Playstation 3 Breaking Even (Cuts costs in half in 1 year)

[Zenien]

the firm has been able to "shrink the PS3's chips and tweak its design," which aided in getting the cost per machine "to around $400 now, from above $800 just before it went on sale in November 2006

http://www.engadget.com/2008/01/12/sony-cuts-playstation-3-production-cost-in-half/

One of the primary reasons listed was 'reduction of parts' so beyond just the motherboard simplification revisions I bet the 400 dollar cost is for the 40 gig PS3 at this point (they still haven't moved to 65nm). I'd bet that they might be making a hairs profit of off the 80 gig.

 

[Havok83]

Was just about to post this. Good news for Sony. They are starting to break even and not lose money off of hardware sold. I can see why they'd push for the 40gb to be the lead version. Its been doing them good since its been released

 

[BatMatt]

one more $100 price drop this summer would do huge numbers for the console I believe

 

[Havok83]

one more $100 price drop this summer would do huge numbers for the console I believe

it would, but I doubt it will happen. Maybe a $50 drop

 

[Joker]

screw the 40 gig version and it's total lack of backwards compatibility...they only cut costs by taking out an integral feature that was one of the things sony fans championed over the xbox from the earlier systems...

 

[Zenien]

Are you saying thatthe EE and GS cost 400 dollars to make? Sony must be losing hundreds on those PS2's that they're selling at 129.99.

 

[WhatsHisFace]

Manufacturing a PS3 costs a lot more than making a PS2.

 

[Timstuff]

one more $100 price drop this summer would do huge numbers for the console I believe

IMO they should either have 3 SKUs like this:

40GB - $349.xx
80GB - $449.xx
120GB - $499.xx

Or, they could drop the 40GB SKU, and pack a 120GB SKU with goodies like an HDMI cable, one of those nifty Jabra Bluetooth headsets that came with Warhawk, and a Blu-Ray remote. The result would be the following options

80GB - $399.xx
120GB - $499.xx

And a final option would be to bring back the 60GB PS3 SKU to replace the 40GB SKU, minus the dedicated emotion engine (it'd have software emulation ala the 80GB), and then have a 120GB SKU replace the 80GB. This would not be an actually price drop, but more of an "increase in value."

60GB - $399.xx
120GB - $449.xx

In any case, we're obviously going to see further price reductions this year. The question is, will Sony opt for controlled obsolescence like they did with the 20GB and 60GB, or will they actually lower the prices for real, like they did with the 80GB and the recent 40GB SKU? I think Sony knows that the lower the "starting price" is for PS3, the more successful it will be. By the end of this year, I think Sony needs to make it their goal to have a $299 PS3 availible.

 

[Devil May Cry]

IMO they should either have 3 SKUs like this:

40GB - $349.xx
80GB - $449.xx
120GB - $499.xx

Or, they could drop the 40GB SKU, and pack a 120GB SKU with goodies like an HDMI cable, one of those nifty Jabra Bluetooth headsets that came with Warhawk, and a Blu-Ray remote. The result would be the following options

80GB - $399.xx
120GB - $499.xx

And a final option would be to bring back the 60GB PS3 SKU to replace the 40GB SKU, minus the dedicated emotion engine (it'd have software emulation ala the 80GB), and then have a 120GB SKU replace the 80GB. This would not be an actually price drop, but more of an "increase in value."

60GB - $399.xx
120GB - $449.xx

In any case, we're obviously going to see further price reductions this year. The question is, will Sony opt for controlled obsolescence like they did with the 20GB and 60GB, or will they actually lower the prices for real, like they did with the 80GB and the recent 40GB SKU? I think Sony knows that the lower the "starting price" is for PS3, the more successful it will be. By the end of this year, I think Sony needs to make it their goal to have a $299 PS3 availible.

They won't stop the 40 gb Sku. It's only 40gb in Japan. I like your idea up top. Just eliminate a 120 gb.

 

[Joker]

Are you saying thatthe EE and GS cost 400 dollars to make? Sony must be losing hundreds on those PS2's that they're selling at 129.99.

No, you're twisting my words. The 60 gig cost $600...they take out the PS2 chipset, and reduce the HDD space, and it's down to $500...so I'm saying that the PS2 chipset probably costs around $50-$75...I dont know where you go the "it costs $400" thing from, but you're an idiot, so, I dont expect it make sense.

 

[Zenien]

I'm not twisting your words boyo, this is what you said.

screw the 40 gig version and it's total lack of backwards compatibility...they only cut costs by taking out an integral feature that was one of the things sony fans championed over the xbox from the earlier systems...

You said "They only cut costs by removing taking out an integral feature" (the EE and GS chipset is what you were refering to).

Now in your current post you go on to cry a little bit, and say "That's not what I said!" When it is exactly what you said. You then go on to say "Omg they probably only saved 50-75 dollars by removing the PS2 components!" (if that considering they could be selling the PS2 at 79 dollars and still break even most likely)

So while you're accusing people of being idiots, you migh want to realize tht what they sell the system at is not the same thing as manufacturing cost of production per unit.

