How the PS3 Hit $600

Joystiq has up an interesting article today, gathering together information from a couple of places to discuss why the PlayStation 3 is so expensive. From the article: "Kutaragi was demoted after being passed over for the role of CEO and, when former Sony Pictures head Howard Stringer assumed the position, the relationship between the content and technology divisions of Sony became even more intimate. Stringer "quickly dubbed the PlayStation 3 as one of the company's 'champion' products." Kutaragi's desire to stratify the console market with Cell technology in effect wed Sony to the unpalatable prospect of charging an unprecedented price. Coupled with Sony's desire to not only push their own content on HD discs, but to control that medium with their proprietary Blu-ray format, the final price was escalated by two very advanced (and very expensive) pieces of Sony technology."

Comments

#1 reason

[From A Far Away Land]

The number one reason Sony's PS3 is so expensive is because they are not customer based anymore, they are "theory" based.

The DRM Rootkit seemed like a good idea in "theory".
A $600 game system seems like a good idea in "theory".
In theory I'm not going to buy the PS3, and neither will billions of other humans because of the price.

Re:#1 reason

[Tango42]

You make a good point - MS is the exact opposite of Sony. In theory, Windows is a crap OS that nobody would ever buy. In practise, they do, though (for completely non-technical reasons).

Something that works both in theory and in practise would be nice...

Poor management

[neuro.slug]

I'm really scared for the PS3. I remember reading a recent comment on /. earlier about Sony's last-minute motion-senseing controller reeking of upper management mandating that said feature go into the product. I have a feeling that this same upper management is going to severely harm what was once a pretty sweet console.

-- n

Low yields on vital PS3 components

[Anonymous Coward]

I have inside information from Sony Electronic Entertainment (posting anonymously for obvious reasons) that yields on some of the components like the graphics chip and Blu-Ray controller chipset are as low as 20-30%. In conjunction with those being new and revolutionary technologies only manufactured in a handful of factories in southeast Asia will no doubt contribute to the $649 price point. Oops, did I just reveal something I shouldn't have? ;)

Pasting for the PS3 because it invents not copies

[MosesJones]

Again... because its technology is too cutting edge and too new and therefore too expensive, would have been much better to go with cheap commodity stuff rather than daring to push the boundaries and actually put some THOUGHT into the product.

But what got me most was this

Coupled with Sony's desire to not only push their own content on HD discs, but to control that medium with their proprietary Blu-ray format.

If the PS3 gets reasonable marketshare then this could be considered its master stroke in 2 years time. While the XBox 360 will need a revision to support HD discs, the PS3 won't.

But what irritates me most is the phrase "their proprietary Blu-ray format". I must have missed the bit where the MS Supported HD-DVD was an open standard with no strings attached. So Sony created an HD disc standard, just like they worked with Phillips on CDs and have created several other professional and consumer format standards, some which flew, some which didn't.

Its a sad state of affairs when Slashdot articles don't even celebrate the invention and the investment, but bitch just about the price and want LESS gadgets in the box, and when the MS supported standard is implicitly suggested to be a more "open" option.

Price Premium for Being a Sony

[reporter]

I am not surprised by the $600 being charged for a Sony Playstation 3. Sony products traditionally command a high price: a competing non-Sony product offering identical functionality costs 25% less. Just look at the prices of televisions, computer monitors, and VCRs from Sony versus Panasonic versus Philips.

What Sony management does not seem to realize is that the American middle class will pay a premium only if the product offers premium quality. Nowadays, I do not see much difference, in quality, between a Sony electronic gadget and, say, a Panasonic electronic gadget. I refuse to pay the Sony premium. Increasingly, other potential and current Sony customers refuse to pay a premium without a corresponding premium in quality. For the year ending on 2006 March 31, the electronics divison of Sony lost $0.6 billion ($1.1 billion - $1.7 billion).

If Sony maintains the $600 price tag, Sony will lose the gaming console market to Microsoft. Armed with a well-funded research division, Microsoft poses a formidable threat to Sony.

