM will put the Cell in their workstations

not a 1x8 , i don't see a need for a 250m transistor chip in a tv , mabye a 1x4 or something which again is a diffrent isa . The only place i really see it taking off is servers and even then it will prob be a diffrent version of the cell most likely the dd2

When you add up all the costs together with Blu ray, GPU, etc. I don't think a $299 price point is unachievable. Imo, they should just up it to $350 with a hard drive but we'll see how Sony stands on that.

if the x360 is 375 the ps3 with the bigger parts will be even more expensive what sony sells it to us for isn't really the point of the thread for the most part . I expect 400$ launch for the ps3

 

[Teasy]

Well i don't know . remember the cpu is small its only around a 150m transistors if i'm recalling right , the gpu is in two parts which will greatly help yields , there is no sound chip unlike the xbox .

So i don't know , i don't see why it would cost more than the xbox and at the same time i can see why it will cost less. Remember this time around ms is making the deals with the manufacturers and they can get very very nice deals and the hardware isn't actually all that big on the current processes

You only have to look at how the original XBox stood up to high end PC's on its release and then do the same for 360. XBox 360 is way ahead of the curve compared to XBox. I don't think having the GPU in two parts saves money and whatever the size of the CPU its still extremely high end.