Because if you bothered to read the article, it said that, originally, the PS3 cost 800 dollars to manufacture, and now it costs 400 dollars to manufacture. That's a 400 dollar difference. It would be impossible for them to have made tht difference on simply removing the EE and GS. Litterally.

Your hypocrisy is just icing on the cake.

Oh and they aren't making any real savings on that reduced Harddrive. Guess why they upgraded to 80 gigs in the first place, because 60 gigs and everything below that had bottomed out in price, going to 80 gigs made no financial difference...

This idiot knows how to read, pity you can't.

 

[GFreeman]

What's a "boyo"? Also, does this mean I should wait a little while before picking up a ps3 because there's an imminent price drop?

 

[Havok83]

What's a "boyo"? Also, does this mean I should wait a little while before picking up a ps3 because there's an imminent price drop?

there will always be a price drop. If you see games that you want out now or will be coming soon, just get it

 

[Fading]

IMO they should either have 3 SKUs like this:

40GB - $349.xx
80GB - $449.xx
120GB - $499.xx

Or, they could drop the 40GB SKU, and pack a 120GB SKU with goodies like an HDMI cable, one of those nifty Jabra Bluetooth headsets that came with Warhawk, and a Blu-Ray remote. The result would be the following options

80GB - $399.xx
120GB - $499.xx

And a final option would be to bring back the 60GB PS3 SKU to replace the 40GB SKU, minus the dedicated emotion engine (it'd have software emulation ala the 80GB), and then have a 120GB SKU replace the 80GB. This would not be an actually price drop, but more of an "increase in value."

60GB - $399.xx
120GB - $449.xx

In any case, we're obviously going to see further price reductions this year. The question is, will Sony opt for controlled obsolescence like they did with the 20GB and 60GB, or will they actually lower the prices for real, like they did with the 80GB and the recent 40GB SKU? I think Sony knows that the lower the "starting price" is for PS3, the more successful it will be. By the end of this year, I think Sony needs to make it their goal to have a $299 PS3 availible.

Good ideas, and I like the top one especially. I'd add a few small changes, but other than that I like it -

Strip the 40GB down just a bit and sell it for $300. That way they can have a usual console entry price machine set up for next Christmas. Have the 80GB dropped to $375, and I say $375 as many ppl aren't willing to pay $100 more for an upgrade, but $75 even tho 3/4 of that still seems affordable and the more ppl that opt for the $375 over the $300 I'd imagine the better for Sony. Then have an elite version (the 120GB you mentioned) at $500, and yes include all the bells and whistles, maybe even push it to $550 depending on how much they add. So

40GB entry level PS3 - $300
80GB normal PS3 - $375
120GB elite model PS3 - $500

Because if their selling a none BC PS3 that's stripped down, they might as well sell it for normal entry level.

 

[Timstuff]

True. I think that Sony should make it a priority to get the 40GB PS3 down to $299 by the end of the year.

 

[hippie_hunter]

Considering that Sony is managing to reduce costs rather quickly ($400.00 in a year is pretty damn good) I think a price cut is bound to happen in a couple of months in order to make it cost as much as the Xbox 360.

 

[Zenien]

I don't think we'll see a price drop until the end of 08, if we see one this year. Sony just got to the point where they aren't losing an arm an a leg on every unit sold and they're pretty much burned through most of the money they made off of the PS2 (think about that lol). I bet tat they will have a small price cut later this year in the run up to Christmas,

 

[Devil May Cry]

I don't think we'll see a price drop until the end of 08, if we see one this year. Sony just got to the point where they aren't losing an arm an a leg on every unit sold and they're pretty much burned through most of the money they made off of the PS2 (think about that lol). I bet tat they will have a small price cut later this year in the run up to Christmas,

You think they've burned through that money? Wow. 120 million consoles. I know they reported big losses last year...but THAT big? I guess they were scrambling to find cheaper parts like with the PS2.

Edit: I'm too lazy to create a new topic for this but...

Yesterday in a heated IM discussion about which of the three console makers is going to have the strongest line-up this year, a friend of mine who works at Sony Computer Entertainment Japan blurted out that Sony's internal studios have up their sleeves more than 20 yet-to-be-revealed projects for PlayStation 3.

Intrigued by this I asked if he could give me some examples. Project Siren (makers of the Forbidden Siren franchise), Team Saru (creators of the Ape Escape series) and Team ICO are three of the studios who're getting ready to reveal their new projects this year. After some more pushing, he told me that all he knows about Team ICO is that the team is working on two games, both for PS3.

http://www.n4g.com/ps3/News-99816.aspx

 

[Zenien]

You think they've burned through that money? Wow. 120 million consoles. I know they reported big losses last year...but THAT big? I guess they were scrambling to find cheaper parts like with the PS2.

Actually I haven't like confirmed that but the stats are in

http://forum.pcvsconsole.com/viewthread.php?tid=11760

and

http://forum.pcvsconsole.com/viewthread.php?tid=18820

Well I could be wrong I might confirm it when I have more free time.

