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Breaking Down the Dropping Parts Cost for Sony's PS3

Posted by timothy on from the wait-until-it's-all-one-chip dept.

will_die writes "The people at iSuppli have taken apart an October 2008 version of the PlayStation 3 to create a bill of materials, along with providing a comparison to original PS3. The article provides information about the changes Sony has made. One of the big ones was that the hardware has gone from costing $690.23 to the current price of $448.73. This was done using a combination of removing parts (currently 2,820 vs. the original 4,048), cutting the cost of the CPU ($46.46 vs. $64.40), and cutting the cost of the graphics processor to $58.01 from $83.17."

29 of 302 comments (clear)

  1. Sony needs to... by GPLDAN · · Score: 5, Insightful

    It still precludes them from selling at $299, which is where marketing data is suggesting they need to go to compete against Xbox.

    PS3 is being outsold by a good margin month to month, which means market share is dwindling (although objectively there are more PS3s in the world, which makes the equation for game developers shift) - and they seem to be losing developer mind share, as evidenced by the fact that there are few games that are PS3 exclusive. Most importantly and shockingly, Microsoft is getting Japanese game developers to come over to Xbox, where that model simply didn't exist in the PS2 days.

    Sony needs about 4-5 more Metal Gear Solid like titles, and they really need to work out the bugs with online play. I don't use my PS3 online, but from what I am to understand, it's not even close to Xbox live.

    1. Re:Sony needs to... by jellomizer · · Score: 5, Insightful

      They still need to make money.
      If you sell at a loss you don't make it up in volume, you just create a larger loss. I am not sure why people in slashdot never think of this concept that a for profit company kinda needs to make profit. Selling at a loss doesn't create profit. Sony is better off trying to prove that the Play Station is worth the cost, vs. selling at a loss. Even if they don't make #1 seller for the PS 3 they will make money from their units sold. And perhaps the PS 4 can get back.

      --
      If something is so important that you feel the need to post it on the internet... It probably isn't that important.
    2. Re:Sony needs to... by repvik · · Score: 3, Insightful

      They can still make money by selling the console at a loss. They just need to sell enough PS3s to create a large enough market for games.

    3. Re:Sony needs to... by F-3582 · · Score: 5, Interesting

      No. GPLDAN just used the word the wrong way. What he really meant was that while the absolute number of PS3s sold to customers are going up - more people buying than returning - the relative numbers (=market share) goes down, because the competitors keep outselling it.

      What I'd like to know is the real install base of the three consoles. You know, not every Xbox360 sold is actually going to a new customer due to a so-called RROD phenomenon. Is there any good data to clear that up?

    4. Re:Sony needs to... by tilandal · · Score: 3, Insightful

      It is a myth that you can sell consoles for a large loss and make up for that in games. No console has ever had an attach rate high enough to take a $150 loss on each unit and still make money. This is not even factoring in shipping, support, development and operating expenses.

    5. Re:Sony needs to... by elrous0 · · Score: 3, Informative

      Actually, if you read the actual SALES numbers (not the "shipped" numbers Sony likes to obfuscate with), you'll see that Sony is in third place in both month-to-month sales and in overall market share.

      --
      SJW: Someone who has run out of real oppression, and has to fake it.
    6. Re:Sony needs to... by Chuck+Chunder · · Score: 4, Insightful

      That is slightly modified for Sony and the PS3 as it pretty much won them the format war for HD video.

      I don't know how you'd begin to calculate what that is/will be "worth" to them. Plus there are additional revenue streams these days (ie online purchases) that don't effect attach rate but could bring a lot of profit.

      That said I think the Nintendo model makes a lot more sense.

      --
      Boffoonery - downloadable Comedy Benefit for Bletchley Park
    7. Re:Sony needs to... by fermion · · Score: 3, Interesting
      It has very little to with price, it has to do with games. One thing that MS is good at is making it easy for developers to create software. Combined with the reality that most developers are familiar with MS dog food, and one does have a situation where MS can get games out. People buy consoles to play games on, not to have a pretty box in their home.

