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PlayStation 3 Delayed, Over $800?
AWhiteFlame writes "Cnet is reporting that a research report issued by Merrill Lynch suggests that the Sony PlayStation 3's American release may be postponed until 2007. From the article: 'The analyst firm proposed the idea that high costs and Sony's decision to use an 'ambitious new processor architecture--the Cell' is making it look like the company might not be able to meet its goal of getting the PS3 out in the U.S. this year.' Sony did not immediately respond to a request for comment." The official report (pdf) would also seem to indicate that the console will be somewhere in the neighborhood of $900 when it launches.
...the report says basically "we don't know anything, but we think it's hard, so they won't make it."
Right. Remind me to call them nextx time I need random guesswork done.
To clarify: by "intelligent marketing by Sony," I mean, "paying money to the analysist that wrote this piece."
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...more than anything like Merril Lynch is trying to get people to dump Sony stock so they can buy it up, then make a killing if the PS3 matches their REAL expectations. Or maybe I have my tinfoil hat wrapped a little tightly?
Going back to school for entry-level jobs?
Excellent post above about Apple to Sony.
Hype how expensive the machine is and how much good stuff is there, and then make it look like a bargain when they come out as 600 dollars! Look you saved 30%!
Yup. Considering that Sony also owns the rights to all BluRay technology, they will make money in the form of royalty off of every single BluRay disc that is sold in WalMart, Best Buy, Target, etc. BluRay is really what Sony seems to be hedging its bets on, not necessarily the PS3.
The Revolution is definitely coming out before at least thanksgiving, and definitely under $300. Why get somthing with fewer but more expensive games that, all on top of that, costs 2-4 times more?
Wonder what the public key field is for?
Of course, to stay competetive, Sony will never sell the PS3 for what it cost to build it, but this really does put a question mark on how low they can afford to go.
The report also speculates on the ramifications for other companies, such as Nvidia, ATI, EA and others. It's a good read.
The article states that $900 is the cost to Sony. It won't cost that retail, they always take a hit. The original Xbox cost more to make, than it sold for. It's called a loss leader, look it up.
The report comes up with the $900 estimate by summing up cost estimates for each of the components, but its estimates for the prices of those components is overly pessimistic. In particular, it predicts that the Blu-Ray drive will cost $350 initially (!?), that the CPU will cost $230 initially, and that the unit will not be sold at a loss. They don't say how they arrived at those, but $350 for an optical drive in bulk is not believable at all. If Blu-Ray drives cost anywhere near that much, then the PS3 will ship without them. A more reasonable estimate is that the PS3 will cost $500 at launch, and come down to $300 quickly.
You're guilty of the same thing. You don't state why their numbers are not believable, nor how you arrive at your $500 estimate, nor the reasoning for how it would be easy for them to cut the price by 40% quickly.
While xbox 360 is positioned decently well, it hasn't had the landslide success people were expecting. At the price point sony may come in at, and the lateness... nintendo may well regain the home-console throne, at least in numbers. Mass appeal to non-hardcore gamers, low entry cost, *REAL* backwards compatibility are going to make the revolution an easy sell.
a research report issued by Merrill Lynch suggests that the Sony PlayStation 3's American release may be postponed until 2007 [...] The official report (pdf) would also seem to indicate that the console will be somewhere in the neighborhood of $900
Is this the same Merrill Lynch that was accused of lying about the health of corporations such as Worldcom and Enron? The same Merrill Lynch that agreed to pay $100 million in fines? The same Merrill Lynch that may owe several billions of dollars to institutional shareholders and others for gross deception?
Remind me why I, you, or any news outlet for that matter, should have any faith in their statements?
This has always been Ken Kat strategy from day one. Hype the PS3 as a supercomputer and go on record that it will be "expensive." Then when all looks dire (and just in time for E3 '06) expose the true price point for $399 USD -- "Yes $399, to let it go at this price is killing us. Did I mention it's a supercomputer?"
If Sony knows one thing, it's how to hype a product.
mmmmm, these highly trained professional's you speak of seem to have trouble doing simple arithmetic. If you examine the pdf, the prices add up to 800$, not 900$
Quite a misleading headline. Sony wouldn't dream of trying to sell a system for $800 plus. Perhaps that figure is refering to actual cost per unit, I.E how much of a loss they are selling at? A quick google shows that Xbox 360s actual cost is in the $750 range, so this is nothing unexpected, what with all that blu-ray cell chip crap they are supposedly throwing in there...
My guess? This is pure hyperbole, and Sony will have this sucker out by Christmas 2006 at the latest.
The only reason Microsoft is still alive is that they have their massive amounts of other money-printing divisions to support the gaming division while they try to smother the competition.
Sega didn't have that, and ended up having to leave the hardware business because of it.
"Your effort to remain what you are is what limits you."
No. It is not a claim -- per se -- but speculation based on the incredibly large die size. The fact that IBM is ready to ship blade systems in 3q only says that they can get a sufficient supply to meet their expected (very small) market. Sony with the PS3 is quite a different animal. They'll need to manufacture several million units in the first year, which means that any yield problems (even small ones) with the Cell will impact them significantly more than IBM (or other third party Cell blade manufacturers).
The key phrase here is "other participants", i.e., those who actually buy stock, instead of writing about it. They are the market. The analysts could all die tomorrow, and the market would still be there.
