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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."
I really think Blu-ray will bite Sony in the ass. I know a lot of people who will be getting a Nintendo Wii or XBox because of that price.
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.
Oh You POS
Information collected from RooKit Marketing suggested gamers were willing to pay that much.
Let's face it, they've figured out that without a girlfriend, we've got money to burn.
Wanna fight ? Bend over, stick your head up your ass, and fight for air.
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? ;)
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.
An Eye for an Eye will make the whole world blind - Gandhi
The game (and music and movie) industry is bizarre, deal with it. If the PS3 is fun and gets a sexy reputation, then people will buy it. If people think it's lame, then they won't buy it. I don't think the price has very much influence.
For me, the fact that they added "motion sensing" at the last minute sounds much more worrying for Sony. It sounds like they realized the Wii was going to beat the PS3 and they had to copy it. I think I will get a Wii, not because it's cheap, but because the controller has great potential for fun gameplay.
Sorry, but you don't know what "proprietary" means. Proprietary means that the format is owned by someone, which it is. The fact that a bunch of big companies got together and formed an association doesn't change that fact.
proprietary
adj.
1. Of, relating to, or suggestive of a proprietor or to proprietors as a group: had proprietary rights; behaved with a proprietary air in his friend's house.
2. Exclusively owned; private: a proprietary hospital.
3. Owned by a private individual or corporation under a trademark or patent: a proprietary drug.
It all depends on which definition you're using. You are assuming definition #3. But it seems clear from the context that the article itself (written by Joystiq?) is using definition #2.
The point is Blu-Ray is no more proprietary than HD-DVD or even regular DVD. The fact that Joystiq used the word at all is implying that Blu-Ray is somehow proprietary in a way that those other formats are not. Otherwise, there'd be no reason to describe it in that manner - I mean the Xbox 360 is using the "proprietary" DVD format and it only costs $300-$400. So this is not a differential between these two systems, and implying that it is is at best biased reporting and at worst just plain incorrect.
It is almost definitely true that the BD drive is one reason why the PS3 is so expensive, but that's just because it's new technology. It's got nothing to do with it being proprietary or not.
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.
Comment forecast: Bits of genius surrounded by a sea of mediocrity.
What percentage of people actually use their consoles as a primary movie player?
People who don't want to buy two? Students? No idea, I just know that we coped for several years with a PS2 as the DVD player.
Doesn't change the fact that the format war does nothing for the consumer whatsoever, hence the pointed tone about proprietary format. The same tone would be taken with HD-DVD, the point is the consumer gets f@#ked again.
So what should Sony be doing, trying to get a large industry group behind their standard to help it.... oh hang on they are doing that... how about trying to use a non-proprietary (not yet Open Source) technology such as Java for the interactivity bits... oh hang on they are doing that.
Let's put it this way. If Microsoft, who had an open choice like Intel, had backed Blu-Ray... do you seriously think there would still be a discussion? Can you think of a SINGLE technical reason to back HD-DVD over Blu-ray if you were Microsoft making that decision, BEYOND considering Sony to be competition?
It isn't the same, and it isn't right to say that consumers always get fucked by these standards wars, often they lead to decent competition that drives the price down, and either leads to a dominant standard (VHS v Betamax) or total compatibility (DVD-R+R etc etc). Monopolar approaches tend to work in markets with lots of standards that need to agree(e.g. WiFi with 802.11x).
Microsoft pushing HD-DVD isn't the same as Sony pushing Blu-ray, one company put energy and investment into inventing and creating something, the other made a political decision.
An Eye for an Eye will make the whole world blind - Gandhi
When first adopters are accustomed to spending $300 for a console launch (later adopters get it at the $150-$200 price point), $600 is quite a lot. Double, in fact. As for the price of a TV,
Then again, most early adopters will already have an HDTV, so they're not factoring that price into the equation. A $200 difference is a lot when you're comparing $400 to $600.
Not necessarily true. Aside from the fact that there are games on 360 that you simply can't play on Xbox or PS2 (like Oblivion or PGR3), just because you don't have HD doesn't mean you won't benefit from the newer system's extra horsepower. More actors on screen, more particle effects, better physics and AI, better frame rates (especially imporant in racing games -- PGR3 on 360 at 60fps is much smoother than Forza on Xbox at 30fps), etc. Sure, you don't get the benefit of higher resolution textures, and you may have to sacrifice some vertical resolution for letterboxing, but outside of first-person shooters where pixel-level accuracy counts you're not going to miss it all that much.
Can you think of a SINGLE technical reason to back HD-DVD over Blu-ray if you were Microsoft making that decision, BEYOND considering Sony to be competition?
I can think of a few off the top of my head:
1) HD-DVD drives are less expensive
2) HD-DVD has a mandatory managed copy requirement
3) HD-DVD doesn't have region coding
4) HD-DVD discs are less expensive to produce
5) HD-DVD discs can be produced with DVD9 content on one side and HD-DVD content on the other (ie: good upgrade story)
6) HD-DVD discs are more fault tolerant than blu-ray
7) Hi-def Movies don't need more than 25 of storage space with modern codecs