      The WSJ has the same take on the PS3. It is doomed. I am not so sure. Sony always plays to the big picture, is always, as the say in politics, on script. Sony has a lot of different interest, but what is interesting is that all these interests seem to play together, none of them go off script just because it might mean more profit in the unit. For instance, the MP3 players did not sweep the market due to the fact that Sony wanted to protect it's content interests and push the memory card standard. Some might call that a mistake, others might have said it would have been a mistake to stab other divisions in the back by doing otherwise.

      So what has happened here. MS built a game console with very good games that they could sell relatively cheaply. Now, dollar for dollar it does not do so well as the WII, which it competes at the entry price level, is still selling more that the XBox. Wii sales doubled, Xbox relatively flat. To be clear, Wii sold twice as many units as XBox, and given street prices, many paid more for the Wii. OTOH, XBox games seems to be selling more. To make it cheap it did not include a big HD or a dvd drive. In effect, MS gave up the living room to save game console. But is likely not to even have the lions share of the game console market.

      Sony used an integrated strategy. The built a more expensive console, but made it a complete unit, with blu ray. I think that many would agree that the blu ray decision was a factor in blu ray winning the format wars, and that this has long term strategic significance to Sony, most specifically in keeping the living room away from MS, who bet on HD DVD.

      So Xbox likely has fewer consoles out there than Wii. Both are primed for streaming media, and not all XBox 360 are capable of playing stored movies, or at least not a lot of them. The PS3 is half in number, but each one is ready to play a new, expensive, and sometimes Sony generated blu ray disc. I think MS continues on it's way to win the battle but lose the war.

      --
      "She's a scientist and a lesbian. She's not going to let it slide." Orphan Black
    8. Re:Sony needs to... by EastCoastSurfer · · Score: 3, Insightful

      Consoles are a tricky thing. If they sold every PS3 at a decent profit margin then very few would sell and that in turn would lead to less games being developed. My guess is that they have a curve of cost vs. sales price. Originally they sell them at a loss to get them out there with the understanding that over time their input costs will drop and they'll eventually be on the positive side of the curve. Look at the PS2. They sell for $100 now I think. I'd be curious to see how much one of those actually costs to make now. At this point their profit margin on a single PS2 is probably pretty high.

    9. Re:Sony needs to... by Sleepy · · Score: 5, Informative

      >Actually I just bought a brand new PS3 from Sony for $250.

      I did the same exact thing last year for $299, got the 40GB model. I bought the PS3 mainly for the BluRay player.

      I did not WANT a credit card out of the deal (even if it is a Chase card), but I read the fine print:
        $100 off a PS3,
          NO INTEREST 12 months..
          AND no yearly card fee?

      I paid off the PS3 early at 10 months, the card is blank, and soon to be canceled. I told others, but no one believed the terms and I know 3 people who paid full price anyways. Wacky..

    10. Re:Sony needs to... by EastCoastSurfer · · Score: 5, Insightful

      even the Wii will probably fall short unless it gets real games.

      People keep saying this while the Wiis market share keeps growing. I know 3 families that got Wiis for Christmas. All of these families were in the anti-video game crowd. Everyone one of them seems to enjoy their Wii. One friend of mine was excited about it because his wife goes..."it's great we can download the old nintendo games, because new games are too complicated to play."

      I have played games since I was a kid and it's easy to miss just how appealing the Wii and its lack of 'real games' is to an apparently large majority of people.

    11. Re:Sony needs to... by Sleepy · · Score: 4, Interesting

      >I think that many would agree that the blu ray decision was a factor in blu ray winning the format wars, and that this has long term strategic significance to Sony, most specifically in keeping the living room away from MS, who bet on HD DVD.

      As far as Microsoft's bet... Microsoft didn't bet anything_ on HD-DVD:
      1) They just offered an add-on player and let their fanboys bet THEIR money on HD-DVD.
      2) They threw a hundred mil or so at Toshiba. Toshiba lost a LOT of standing with consumers.