I'm surprised you don't realize this, being a "professional economist".
You might be right if these boys were specialist IT analysts, but they aren't they are financial analysts making a series of pretty big assumptions that don't match reality. These are also the folks that hyped the .com as the future and didn't spot the gaming market or mobile markets (don't believe me go and look at the reports from 1999).
So we have the Cell... currently for sale on development boxes... so not quite experimental
We have blue-ray price of $350 a unit, some what odd given that you can already get BURNERS for under $1000. And these are at the low volume end while the PS3 will be high volume.
Then we get the slip until 2007. This is based on the Cell being too new (its in production) and some assumptions.
So in terms of who I'd trust around it? Me I'd go for the IEEE who reckoned that the Cell would be one of the hits of 2006, but hell they are only the most established electronics and computer organisation on the planet.
Don't trust analysts, remember most of them don't beat the market.
An Eye for an Eye will make the whole world blind - Gandhi
PS3 is looking more and more like the Sega Saturn.
If Sony knows one thing, it's how to hype a product.
I think it's more accurate to say "If Kutaragi knows one thing, it's how to hype a product". Until Kutaragi came along, Sony was a very different company: very good industrial design, solid and sometimes innovative technology, understated marketing.
The PS line turned all that on its head, and given other changes which have loosened the company's traditional moorings (e.g. Sony's founder retiring), Sony itself seems to have drifted in that direction too. [It's hardly a sure thing -- apparently the "mainline" management at Sony loathes Kutaragi -- but I guess in the absence of a strong leader, they end up following the money in the end...]
We live, as we dream -- alone....
Instead of $900, result is $800
And before posting about other expenses like storage, packaging... Second result $320 is correct. Meaning in 3 years costs would be the same.
It is a sad world when 7 analysts is not enough for simple addition.
If producers of Numb3rs will be looking for new cast, well Merril Linch are the perfect match for braindead victims.
Signature Pro version 1.13.2-3 release 83.5 beta3try7 after-breakfast edition
Why do people keep quoting this horrible article? Gamecube, PS2, and Xbox all lost money on system sales when they first came out. But when you make something for 5 years, costs tend to go down. Read the financial reports from these companies not some website with no real hard facts.
Merrill Lynch is about as trustworthy as Shadow from FF3: They'd slight their own mama's throat for a dime!
Ex nihilo nihil fit.
The first game title to be released for the Sony PS3 will be titled "Wall Street Fighter". In this multiplayer game, players use a virtual "Internet" to discuss, predict and ultimately manipulate the retail price of unreleased video game consoles, amassing vast fortunes by buying and selling futures.
There's a Starman, waiting in the sky / He'd like to come and meet us, but he hasn't got the time.
It's true sony is taking a bigger risk wiht the ps3 then the ps2 (definately not the psone though--that was hella risky territory for sony with a lot of experimental variables).
Sony is a hardware and R&D company, very different from MS. Just like they did with teh ps2 and psx, sony will have spent several billion (not so much for the psx but definately for the ps2) to setup the chip foundries and other factories to gear up for mass manufacture. Sony's highest costs have always been at the startup of a new console. With teh ps2 they broke even with the one millionth or so console and profits were about $175 or so on teh consoles afterwords.
The only companies in history to have suffered massive losses from hardware costs are Sega and Microsoft. Both of these companies don't produce anywhere near as much of their consoles as sony does. They pay vendors for most of their equipment.
In sony's case there is very little that they aren't producing (like the nvidia graphics chip).
In this case the most costly components listed by ML in the article was the cell processor and the blu-ray drive. The cell processor cost in the article was $230 dollars. But the thing is sony isn'tgoing to pay a fixed cost on the thing, ML just came up with that number out of their asses.
Sony helped fund the cost of the fabs that will be used to produce these with IBM justlike they did with the emotion engine and toshiba. They will spend over a billion early on but after they've produced their 1-2 millionth console they've met the initial cost of setting up the fab which is by far the most expensive part in this.
The blu-ray cost is laugable in almost every way. You can buy full fledged dvd-players nowadays for only $30 dollars @ retail. Going through the supply chains all the way to the manufacturer it costs them what, $22 to produce the whole player unit? Out of that, the pure drive components are what $8-16 USD.
Comparing the cost of a blu-ray players/recorders to what will be inside the ps3 is ludicrous. Since blu-ray was developed by sony they won't be paying royalty's to anyone AND they'll produce the drives themselves. Sure it's going to be moret hen the cost of just using dvd-rom drives. But once again sony is the manufacturer and they'll make the facilities themselves to produce 1-2 million of these babies within the first 12 months (probably much more). $350 per unit is ridiculous price.
Hmmm... Pie...
Now, that's stupid. No, it's not the way your PS broke, it's your post that's stupid.
You cannot believe the service parts price is the actual part price. It's not.
Let's illustrate this with an example. I sold an HP laptop to a client 22 months ago. The wholesale price for that computer was below $800. 4 months ago, coke fried the mainboard. Do you want to know the price for a new mainboard? A whopping $1400, labour excluded.
Should I conclude HP was selling the laptop at a loss? No. The right conclusion is HP does not want to store parts, they'd rather sell you a new computer because storing parts, repairing and so is very costly in logistics and administrative costs. Same for your PS.