I'd rather discuss the other $2B in losses that Sony incurred, what choices and components were responsible and if they were good decisions.
I said it earlier, and I'll say it again. I think the BD was a good idea. I think they made other poor decisions that resulted in the other $2B loss, one of which was launching earlier than they wanted to in an attempt to counter the 360.
Well I don't think it's that one thing cost too much and another didn't... it's just more along the lines of, here's a console that was to be sold for
x amount of money, and for all that was tossed in, it ended up costing
y amount more to produce.
In the larger scheme of things I think there are a couple of classes of components inside the PS3:
1) Components that were outright wholly optional (B/C, Wi-Fi)
2) Components that were necessary, but may have been priced at a certain premium to available alternatives (Cell, PSU, MoBo)
3) Components that served an ancillary market/function (Blu-ray)
Now remember that Sony
expected PS3 to be lossy anyway upon launch, so on top of whatever initial price target they had in mind, they were willing to spend more than that on components.
Let's say they would have liked to launch at $450, and would have willingly absorbed $100 loss/console at launch, for a burn rate of $1 billion/10M on PS3 install base.
With that (arbitrary/fictional) $550 budget to work with, I can understand where ~$5 Wi-Fi and ~$5 Bluetooth get included as minimal costs that are thought to positively impact the user experience. So I have a hard time criticizing decisions like that.
Now on Cell, Cell is sort of the heart of the initial PS3 design effort. It's almost impossible to quantify that cost as manageable, because it was so integral to the development of the system... even pre-dating the larger system R&D itself. So, whatever the costs associated with Cell, I'd almost consider them a fixed cost rather than a variable we can actually play with. And in terms of investment, the architecture
should pay forward dividends as it gets leveraged into the next console.
So Cell chips vs some 'control' Intel chip... may have cost more on a chip-for-chip basis, but whatever that cost is we're just going to have to toss it in wholesale towards that $550 as a non-variable expense, along with the XDR RAM that it works with.
Decisions that were more fluid but still material expense generators included the decision to use a high quality motherboard and an internal (and internally developed) PFC power supply. Not to mention the massive cooling solution that resulted from the internalizing of all of this.
But it's hard to separate the stuff out in a piecemeal fashion, because the truth is that since they
were going to use PS3 for BD penetration - and just probably out of their own pride in project development to begin with - a quiet and internalized solution was always a must. The discussion of PS3 vs standalones is one thing, but the idea of PS3's appeal as a player in its own right is completely another, and the console would not have had the AV-centric uptake that it had were it with an external PSU and louder than it was (already too loud for some).
And
because it was using new-tech optical drives and IC's like Cell (which is finicky on power delivery), the use of the motherboard and the high-quality PSU were almost further required rather than a true option. Each design decision had a cascading effect on what would be acceptable for other design decisions.
And so then we reach a point where it's either all or nothing; do they launch PS3 as a system that is forced to use the most expensive across a broad range of components to achieve its goals, or do they go cheaper and in so doing scale back the scope and ambitions across the board?
Well, they went for the former, and due to constraints elsewhere in the chain (software development, infrastructure) weren't able to capitalize immediately on even those factors that they initially paid out for so handsomely. For instance, movie store *this* summer instead of the summer of '07.
Anyway... I think the thing with BD is that at any given stage, its exclusion would have lopped off some significant factor in loss. I estimated it at $2 billion, but maybe I was wrong to do so, since there's a number of ways one could look at it. For instance, the fact is that whatever they
wanted to launch the system at and what they finally did for ($500, $600), the spread was much larger than $100. In fact, when you consider that the losses we're discussing here ($3 billion plus the PS2/PSP profit wipeout) are extremely front-loaded in the PS3's life, the deal is obviously that the initial launch PS3's were losing a ton per console. I just
have to think that is mainly due to the BD inclusion, since the other technologies - though new - were being produced on mature(ish) fab technologies.
As time has gone on, we've seen the costs of PS3 manufacture drop precipitously, allowing significant early life cost-cutting (essentially $200) at the same time that the actual loss per console has diminished at an even
greater rate. 65nm Cell, taking B/C out, cheaper cooling... all decent contributors. But the biggest one I'd venture has been the dramatic cost reductions in the BD drive inclusion as the manufacturing and economies of scale on that front have begun to rev up.
So - who knows. But for me the single most significant design decision for the PS3 will always have been the Blu-ray inclusion; without it, they could have launched earlier, priced for less, and have lost less.
But like you, I think it may have (may have!) been the right decision anyway, simply based on the bet Sony had riding on BD's victory at the time.
They'd almost have been better off waiting another year, and launching a console that either used cheaper and more matured tech.. so their costs would have been lower to start, or a console that included more features such as a current-gen GPU instead of the RSX, or additional RAM, or started with larger HDD capacity, etc.. so that it would have been clearly superior to the 360.
It seems to me they split the baby in half with the PS3. If they wanted to rush to market, they still could have done so with BD, just scale down the rest of the feature set.
They'd have been better off waiting another year, or tossing some of the ambition and launching earlier. I agree that the launch was one where events collided to make it as painful as possible... but at the same time that was really just bad luck. If I were in their position, I honestly would have been paralyzed by what course to take as well. BD development was delayed
just long enough, and HD DVD initial pricing reduced drastically enough in advance of the PS3 threat, that essentially Sony had to decide whether to go full-out on BD or not at a time before the economies made sense.