      Toshiba's reputation sucks now... ask folks who bought last year's Walmart Toshiba HD-DVD players and all the movies they could. Funny how this debacle does not touch Microsoft any.

      I don't think Microsoft wanted either format to gain critical mass - wide and early adoption is a threat to Microsoft's goal of 'services', including pay per view and digital downloads. Microsoft set HD video back by a year, that's all they got and that's all they wanted.

    12. Re:Sony needs to... by dave562 · · Score: 3, Insightful

      At this point in the life of the Metal Gear series, most of the people who are playing the game for the story. They are playing for those long, drawn out cut scenes. They aren't buying a video game, so much as they are buying a movie that they get to control a part of. Grand Theft Auto is very similar. They seem to have focused primarily on the story. I'm really disappointed with the lack of challenge/difficulty in GTA IV. They have either made the game much easier, or it's just much easier since I stopped smoking pot. It's probably a combination of the two. From a storyline point of view though, GTA IV is really good. On the PS3 the game world is absolutely amazing. The weather, the lighting, the sound, the physics, everything. The game is so detailed that if you are listening to the radio when your cell phone rings, it makes that buzzing sound a second before it rings.. just like if you have your real cell phone too close unshielded PC speaker wires.

    13. Re:Sony needs to... by cowscows · · Score: 3, Insightful

      Luckily for Nintendo they've already made a decent product selling the Wii itself. They're making money faster than they can count it, and Wii's are selling just as quickly as they were two years ago (maybe even faster since availability is somewhat better) I don't think they care in the least if you buy an Xbox360 to sit next to your Wii.

      --

      One time I threw a brick at a duck.

    14. Re:Sony needs to... by Narishma · · Score: 3, Informative

      I don't know why you got modded informative but that figure you gave for LBP's sales is totally inaccurate. The game sold more than 1.5 million copies world wide and is still selling decently (at least in Europe) due to the recent holiday ads.

      --
      Mada mada dane.
    15. Re:Sony needs to... by phantomlord · · Score: 4, Informative

      I'm 31 and have been gaming since I was about 4 years old and got a knockoff Atari. I later transitioned to the NES and then SNES. I remember the Neo-Geo being all the rage because of the awesome 24 bit graphics (along with an insane price tag and games that cost as an entire SNES). I happily kept playing along on my consoles anyway, even still digging out the Atari for some good games despite the blocky graphics. Eventually, I switched from console gaming to PC gaming mostly due to the old AD&D CRPGs. By the time Doom 2 came out, I was gaming exclusively on the PC. I dual booted for a while until Loki came around and I got to play commercial games in Linux. To this day, I'm still content playing the games that run in Linux and I've watched a hundred games get hyped for months leading up to their release by Windows users and then forgotten a month later. It seems a lot of games are made to be consumed and most hardcore gamers need to get their fix by going from the current hyped game to the next hyped game as soon as the studios can rush them out.

      I bought a Wii the week they came out and I've got 14 game sitting on my shelf. I play what I find fun, not what gets all the buzz. After all, I'm the only one that can truly determine my happiness because if I let others determine it for me, well, they're living my life, I'm not living my own. So yeah, I see the commercials for "HypedGame 7 only on PS360!" and yawn. Big deal. Remember how cool Assassin's Creed was going to be? Or the hype of Heavenly Sword and how that was going to launch the PS3 into the lead for this generation? When was the last time either of those games were even mentioned? I haven't played either and, you know what, I didn't miss them. They were hyped, summarily beaten in hours, and forgotten by the hardcores.

      It kinda reminds me of my EverCrack days, where the hardcore guilds would do everything they could to conquer the content as fast as possible, meaning devs were always working on new content to keep the hardcores happy, bugs went unfixed and the less hardcore raiders (not to mention the purely casual gamers) were completely ignored. It got to the point where most of the people playing the game never got to see even half the content in the game all to keep the hardcore junkies hooked and needing a fix.

