Rumor: Slim PS3 on the way?

[ban25]

My feeling is that the PS3 could use an image boost more than anything, and a redesigned, relaunched product at a lower price point will go a long way towards accomplishing that.

 

[patsu]

“The cost reduction since we introduced the PS3is very substantial and this is on schedule,” Oneda-san replied when asked about manufacturing costs. “We don't disclose how much of the PS3, specifically the cost deduction was achieved during the past two years. But that is on schedule.”

“About 70%, roughly speaking,” Oneda-san added when pressed further on the matter.
Although a precise manufacturing cost isn't known, it's widely believed that the PlayStation3 originally cost Sony approximately $800 (£485) per unit. In January 2008 reports surfaced that the manufacturing costs had been reduced by 50% to approximately $400 (£243). Although Sony wouldn't elaborate on exact figures, the 70% decrease suggests that costs have come down to around $240 (£146) per unit.

Source: http://www.totalvideogames.com/PlayStation-3/news/PS3-Manufacturing-Costs-Reduced-By-70-14439.html

 

[Rangers]

Source: http://www.totalvideogames.com/PlayStation-3/news/PS3-Manufacturing-Costs-Reduced-By-70-14439.html

240 per unit? Seems EXTREMELY unlikely, havent Sony executives recently stated several times theyre still losing money on the hardware? And even given a 10% figure, which would mean about $440 (pre-slim, of course)?

Edit found it: http://gizmodo.com/5256091/sonys-ps3-costs-are-still-10-percent-higher-than-ps3s-price

I dont see any way to make sense of the 70% statement literally. Lets say PS3 originally cost $1,000 (much higher than most people would estimate). Then it would currently be costing $300 (much lower than a 399 price point and tons of losses in the videogame segment allow). I'm thinking maybe he meant 70% of the reductions they had planned on at this time, have been achieved.

Also, I think totalvideogames has been known as a dodgy source before but I could be getting them confused with other sites. Anyway, if this is anywhere near true, 299 this fall is back on the table..

 

[patsu]

They claimed to be citing a Sony conference call. If it's true, then we will hear similar translations from other sites.

I think it depends on what they mean by "cost" (or "unit cost"). e.g., Sun Microsystems had at least 6-7 definitions of "average selling price" depending on the context (division).

 

[deepbrown]

240 per unit? Seems EXTREMELY unlikely, havent Sony executives recently stated several times theyre still losing money on the hardware? And even given a 10% figure, which would mean about $440 (pre-slim, of course)?

Edit found it: http://gizmodo.com/5256091/sonys-ps3-costs-are-still-10-percent-higher-than-ps3s-price

I dont see any way to make sense of the 70% statement literally. Lets say PS3 originally cost $1,000 (much higher than most people would estimate). Then it would currently be costing $300 (much lower than a 399 price point and tons of losses in the videogame segment allow). I'm thinking maybe he meant 70% of the reductions they had planned on at this time, have been achieved.

Also, I think totalvideogames has been known as a dodgy source before but I could be getting them confused with other sites. Anyway, if this is anywhere near true, 299 this fall is back on the table..

Uh...but the 70% might be referring to the Slim. According to Sony they've already gone down to 45nm:

“Regarding the reduction of hardware costs, efforts to shrink the Cell/B.E. progressed according to plan as the original 90nm generation gave way to 65nm and then 45nm devices. Through this, as well as through ongoing efforts to reduce the number of components used, Sony will endeavor to further improve profitability.”

And what it sells to consumers is not what is sold to retailers - meaning they've been below the retail price for quite some time (well over a year), but not necessarily the wholesale price.

TheSixthAxis confirm the call btw.

 

[DieH@rd]

240$ is for Slim IMO. Now they finaly have the room for 100$ pricedrop.

 

[Rangers]

Uh...but the 70% might be referring to the Slim. According to Sony they've already gone down to 45nm:

“Regarding the reduction of hardware costs, efforts to shrink the Cell/B.E. progressed according to plan as the original 90nm generation gave way to 65nm and then 45nm devices. Through this, as well as through ongoing efforts to reduce the number of components used, Sony will endeavor to further improve profitability.”

And what it sells to consumers is not what is sold to retailers - meaning they've been below the retail price for quite some time (well over a year), but not necessarily the wholesale price.

TheSixthAxis confirm the call btw.

Then why all the huge losses in the video game division? Why the lack of price cutting? Why the statement in my link?

Also the wholesale price on a console is typically ~$20 less than retail. I know that for a fact. Not a huge amount of money.

240$ is for Slim IMO. Now they finaly have the room for 100$ pricedrop.

If it's really 240, then they will be shooting for $249 MSRP.

 

[Rangers]

Hmm, I found this and I personally haven't really seen this anywhere else before

Earnings call transcript 4th quarter

Richard Kay - Cross Research

That’s very clear thank you. I have one second question. Oneda mentioned that the LCD television could come to profitability this fiscal year, I think second half. Are you able to comment when you think television will break even long-term cumulatively because obviously you''ve had many years of losses already on LCD television? When do you think you''ll cumulatively breakeven on the whole project? And actually same question for PS3 - when will you cumulatively breakeven on PS3 bearing in mind the initial costs you had to put in, which were over 200 billion yen back in fiscal ''06. So breakeven long-term cumulatively for those two products is what I''m interested in.

