Re: ...
DeadmeatGA said:
Instead of Sony paying another company for Computer Chips to put inside their products such as a DVD player, They will put the Cell architecture inside them; this will save them money as they don't have to buy their IC anymore!
Outsourced parts can be significantly cheaper than inhouse parts. This is how Dell went onto become the biggest PC maker in the world, while SGI, DEC, and Cray with inhouse chip and OS went nowhere, because keeping those infrastructure up can be very expensive.
A better managed firm would seek to gain the most return from its investment, in case of Dell by not investing at all. Why do it inhouse when others do it better for less?(Dell notebook and PDA not designed and manufactured by Dell, Dell simply buys those from Taiwan and stick its brand on, and Dell price cannot be matched by other top tier venders with inhouse R&D & manufacturing). Inhouse infrastructure significantly increases the fixed cost so a bnusiness becames less flexible and unable to adjust to sudden market shifts.
That's a big fallacy, since Sony is expected to bleed billions because of CELL.
That is all. That's the point behind putting Cell in all their products, They save billions per year because they don't have to buy IC from another company.
How is Sony as a group saving anything by sticking a $100 CELL into its TV set when a $20 chip from another company will do the same???
Whoa you are right Deadmeat, why should any CE maker produce its own chips ?
After all we have all seen the failure of guys like Samsung that make most if not almost all of the major components they use in-house.
Those losers... and they are only valued at $50+ Billions... hahaha when will they learn.
Dell, btw... operates on quite razor thin margins as well... what makes them rich is the sheer volume of parts they move and that is also the reason why they get special deals from Intel and other CPU makers.
I do not think the Sony brand would work well with the Dell business model, at all...
Either you move to that model or you increase what you make in-house and keep the efficiency high: Samsung does it and they do have bread on the table at every meal.
If you keep having key components manufactured outisde you are paying your competitors R&D and you are never going to be able to get the same profit margn as them: if you buy LCD panels for 15'' monitors from Sharp, it is quite tough to make 15'' LCD monitors cheaper than the equivalent Sharp ones.
I am sure you can understand why.
Right now the main and most efficient Semiconductor centre at Sony is SCE and it is only natural that they are reorganizing around it and giving it funding.
Of course you want Ken Kutaragi and SCE dead, there is no confusion about that.
They will never do anything right in your views, nothing.
Here you are looking like a fool slamming down a console, PlayStation 3, almost 2 years before it is launched.
Of course, the valiant knight of truth as you basically called yourself, vowed to end ignorance have to tell people why PlayStation 3 will be a failure, just like PlayStation 2 was or was supposed to be according to your predictions, they might think you are a fool for calling it so early, but you know better...
Please, wake up man...
How do they save money with CELL ?
Sticking a $15 dollars CELL chip manufactured in-house instead of a $20 chip bought from a third party vendor which really costed him $12 and the other $8 are for R&D of the current product and future ones.
Also, with all the fab space SCE has, they have the capacity of producing more chips for the rest of Sony furtherly saving money and not leaving those 90 nm and 65 nm lines used at non full potential.
Even if we replace the main $25 DSP chip and CPU with a $40 in-house fabbed CELL chip for this device A ( produced by Sony Consumer Electronics ), we will still save money if we can produce more chips in-house: save $25 dollars on other 5 the rest of the chips of the system because you ar eproducing them in-mass in-house and you are all-set, ending up with let's say $50 dollars for the system with components mostly bought outside and $50 dollars for the system with components mostly fabbed in-house.
Same price you would say ? No...
With the $50 dollars you paid for the mostly SCE fabbed system you are paying back also the R&D costs SCE needed for its fabs, thus paying back your own SCE investment.
The reasoning it is simple: to keep fighting hard in the console market SCE has needed to have a very competitive Semiconductor R&D sector ( and important alliances [Toshiba, IBM] ).
In order to do that they need money to be invested.
How can this benefit the rest of Sony ?
So far the rest of Sony took the fat sacks full of cash SCE made and spent them, not even with a lot of efficiency if I have to be honest ( all IMHO ).
Now, there is need of increasing the over-al profit margins and the idea behind CELL and behind sllowing SCE to keep up its Semiconductor investment is to make that kind of progress benefit the rest of Sony in a more creative and proactive way: why cannot the rest of Sony stop fighting and competing against SCE's R&D and we make of an evolved SCE the practical center of our consolidated Semiconductor business and we nuse the excess fab capacity it does have for manufacturing chips to be used in Sony products ? To make it even a sweeter deal, why do not we use chips that SCE already produces for itself in other Sony products ?
Nobody is happy about Sony buying $2+ Billion worth of ICs from competitors and third parties when it could manufacture a good part of them in-house saving money and paying your other sectors R&D instead of paying the competitors' R&D for them.
The whole Microsoft-nVIDIA fight over Xbox components would have allowed Microsoft to lose less money if they had licensed the IP and they were having UMC or TSMC make the chip directly for them.
Another example to show why having more direct control on manufacturing can be helpful.
NOT funny. 
