PS3 cost discussion *spin-off

As shifty said, the retail pricing is determined by supply and demand, and not by manufacturing cost, although nobody would sell drives for less than what they're costing to make obviously. There are many companies making tray drives for PC's, but very few slot drives in very few numbers, so they're naturally more expensive. This has nothing to do with the cost of the slot mechanism, but only market dynamics.

LiteOn would love to sell 10 million BD-ROM drives a year, since PC drives aren't selling anywhere close to the number of PS3's. The fact that the PS3 drive is custom sized and slot loading isn't driving the manufacturing cost up, because when your custom drive is produced in higher quantities than all the standard drives, you realize economies of scale and make them cheaper.

Another portion of the equilibrium is the BDA royalty fees, Sony ends up paying some portion of the BD royalties to itself, in a different division, while this won't make the gaming division's numbers look good, overall the money stays in the company.
 
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First of all, no one is using closeout pricing. Second, of course you can pick any drive off the internet and compare. Drives are commodities and the vast majority of parts used in different drives are identical.

I bet I could take apart a CD drive from 10 years ago and it will have an almost identical tray loading mechanism as a 16x DVD burner you can buy today. I'm sure a slot loading BD drive has a very similar if not identical mechanism to all the other slot loaders out there.

I agree. Slot loading Bluray drives probably call for a premium because its a much smaller market for slot loading versus tray loading drives. A smaller market means a smaller supply and higher sales prices. I don't think the PS3 is affected by this because I doubt if any manufacturers has one line of BR drives slot or traying loading that are moving ~6-8 millon units in the latter half of 09.
 
It would be a good ballpark for the upperbound though (as long as the specs are similar), but you have to find a few different sources. The large volume, OEM price cannot be more than the retail price.

Depends on the drive doesn't it and when sony made the contracts. I doubt sony orders them one at a time or even a thousand at a time. I'm sure they had delievery for qtr 4 production (slim production) before august and the prices they paid for the drives would have been settled back in june .

Also once again they are diffrent drives.

First of all, no one is using closeout pricing. Second, of course you can pick any drive off the internet and compare. Drives are commodities and the vast majority of parts used in different drives are identical.

Pricing old out dated models isn't closed out pricing ? No one has any clue why the drive is $50 as quoted . Or even why other 4x drives are going for 60-70.

I bet I could take apart a CD drive from 10 years ago and it will have an almost identical tray loading mechanism as a 16x DVD burner you can buy today. I'm sure a slot loading BD drive has a very similar if not identical mechanism to all the other slot loaders out there.

Perhaps but if you take apart a tray loading bluray player it wont be identical to a slot loading bluray player. As I've stated the avaliblity of them is extremely low. I've only seen one posted. Of course even in the oem ballpark they will comand a premium because they arne't widely used and may simply not be popular on the pc market.

As shifty said, the retail pricing is determined by supply and demand, and not by manufacturing cost, although nobody would sell drives for less than what they're costing to make obviously. There are many companies making tray drives for PC's, but very few slot drives in very few numbers, so they're naturally more expensive. This has nothing to do with the cost of the slot mechanism, but only market dynamics.

This is simply not true and you may wish to correct it . If a store is sitting on a bunch of older drives that are not selling they have only 1 course of action. Slash prices. If product still doesn't move they will continue to drop the price adn try to recoup as much of the value as possible. In pc world the 4x drives are old and out dated. You can now buy 6 and 8x drives . So of course the drives will be at rock bottom prices. You can't price a 4x drive at $80, $90 when a 8x drive is selling for $110.

LiteOn would love to sell 10 million BD-ROM drives a year, since PC drives aren't selling anywhere close to the number of PS3's. The fact that the PS3 drive is custom sized and slot loading isn't driving the manufacturing cost up, because when your custom drive is produced in higher quantities than all the standard drives, you realize economies of scale and make them cheaper.

The ps3 and ps3 slim use diffrent drives with diffrent dimensions yes ? So let me ask you when the supplier of drives got their first orders on the drives how many drives were already sold ? I will give you your answer ... none.

A new custom drive size , rated at a longer life cycle (because you can bet sony pays for more than a 30-90 day warrenty that an oem drive would come with at retail) will cost more than the oem drive on a standard line which most likely is producing bluray , dvd and cd drives.

Surely in the long run ps3 slim drives will be cheaper for sony than bulk oem drives, but that doesn't mean it will happen at launch. Which is what many of you are forgeting. This is the launch of a new system with new drives in these ps3 slims

I agree. Slot loading Bluray drives probably call for a premium because its a much smaller market for slot loading versus tray loading drives. A smaller market means a smaller supply and higher sales prices. I don't think the PS3 is affected by this because I doubt if any manufacturers has one line of BR drives slot or traying loading that are moving ~6-8 millon units in the latter half of 09.
If no one was producing the slot loaded drive at the dimensions sony wanted then someone would have to change their lines for it. I doubt most of these drives were made in the later half of 09. The things went on sale in the first week of sept. Which means the units were most li,kely made over the summer. The drives had to be done even before that . So your looking at drives that were made or at the very least pricing was set for the order back in qtr 1 of 2009. I know back in june a 4x bluray player was about $80 bucks at the low end(bought one for my sisters pc at college)


You guys are jumping on isupply but man considering people pay for their reports on this stuff I don't see why your all up in arms fighting them.