P.S.
Curiously, with the fading away of Bell Laboratory as the premier industrial laboratory, Microsoft's research division now assumes the mantle of America's #1 industrial laboratory. It is certainly the coziest laboratory, funded by an almost limitless supply of money from Microsoft.

Re:This will haunt them

[Yaztromo]

That's right, nothing. (Okay, somewone will post another reason to upgrade in a second or two, just to prove me wrong. Bastards. :-) ).

Sorry in advance, but...

I think the sphere where one or the other (or both) will really take off is in computing devices. True, there are still a lot of people out there who don't even have DVD burners (nevermind dual layer DVD burners), but I can see the need for very large offline storage capacity by computer users ensuring that one or both of these standards does indeed take off. Who wouldn't want a single disc that can store up to 200GB of data (which, according to WikiPedia is the current maximum achieved thus far -- whether or not such discs will be available to the general public anytime soon at a reasonable price is anyones guess)?

We'll quickly get to a point where a variety of device types will be manufactured and released that use either standard -- computer optical drives, game consoles, video players -- and it only takes one of these to really take off for the others to follow (as there is a certain cost savings and end-user convienence in the long run to have all of these devices using compatible storage technologies). Indeed, assuming production of the 405nm blue-violet lasers really ramps up, we may get to a point where the red lasers needed for DVDs and CDs is actually more expensive to manufacture, at which point people needing to replace older equipment will simply go with the newer standard (particularly if the units in question are backward compatible, or in situations where backwards compatibility is unnecessary).

I personally don't care about BlueRay or HD-DVD for video at this point -- I have a very nice Standard-Def TV, and don't really have the spare cash laying around to replace it with an HD unit. I likewise don't currently care about them for gaming -- my PS2 still works just fine, and has a ton of really good games I haven't finished exploring as it is (as I rarely have time to sit down and play much of anything as it is). However, being able to dump 25GB (or more) of data to a single optical disc on my computer does appeal to me quite a bit, and I'm looking forward to the day when Apple starts including BlueRay drives in their MacBooks (hopefully that day will come before the next time I need to upgrade my system :) ).

Yaz.

Yaz.

eBay 'em

[MBCook]

So many stores simply didn't sell 360s because they eBayed their entire stock. I don't see why Sony doesn't do the same.

Just set a price. A DECENT price. $400.

Then say "the first two shipments will be sold all on eBay by us. Bidding starts now."

The fanboys and early adopters who are willing to shell out will drive all the systems up to $900 or more. Sony will sell 'em all, they'll make a profit (surely PS3s don't cost THAT much to make), and those of us who will wait for a more reasonable price will get it later.

Instead, they're charging EVERYONE $600. They will sell fewer to "normal" people, and they won't get any of those insane profit margins that eBaying the first two shippment would get them. Sony is worse off, the average joe is worse off.

It's simple economics. If you have a hot product, why fuss with stores and go straight to a market decided price (with a minimum, of course) by eBaying them for a while. I'm sure eBay would cut you a huge deal on the auction.

Heck, you're Sony. You can auction them yourself off your site.

But instead of charging $400 and getting tons of proffit from the people willing to pay $1500, you're charging $600 and getting a large loss.

Genius.

Re:This will haunt them

[Ucklak]

At this point I feel that the HD-DVD/Blu-Ray debate is going to go the way of laserdisc.

Everyone will know that the quailty is better but most people won't care, at least common people who buy the large flat panel TVs and watch content with the wrong aspect ratio on it.
Videophiles will buy it along with the $80 HDMI cables but I don't ever seem to remember Wal*mart carring any title on laserdisc in their stores.

I thought I was going to buy into the HD formats but it is a mess right now to the point that I just don't care anymore about it.
As somewhat of a purist, I was waiting for SED units with 1080p but at this point, if I have to buy a new TV (because my color is starting to fade), I will settle for 720p and stick with regular DVD's.

STOP USING LOGIC!

[SmallFurryCreature]

Geez, you might as well point out that 600 dollars would buy you 1/4th of a quad sli setup. Buy you the CPU of a top gaming rig. Is about half the price of a video iPod (wich by the way is more expensive AND less powerfull AND has a smaller screen AND supports fewer codecs then its rivals).

