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.

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.

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

[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.