      Taking that back to the broader video game subject, the hardcore gamers are just moving from one big budget game to the next with very few really good games out there... and I think that's exactly the opposite of where we need to be. Yes, contemporary graphics are a good thing, but should as much effort go into rendering a rippled water reflection in a fountain that you're going to spend a half second running by as developers put into making the game actually fun, memorable and replayable? If I want perfect reality, I'll look out my window. I play games to have fun. And that... is what Nintendo is trying to tap into, making gmaes that are fun for a lot of people rather than a 30 second "gee whiz, look at that!" for a few people. And you know what? That's fine by me... which is why I'll stick with my Wii instead of getting caught up in the hype of the next XBox3 game.

      --
      Don't leave your mind so open that your brain falls out. Don't close it so much that you cut off the blood.
    16. Re:Sony needs to... by benwaggoner · · Score: 5, Informative

      I don't think Microsoft wanted either format to gain critical mass - wide and early adoption is a threat to Microsoft's goal of 'services', including pay per view and digital downloads. Microsoft set HD video back by a year, that's all they got and that's all they wanted.

      I worked on the HD DVD team back then, and we manifestly wanted HD DVD to win, and we invested quite a lot in it. However, we didn't bet the Xbox 360 on it the way Sony bet the PS3 on BD (which appears to have been a good choice from the console business perspective). In the end, Sony was willing pay to whatever cost it took for BD to win.

      Our interest was much more in delivering great video experiences than in which particular substrate thickness of polycarbonate imaged with a blue-violet laser won in the end.

      This is a sample of what I've been working on these days:

      http://smoothhd.com/

      Still pre-beta, but I don't think that optical media will be the hard or the interesting part of HD video delivery much longer.

      --

      My video compression blog
    17. Re:Sony needs to... by Sleepy · · Score: 4, Insightful

      Nope. It doesn't hurt your credit score.
      There are things that do hurt your score, like riding your credit limit over 50% on all your cards, or flipping a card like this when it is your "only" card. With 2 other accounts 5-10 years old, this doesn't even blip. My credit is in the high 700s every year when I check.

      Yeah, I saw this got marked troll. There's someone abusing the moderation system.
      The /. digg/bury moderation system is very "cathedral".. some people get picked to moderate all the time, and I haven't been asked in maybe 5 years. Someone who gets picked often does not like me, and the irony is I've probably been a faithful Slashdot poster for longer than half of that moderator's life.

  2. Re:asdf by Ethanol-fueled · · Score: 4, Funny

    cutting the cost of the CPU ($46.46 vs. $64.40), and cutting the cost of the graphic processor to $46.46 from $64.40.

    Whoa, so the Cell processor IS the graphics processor? Yo dawg, I heard you like to compute so I put a processor in your processor!

  3. GPU down from $83.17 to $58.01 by hansamurai · · Score: 5, Informative

    Because the summary probably won't be fixed.

    --
    Reviewing just the first hour of video games.
  4. Exchange Rates? by lekker+biltong · · Score: 3, Informative

    The article does not mention anything about exchange rates - since the PlayStation is not manufactured in the US and the article mention all amounts in dollars [the Yen strengthened considerably against the Dollar the last year or so] - I would take the amounts with a pinch of salt.

    The other possibility of course is that they converted everything from Yen into Dollars - but did not mentioned it.

  5. If only Microsoft hadn't cut corners by MikeRT · · Score: 5, Interesting

    They wouldn't have had to spend over $1B on repairs and extend the warranty an extra 3 years for the XBox 360. Chances are, the 360 would be cutting a small profit by now. The moral of the story if the successor to the XBox 360 is to trounce Sony, is that they need to not cut corners if they want to exploit Sony's weakness. They'd better learn that because the PS3 is a very, very powerful system and when it hits $300 will be in the range that a lot of gamers will be willing to pay.

    1. Re:If only Microsoft hadn't cut corners by alvinrod · · Score: 4, Informative

      Here's an article from earlier this year that explains a lot of the problems. The article interviews a tester who worked at Microsoft and had some good first hand knowledge of what went wrong.

      Hope that helps.

