PS3 cost discussion *spin-off

[Crossbar]

Here is a new breakdown by iSupply.

Don´t know the validity of it.
However, what I think is quite interesting is that the price of the RSX is so big.
In this price the DDR3 DRAM is included but still it really stands out in my opinion.

However this rhymes pretty well with the fact that the RSX is in line for the next die shrink and the 45 nm version should be in production at Toshibas factories since some time. If the next PS3 revision replaces both the 512 mbit XDR and DDR3 DRAM with 1 Gbit XDR DRAM I think they could shave off another $20 just on the RSX and the memory chips. It will be very interesting to see when it shows up in the PS3.

 

[ErnstH]

I don't think RSX is that expensive (if the listed price is RSX+DDR). Remember that the XDR by itself is almost $40 (4x $9.80). Don't know about current DDR prices though, maybe these are dirt cheap. Of course, Nvidia might just have cut another "good deal".

 

[Crossbar]

I don't think RSX is that expensive (if the listed price is RSX+DDR). Remember that the XDR by itself is almost $40 (4x $9.80). Don't know about current DDR prices though, maybe these are dirt cheap. Of course, Nvidia might just have cut another "good deal".

The XDR cost of $9.80 is actually the total cost for all 4 circuits (i.e. 4 x $2.45) which is still twice the current spot price of 512 Mbit DDR2 memory. The price of GDDR3 memory is very hard to find, but I expect it to be in the range of the XDR memory.

The transition to 1 Gbit XDR with 32 bit data path will shave off some of that cost, it will also reduce heat dissipation.

 

[obonicus]

I don't think much stock is put in the iSuppli breakdowns, in part because they insist on expressing costs in dollars.

 

[liolio]

OT
Why don't they do that for the 360? It would be interesting.
/OT

 

[dobwal]

If you look at the numbers I don't see how anyone doesn't think Sony is not losing money on each PS3 sold in the market. Regardless of what burdens Sony more, the cost of manufacture, licensing or distribution.

Sony shipped 3.2 million PS3, 3.0 million PSP and 1.9 PS2 last quarter. If we assume that the PSP and PS2 are profitable in terms of sales of hardware then the cost of distributing 3.2 million PS3 are eating through the licensing fee generated through the sales of 23.9 million units of PS3 software and the bulk of the 24 million in PS2/PSP software sales unless there are huge costs associated with PSN or Sony's publishing arm. The only problem I see with those representing huge costs is that Sony hasn't really worked to reduce those costs by significantly reducing the development teams.

Doesn't VAT affect manufacturer cost for an importer like Sony? Isn't Sony responsible for paying the majority of VAT for the PS3? VAT isn't paid by the consumers, they are simply helping the retailers, distributors and manufacturers recoup taxes already paid or owed to the gov't. Most of the value of the PS3 has already been added before the PS3 hits the euro market and Im guessing that the raw material and component providers aren't paying an Euro VAT to materials or components sold to Sony in Asia. It seems like Sony would have to account for the majority VAT costs and build that cost into its manufacturing liabilities.

 

[Crossbar]

OT
Why don't they do that for the 360? It would be interesting.
/OT

Latest 360 hardware breakdown I could find. link

The BD drive still has a bit to go before it reaches the DVD drive price range.

 

[DuckThor Evil]

Doesn't VAT affect manufacturer cost for an importer like Sony? Isn't Sony responsible for paying the majority of VAT for the PS3? VAT isn't paid by the consumers, they are simply helping the retailers, distributors and manufacturers recoup taxes already paid or owed to the gov't. Most of the value of the PS3 has already been added before the PS3 hits the euro market and Im guessing that the raw material and component providers aren't paying an Euro VAT to materials or components sold to Sony in Asia. It seems like Sony would have to account for the majority VAT costs and build that cost into its manufacturing liabilities.

If a business imports stuff, they have to pay VAT, but they get it back and it is the customer who ends up paying it. VAT is just a pass through "item" the VAT you pay, you'll get back and the VAT you receive never was yours. VAT basically doesn't cause any costs to businesses, other than maybe they can't ask as high price, because the VAT goes on top of that, and customers might not be willing to pay that much.

 

[gokickrocks]

Sony has not being losing money on each PS3 sold for a few years.

August 24 2009:
Kaz Harai - "It’s well known that Sony loses money on every PS3 it sells. Will that still be the case with the new machine?
If you're just talking about the hardware alone, the quick answer is yes. That makes good headlines, but I don't actually know that that's the true nature of the business that we're all in, whether it's PlayStation, Xbox or the Wii. I think the better indicator is to look at the business as a whole platform, to ask: are you profitable in terms of the hardware, software and peripherals. And the answer to that question is yes on a gross profit level since the last fiscal year."
http://technology.timesonline.co.uk/tol/news/tech_and_web/article6808050.ece

by whole platform, i believe he is referring to the playstation family, ps2 and psp included

if i recall correctly, in every interview with a sony exec, they always mentioned that they expect the ps3 to eventually be profitable...so there was never a year where the ps3 was profitable (i dont know about breaking even, but at the very least it was not profitable...but from the above interview, it implies that it never broke even either)

 

[patsu]

http://ps3.ign.com/articles/105/1055085p1.html

Speaking to Japanese newspaper Nikkei, executive VP of technology Masayuki Chatani discussed the process of shrinking the original PlayStation 3 behemoth into its sleeker design we have today.

"It was pretty tough to squeeze a power-hungry piece of equipment like the PS3, drawing up to 250W, into a case this small, complete with power supply," he said in an interview. "I think it's a very advanced design, and am really proud of the engineers who achieved it. True, the case could have been made even smaller if we'd left the power supply on the outside, but that would have imposed restrictions on transport and use, making it harder to use freely. "

Chatani also noted the inclusion of a harddrive made redesigning the console a bit tougher, adding that remote network storage was considered instead of an internal storage.