Pricing that was finalized earlier this year with non standard dimensons and a non standard interface (slot loading) and more durable than an oem (30 day warrenty) drive could easily have cost sony $60+ when they sat down with a supply and hashed it out Remember sony needed delievery of over 5 million of these drives.
 
Here's the same drive at some big retailers, and they're all priced between 55-65 dollars:
http://www.google.com/products/cata...6&show=dd&cid=6607023039682402501&sa=button#p
So they're ALL giving it away for a loss because it's an old drive according to Eastmen, because 8x drives also cost the same. This couldn't be further from the truth, as faster drives require more precision manufacturing.

Another thing some people are forgetting is that Sony isn't contracting the blu-ray drive out to anyone, they are a manufacturer of blu-ray drives, with a vested interest in the Blu-ray technology themselves, they were developing and pushing it for the past 5 years, but they are SOO inept that they can't make a low precision 2X drive themselves for less than the price of a LiteOn 4X drive AT RETAIL.

The reason for the losses is simple, 6 months ago when the slim was being designed, 1 USD bought 100 yen, now it only buys 90.
 
Depends on the drive doesn't it and when sony made the contracts. I doubt sony orders them one at a time or even a thousand at a time. I'm sure they had delievery for qtr 4 production (slim production) before august and the prices they paid for the drives would have been settled back in june .

Of course... but the average unit cost would be cheaper (compared to retail prices). We haven't heard manufacturers complain about BD drive price erosion like in HDTV despite aggressive drop in player price. If Sony orders a second batch a year later, this would bring down the average unit cost further.

In any case, if iSuppli is massaging its numbers for a target ($299 + 10%) cost to match Sony CFO's words, then it's wrong in the first place since that $299 is the retail price, not the BOM cost. Also it is unclear what the CFO meant by manufacturing cost. There are usually a few definitions in the same organization.

So the numbers are suspicious to say the least.

Also once again they are diffrent drives.

Yes, but the point remains. It's just that no one can find a similar spec'ed drive for an apple-to-apple comparison. I doubt a slot loaded drive cost significantly more than a tray load one too. Some of the prices we saw are retail price which should be well above a high volume, OEM price (or at-cost).
 
Perhaps but if you take apart a tray loading bluray player it wont be identical to a slot loading bluray player. As I've stated the avaliblity of them is extremely low. I've only seen one posted. Of course even in the oem ballpark they will comand a premium because they arne't widely used and may simply not be popular on the pc market.

Well duh it won't be identical to a tray loading drive. The loading mechanism on Sony's BD drive will be very similar if not identical to other slot loading drives, which aren't rare at all. Or do you really think Sony designed their drive to have completely different parts for no reason other than to make it more expensive?

You make it sound as if a slot loading drive is sooo difficult and expensive to manufacture, when in fact its not. The wii has a slot loading drive. Every car stereo ever made with a CD/DVD player has a slot loading drive. Most Macs have slot loading drives. Just because they're rare on PCs doesnt mean they're rare at all.
 
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Gasp! They even have slim slot based BD drives.

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link. Great find, not that it really matters in the slot drive price debate. The fact that the Wii has a slot drive should be enough to end that discussion.
 
Gasp! They even have slim slot based BD drives.

pic_s1_bc5600.png


link. Great find, not that it really matters in the slot drive price debate. The fact that the Wii has a slot drive should be enough to end that discussion.

gasp a $150 drive thats already been talked about.
 
Yes, Sony manufactured the blu-ray drive so it's easy (and logical in corporate world) to increase the part manufactured by others divisions of the group. So, yes Sony PS3 division lost money on each PS3, but others Sony division who sell to Sony PS3 division made money.

Thats true, but its highly doubtful that the extra margin is full of fat profit. And given that the PS3 is such a high profile product, some companies with a similar product might be encourage to have such a smaller, less followed division eat losses so that its major division's numbers would more easily digest by shareholders.
 
We recently discussed the price of Flash memory. Here is an article discussing what is happening in that market right now.

Meanwhile, the overall NAND market is recovering after a bad downturn. ''What a difference a year makes,'' said Joseph Unsworth, an analyst with Gartner, in a report. ''After a disastrous 2008, NAND vendors were in despair. But in 2009 rationalism ensued and industry balance was forced into repair. With demand staying robust through most of 2009, vendors' hopes grew, As supply constraints remain, 2010 looks quite strong, as does 2011, too.''


Prices are better as well. ''NAND contract pricing in early December was down slightly across most densities, but compared with December 2008, prices for MLC parts have roughly doubled, and prices for SLC parts have stayed relatively flat. The current price for a 16Gb MLC part is about $4.68, which compares with $2.25 for the same part a year ago,'' he said.


''Not only does this show the disastrous conditions the NAND vendors faced a year ago, but also the severity of the adjustments that were made to rectify the oversupply problem,'' he said.


''The outlook for the remainder of December is that pricing is likely to remain soft, but given optimism during recent channel checks, it appears that prices will remain stable leading into 2010 before sliding again in the second quarter. The year 2010 will be a strong one for NAND vendors with revenue growth of more than 20 percent,'' he said.

I guess the smartphones are helping keeping the price up, however the article also describes Micron and Intels new NAND processes that will help increase their capacity and hopefully help driving down the price in the next year.
 
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