  6. Consistency Please! by camperdave · · Score: 5, Insightful

    Keep all the price comparisons either from-to or all to-from. Don't mix the two because you'll confuse people (eg me). When I saw "...the hardware has gone from costing $690.23 to the current price of $448.73." it triggered me to read the last sentence as "cutting the cost of the graphic processor from $46.46 to $64.40.". I thought I was seeing some sort of Orwellian finances in effect.

    --
    When our name is on the back of your car, we're behind you all the way!
  7. Unfortunately, not all these changes are good! by larsoncc · · Score: 4, Interesting

    I'm all for a cheaper PS3, which apparently can only happen with a bit of "wow" taken out of the box, but for a bit of history:

    *The original 20 and 60 GB models of the PS3 supported full hardware backwards compatibility for the PS2 (with the notable exception of the Guitar Hero controllers). The 60GB had a lot of extras, like card slots.

    *The 80GB unit without FULL backward compatibility still supports 80% of PS2 titles, and retains the memory card slots.

    The way I see it, you shouldn't degrade a tech product over its life cycle, you should add features to it. Or failing that, it should get VERY cheap, and super small.

    PS3 isn't doing either. I'm glad I own the 80GB model.

    --
    Video Game News, FAQs, etc
    1. Re:Unfortunately, not all these changes are good! by Geoff-with-a-G · · Score: 3, Insightful

      1. In the next year, PS2 will become less relevant than it currently is. At some point, nobody will care if it can play PS2 games.
      2. They cut the hardware price by $241.50. The cost of a new PS2 is $129. The money saved could almost by two PS2s.

      They're still releasing new PS2 games. If you go to Game Rankings right now, the top game on the main page is Persona 4 for... Playstation 2.

      This used to be a source of pride for Sony - look at how well we support our platform, we're still releasing top-quality games for it 8 years after it came out, and 2 years after it's "replacement" was released. According to good old Wikipedia, it's the top-selling console ever, at 140 million. Now they're actively removing that platform of games from their current product? Taking steps away from compatibility with it? Sure, eventually it will become less relevant, but I think it's gonna take a while. If we jump over to a DRM-related story, you'll find long threads complaining about "what happens if I buy this game, and 5 years from now their servers get shut down, or the company goes away? I still play my old computer games once in a while, I don't want them taking that away from me..." Forget Persona 4 just being released, aren't there people who will want to play Final Fantasy X or XII again? Kingdom Hearts? Gran Turismo 3 (wow, 14 million copies sold, really?).

      Yes, as you say, we can just buy a PS 2, or keep an existing one. But there's plenty of reasons that's a pain (inputs, controllers, and space mostly) and it's just a big visible step backwards for the product. And cost alone doesn't justify that, the $240 cut isn't all from the Emotion Engine, and if you check the eBay listings for 60 Gig PS3s, you'll see how much of a premium their customers are willing to pay for that feature. I'm one of those people - and there's plenty of others in this thread - stuck between buying a new one and keeping my old PS2, buying an old one off eBay for a premium price, or waiting and hoping Sony steps up instead of down with a future revision. In the meantime, I'm one more customer not buying a PS3, even with their modest price cuts.

  8. Re:asdf by frosty_tsm · · Score: 4, Interesting

    It's good at doing anything where there's a streaming data

    When we discussed the Cell processor in my super computing class, the verdict was it required streaming data to be fully utilized since each of the SPUs each had too little cache.

    Perhaps it would have been wiser to instead only have 3 SPUs (+1 PPU) with a little more power and caching each instead of the 7 SPUs. As it stands, it is a problem that is stumping many PhDs.

  9. Re:lame by not+already+in+use · · Score: 5, Funny

    Let's all take a moment to apologize to Bobtree for his wasted time clicking on this news story.

    Sorry Bobtree.

    --
    Similes are like metaphors
  10. Re:asdf by frosty_tsm · · Score: 4, Interesting

    The trick isn't to use each SPU. The trick is to fully use the SPU and not have it waiting for memory look-ups or core-to-core communication.