...

 

[Crossbar]

http://ps3.ign.com/articles/105/1055085p1.html

Interesting!

Also:

"It is also possible to use Flash memory, or network storage, for example, instead of the HDD. We considered both options, but felt that the price would be too high for the amount of storage capacity the PS3 needs," he added.

Flash is coming, but when depends on how much they think is needed. Could be a fairly small amount if they´ll keep it as an entry level machine meant to be upgradeable with a HDD.

 

[patsu]

The original Nikkei article talks about more stuff:
http://www.gamesindustry.biz/articles/sony-discusses-monthly-online-fees

Sony has once again hinted at plans to charge for online services via the PlayStation Network, specifically mentioning the prospect of monthly fees - although for exactly what products remains unclear.

In an interview with Nikkei Japan, Sony Computer Entertainment executive vice president and chief technology officer Masayuki Chatani was asked how Sony was managing the high costs associated with running a service such as the PlayStation Network.

"We would face difficulties if our business depended solely on the sell-and-forget model. After we sell the hardware, though, we continue to sell products such as content and services," he said.

"We can also accept payment in a growing number of ways," he added. "In addition to single-payment packaged software, there are also schemes like monthly fees or per-item charges."

 

[eastmen]

I don't see how an external drive with a smaller system makes it harder to transport. To me its easier. But whatever.

Also flash is mostl ikely being saved for next gen. 30nm flash will be largely avalible I believe the 64gigs in the ipod touch costs them about $30. It will be many times less in 2012. 64 -128 gigs would be a good entry size for next gen. Would be cheaper and faster than a hardrive most likely and then you can add a hardrive for the more power users.

The only problem with the shrink now is that they are defenseless against a 360 shrink next year. The 360 was already smaller , put a slim line dvd player the cpu , gpu and edram all on one chip plus then an external power supply and perhaps less ram chips ? and you have a very small system imo. Esp compared to the still large ps3 slim

 

[Carl B]

I just thought I'd chime in and say... I'm not feeling those iSuppli numbers at all. It almost feels as if they took the [10% loss] statement extracted from the conference call and reverse-engineered from there. Now of course $300 isn't the price of the PS3 and 10% not even a static figure. I'm with obonicus that dollar denomination just makes it more 'meh' as well.

By the way, what is ~$80 'other components'? Reminds me of some of their off-the-wall nonsense from the first "breakdown" at system launch.

 

[Silent_Buddha]

I just thought I'd chime in and say... I'm not feeling those iSuppli numbers at all. It almost feels as if they took the [10% loss] statement extracted from the conference call and reverse-engineered from there. Now of course $300 isn't the price of the PS3 and 10% not even a static figure. I'm with obonicus that dollar denomination just makes it more 'meh' as well.

By the way, what is ~$80 'other components'? Reminds me of some of their off-the-wall nonsense from the first "breakdown" at system launch.

I wouldn't be surprised if the iSuppli numbers are a bit on the high side. As I doubt their getting any quotes on possible volume/vendor discounts, not possible discounts for long term buying contracts, etc. that are negotiated at the time of purchase.

Then again, there's people assuming Sony is getting 299 USD per console which isn't the case either. I'm guessing they get somewhere between 199-240 USD per PS3 sold give or take a few dollars.

Regards,
SB

 

[Squilliam]

Then again, there's people assuming Sony is getting 299 USD per console which isn't the case either. I'm guessing they get somewhere between 199-240 USD per PS3 sold give or take a few dollars.

Regards,
SB

Would that not be closer to $270 or even $280? I believe the retailer margins are in the order of a couple of % on the console itself and I believe they are the distributors so whilst the shipping cost gets taken out of their tally the console itself gets the full margin.

 

[dobwal]

I've read in a couple of places (don't know how true or not) that in Japan, retailers margin in US currency is 7 dollars for the PS3.

 

[patsu]

I also think that the iSupply numbers may be high. The 2x Blu-ray drive is estimated to cost Sony $66, but LiteOn 4x Blu-ray drive retailed at similar price (or lower). I also saw refurb'ed Sony 2x Blu-ray drive retailing @ $50, and new ones at $75 (Low volume, OEM price).

There were rumors about PC makers trying to negotiate for Blu-ray OEM price to $50 early this year too.

If they are selling at those wholesale and retail prices, the actual cost has to be lower -- especially for PS3 volume.

 

[eastmen]

I also think that the iSupply numbers may be high. The 2x Blu-ray drive is estimated to cost Sony $66, but LiteOn 4x Blu-ray drive retailed at similar price (or lower). I also saw refurb'ed Sony 2x Blu-ray drive retailing @ $50, and new ones at $75 (Low volume, OEM price).

There were rumors about PC makers trying to negotiate for Blu-ray OEM price to $50 early this year too.
If they are selling at those wholesale and retail prices, the actual cost has to be lower -- especially for PS3 volume.

there are more factors at work though. 4x drives are oldand are most likely being clearnced out to make room for the 6 and 8 x drives.

also it depends on when sony did their bulk order. If they ordered earlier in the year they may be paying higher prices. I'm sure sony orders units in the millions and not thousands.

Last thought , doesn't the slim now use a slim bluray drive and aren't the bluray drives slot loader and not tray

 

[patsu]

I believe PS3 uses a lowly 2 x Blu-ray. Anything faster is gravy on top. So I guess they could use EOL'ed drives if they want to. But slim drive does increase the cost. I did forget about that.