Gen Tsuchikawa

Yeah for those two key products we are expecting that both the product line will be breakeven on an annualized basis for the next fiscal year, 2010. And in the case of LCD, as I said before, the second half of the fiscal year we are trying to achieve the breakeven. And that''s the same as the Game business, too. This fiscal year still early to talk, but next year more costs reductions will be expected particularly in some of the chips that we are still using, the 65 nano, but in fiscal year 2010 I think that most of the key various sites will use the 45 nano based chip. So in this case the cost of the PlayStation 3 will be drastically changed and the fiscal year 2010 I think we are going to see profit for all those previous years together.

 

[deepbrown]

Hmm, I found this and I personally haven't really seen this anywhere else before

Earnings call transcript 4th quarter

That there seems to be talking about the whole games division and breaking even there, rather than just the PS3 breaking even. They've got a huge amount of overheads - marketing, salaries etc. Just because the PS3 is making a little bit of money, doesn't mean the Games division ITSELF is making money. (I know this is obvious...but just making it clear the difference). They want to make the PS3 even more profitable so they can bring the whole games division out of the red.

 

[Rangers]

That there seems to be talking about the whole games division and breaking even there, rather than just the PS3 breaking even. They've got a huge amount of overheads - marketing, salaries etc. Just because the PS3 is making a little bit of money, doesn't mean the Games division ITSELF is making money. (I know this is obvious...but just making it clear the difference). They want to make the PS3 even more profitable so they can bring the whole games division out of the red.

The PS3 is whats dragging the game division down. Why would PS2, PSP, software, etc be losing money? In fact the PS3 is losing even more money to drag the PS2 profits down, as the PS2 is pure profit for some time.


And what about this link? http://gizmodo.com/5256091/sonys-ps3-costs-are-still-10-percent-higher-than-ps3s-price

 

[deepbrown]

The PS3 is whats dragging the game division down. Why would PS2, PSP, software, etc be losing money?


And what about this link? http://gizmodo.com/5256091/sonys-ps3-costs-are-still-10-percent-higher-than-ps3s-price

Um...I think they're losing money because of all the costs that come with it. Marketing, salaries etc. ...hence the massive restructuring. And that restructuring also costs money. There's also the appreciation of the Yen messing with exchange rates.

IE. they might be 70 per cent down on costs on the Yen, but when you look at it in dollars compared to now and then compared to when the PS3 launched...the PS3's actual price now would be more than $800. Does that make sense? Hm...I'm sure I could say that in clearer English lol Can you do a better job?

 

[Rangers]

Um...I think they're losing money because of all the costs that come with it. Marketing, salaries etc. ...hence the massive restructuring. And that restructuring also costs money. There's also the appreciation of the Yen messing with exchange rates.

IE. they might be 70 per cent down on costs on the Yen, but when you look at it in dollars compared to now and then compared to when the PS3 launched...the PS3's actual price now would be more than $800. Does that make sense? Hm...I'm sure I could say that in clearer English lol Can you do a better job?

Well I dont think so, but if theyre losing money theyre losing money, and it doest really matter why.

I dont think any restructuring costs were in these results. They have to mention stuff like tha and I didn't see it.

Yeah, it's definitely true the yen has been hammering Sony..a lot. It added $70 to the cost of PS3 in effect, I read somewhere.

 

[deepbrown]

Well I dont think so, but if theyre losing money theyre losing money, and it doest really matter why.

I dont think any restructuring costs were in these results. They have to mention stuff like tha and I didn't see it.

Yeah, it's definitely true the yen has been hammering Sony..a lot. It added $70 to the cost of PS3 in effect, I read somewhere.

I think i might be getting confused. Would the price in dollars be more or LESS than $800 now if the Yen is stronger now? I hate exchange rates lol

 

[Shifty Geezer]

As the Yen gets stronger, for each dollar Sony gets in America it's worth less Yen to them in Japan. If we went back to the good old days of the Empire with the whole world using pounds, shillings and pence, we wouldn't have these complications!

 

[deepbrown]

As the Yen gets stronger, for each dollar Sony gets in America it's worth less Yen to them in Japan. If we went back to the good old days of the Empire with the whole world using pounds, shillings and pence, we wouldn't have these complications!

OK, this is only hyperthetical...

but that means that in 2006 if 2000 yen = $800

then now 2000 yen would equal $1000

Correct? That means that doing 70 per cent of $800 is completely irrelevant.

 

[JPT]

OK, this is only hyperthetical...

but that means that in 2006 if 2000 yen = $800

then now 2000 yen would equal $1000

Correct? That means that doing 70 per cent of $800 is completely irrelevant.

Then just do the 70% from the original yen cost instead and then convert to usd after that.

 

[obonicus]

But as CarlB likes to smack into our heads, talking about PS3 costs in dollars doesn't make that much sense.

 

[deepbrown]

Then just do the 70% from the original yen cost instead and then convert to usd after that.

Which begs the question....what was the original Yen cost? lol

 

[Carl B]

The costs should definitely be normalized to yen, and just taken from there. It does a much better job of isolating the effects of exchange rates on profitability on a per region and per 'moment' basis rather than muddying the waters with retroactive application.

 

[deepbrown]

The costs should definitely be normalized to yen, and just taken from there. It does a much better job of isolating the effects of exchange rates on profitability on a per region and per 'moment' basis rather than muddying the waters with retroactive application.

Yes...so what was it in Yen?