It was said on Neogaf and not called out as wrong.

 

[Joker]

I'm not twisting your words boyo, this is what you said.



You said "They only cut costs by removing taking out an integral feature" (the EE and GS chipset is what you were refering to).

Now in your current post you go on to cry a little bit, and say "That's not what I said!" When it is exactly what you said. You then go on to say "Omg they probably only saved 50-75 dollars by removing the PS2 components!" (if that considering they could be selling the PS2 at 79 dollars and still break even most likely)

So while you're accusing people of being idiots, you migh want to realize tht what they sell the system at is not the same thing as manufacturing cost of production per unit.

Because if you bothered to read the article, it said that, originally, the PS3 cost 800 dollars to manufacture, and now it costs 400 dollars to manufacture. That's a 400 dollar difference. It would be impossible for them to have made tht difference on simply removing the EE and GS. Litterally.

Your hypocrisy is just icing on the cake.

Oh and they aren't making any real savings on that reduced Harddrive. Guess why they upgraded to 80 gigs in the first place, because 60 gigs and everything below that had bottomed out in price, going to 80 gigs made no financial difference...

This idiot knows how to read, pity you can't.

ok, "one of the ways they saved money was by cutting out all backwards compatibility"....and if it's not a money saving feature, why did they do it? just for the hell of it?

 

[Timstuff]

They cut out the BC for the 40GB because they wanted people buying more PS3 games for it, not just playing PS2 games. The only reason that the 40GB can't run PS2 games is because they removed one chip that was dirt cheap to produce (not the Emotion engine, which is already gone from the 80GB).

 

[Zenien]

Because it still saved them a nice chunk of change when you consiering they're producing a million of them? Let's say it cost 100 dollars to make the EE and GS in the PS3 (probably less considering they sell PS2 at retail for 129.99) and they're going to produce and sell a million 40 gig PS3's to retailers over the enxt year.

Right?

That's like a billion dollars saved.

I do think that the exclusion of the EE/GS had a nice impact to their bottom line on the 40 gigs, but without all the effort they've put into simplifying and revison parts, theywouldn't be anywhere close to 400 dollars, manufacturing, if they'd kept things static and simply taken out the EE/GS.

 

[Timstuff]

But they already took the Emotion Engine out of the 80GB version, and it plays PS2 games just fine. The EE was what made BC expensive to manufacture before. It's only a matter of system bandwith or something like that, and they intentionally gave the 40GB version less to prohibit it from playing PS2 games. When you're dealing with BC that's largely software-based (as opposed to hardware based, like in the 20GB and 60GB PS3s), the cost is nickels and dimes. Sony themselves admitted a while back that they stripped out BC from the 40GB in order to fuel PS3 game sales, so clearly it's not a matter of money. That, along with cutting out 2 of the USB ports (which again, are nickels and dimes to manufacture) are also a dandy way to enhance the "premium" perception that the 80GB PS3 carries over the 40GB.

 

[Zenien]

TH 80gig still has the GS, the PS2 southbridge, and a lot of he game logic that[s included in the stock PS2. THe EE is run via emulation, but there's still a significant (reltive) cost savings between the 40 gig and the 80 gig. Especially when they're being produced on his scale. The EE/GS are the two most expensive components of the PS2, and when you're selling millions of consoles, and selling them at a loss, any cost savings is a huge cost savings. I'll try to dig up the PS2 parts and Manufacturin cost guid that Sony published a year ago.

 

[KALEL114]

I didn't feel this deserved it's own thread, so I will put it here.
Just rumor, but.....

Rumor: PS3 in Store for Yet Another Price Drop?

Several posters at SlickDeals.net are reporting that the PS3 may have yet another price drop towards the end of the month. Many are rumoring that a $299 PS3 will be announced on January 28. SlickDeals.net is a website dedicated to providing consumers with the latest prices in electronics, breaking the news of both of the previous PS3 price drops and the 360 price drop a few weeks early, along with the CheapAssGamer forums.

Though it does seem early for this to occur, Sony did recently announce that the price of manufacturing of the PS3 did drop from $800 per unit at the launch to $400 currently. This is mainly due to the success of Blu Ray, especially with Warner Bros. going Blu Ray exclusive earlier this month. Now there are also rumors that Paramount found a loophole in their HD DVD exclusivity contract and will be going Blu Ray as well - leaving Universal and Dreamworks as the only remaining HD DVD studios.

Financially, the price cut makes sense, consoles have historically been sold at a loss until the tail end of their lifetime. The only consoles not sold at a loss are the Sega Saturn(sold at the price to manufacture) and the Nintendo Wii(sold at a $100 profit for Nintendo). Nintendo, Microsoft, and Sony make most of its money off of game licensing, not the actual console. For every game released, they developer must pay $10,000 worth of licensing fees to Sony(its traditionally been $20,000 for all 3 companies, but this was another cut Sony made to encourage developers recently). They also make a bulk of their profit from peripherals, like memory cards and controllers.

http://www.n4g.com/ClickOut.aspx?ObjID=102326