There is a great desire among slashdotters to see Sony fail. They can't really fault the hardware so they got to focus on the price and common sense be damned.

The PS3 not having as innovative a controller as the Wii. Neither does the 360. You don't hear people about that.

The cell is actually a really powefull piece of tech so you can't make claims that it is underpowered or something.

The PS3 will fail or succeed based on wether it can have games that are worth the price. Can the hardware be put to real use and can we get games that blast anything on the 360/PC away? So far nothing is showing up that impresses me but then none of the consoles impress me.

The games don't really have to innovative. Give me F.E.A.R and just use that massive CPU to put 60 ai's in the game at the same time. That would sell me. Well if I can use a mouse with it.

Oh just give me a PS3 with linux and an open spec to the hardware.

Re:This will haunt them

[plasmacutter]

large bulk data storage should not be done on optical meda.

it already takes ages to burn off 4.4 gigs onto single layer dvd-rs.

how long will it take for 25-45 gigs?

then once you get it off.. all your eggs are in one very fragile and irrepairable disk.

dogs step on it and *snap* its gone. oh you wanted to update that rough draft of a book you backed up? too bad, you now have to burn back 45 gigs of data!

I'm going with firewired hard drives or multivolume parity based raid arrays when my needs exceed the bounds of traditional dvd-rs. at least then i can maintain, alter, and repair my data once it's moved off my main system.

I think Sony will pull it off

[DumbSwede]

I think the PS3 is coming out at just the right time and price point for Sony. HDTVs are flying off the shelves now, this being the first year HDTV sales exceed analog TV. The point of Blu-Ray in the very near future will be as a strong competitor to going to the Movie Theater. In fact if Blu-Ray truly supports 1080P and not just 1080P upconverted from 24fps but full-blown 60fps then in many/most cases the viewing experience will be far better than your average Ciniplex.

I've said this before, but I'll say it again. If Sony really wants to get early adopters on board they should try to get the IMAX catalog converted to 60fps 1080P as quickly as possible, that and start shooting new movies in 60fps in an IMAX-lite version -- it would be fairly easy to adapt 24fps cinema equipment to 60fps. Pans would loose their jitter, double vision look. Action sequences would seem more realistic.

Now it maybe that some future hyper-internet will support HDTV on demand, but for the next 5 years Blu-Ray will offer the best cheapest delivery system despite what Bill Gates has to say on the subject -- that and Hollywood's reluctance to distribute on anything other than a physical medium.

One last note about visual quality, I recently watched "Passage to India" (shot in 70mm) in HDTV. The quality was glorious. This because the graininess of standard 35mm confuses HD compression and robs the final mpeg of the resolution it is really capable of. Films shot either direct to HD, with HD-video cameras, or converted from 70mm prints really show the real potential image clarity of HD. Hollywood will soon have to start factoring image quality of HD viewing into account when shooting new content.

Re:This will haunt them

[rolfwind]

As such, judging the new media based on existing media may not be valid. We'll have to wait and see. It is worth noting that Durabis can be used on CDs and DVDs as well -- hopefully we'll eventually see some (and at reasonable prices) so that a longetivity comparison can be done between them.

You can get scratchproof DVD-Rs already.

http://froogle.google.com/froogle?q=dvd+scratchpro of&btnG=Search

I bought some under $1 a piece online after I found out that 1 out of every 3 backup DVDs didn't work because of scratches (not because of faulty burning nor age).

Up to now, it works fairly well. Now, they claim it stands up to screwdriver or steelwool, I don't know about that, possibly.

But none of those extensively used backup DVD-Rs are even scratched slightly (40+ of these DVDs). And there are no fingerprints because I can take a paper towel and clean them - good as new! On a normal DVD this would definitely cause scratches.

Now I only wish they covered my DVD movies in this stuff. Why the industry doesn't is beyond my guess. Perhaps they want to force me to buy their movies multiple times (which I won't). Someone gave me Pirates of the Carribean brand new a while back and that just died of a multitude of scratches - don't even know how it got on there:(