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Author Topic: PS3 $500!??  (Read 2159 times)
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Daehawk
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« on: January 11, 2006, 11:15:52 PM »

http://money.cnn.com/2006/01/11/commentary/game_over/column_gaming/

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This week's CNN Game Over speculates on how much the Playstation 3 will run: "Though Sony didn't reveal any PS3 information of note during CES, the prototype of the system was still one of the most popular attractions at its booth. CNN looks at possible pricing models for the system in this week's Game Over column, talking with both analysts and game developers. The general consensus, from those who work in - and keep watch on - the industry is the machine will likely run $499 when it hits the U.S., though some developers offer other opinions, including a price tag as high as $700."
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Darren8r
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« Reply #1 on: January 11, 2006, 11:21:14 PM »

Yeah its going to be expensive as hell.
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denoginizer
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« Reply #2 on: January 12, 2006, 01:51:59 AM »

If it's over $500 I will pass at launch. I wish thay would offer a cheaper version without the Blu Ray drive.  I would love a $299 model with a standard DVD drive.  Looks like there is no chance of that though.
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« Reply #3 on: January 12, 2006, 03:03:29 AM »

Sounds about right.

It is what it is.  smile
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Dante Rising
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« Reply #4 on: January 12, 2006, 03:06:52 AM »

There is absolutely no way the system will come out at $500.  Next year the premium Xbox 360 will drop to either $349 or $299.  Sony will not want to be $200 over the price of the MS console.

IMO, the sytem will be $399.
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Temjin
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« Reply #5 on: January 12, 2006, 03:33:20 AM »

I say $400 as well.  The prospects of Blu-ray defeating HD-DVD mean an avalanche of cash for Sony and they certainly don't want to lose.  They'll take whatever hit necessary to make sure their Trojan Horse succeeds.

Losses on the PS3 are a drop in the bucket compared to the revenue generated by Blu-ray if it manages to be #1.
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Calvin
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« Reply #6 on: January 12, 2006, 04:27:14 AM »

Aren't they talking about manufacturing costs over 700$ per unit right now? HOw is it going to come out at 400$?
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Turtle
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« Reply #7 on: January 12, 2006, 05:11:02 AM »

The same way microsoft takes a hit whenever they sell one for $300 or $400 USD.

They take a huge hit and go into negatives on console release, but get profit from the games, accessories, and other licenses that are released for the system.

It's in a console maker's best interest to put out a system with hardware that'll last for a long time, or at least make sure that developers make many games for it over the course of its lifespan.  This way, the console has more games coming out for it every day.  The only reason why the PS2 lasted this long was tremendous developer support and for a long period they were the only mature console on the block.  Otherwise its hardware wasn't actually all it was promised to be on release day.

Backwards compatability is also a good feature profit-wise.  This way, not only do you get more willingness to adopt early, you also get more game sales from the sale of older games from the previous system.

In this way, only large corporations like Sony and MS can really put out a next/current gen console nowadays.  The costs for hardware are much too high.

Nintendo plans to lower its hardware specs to reduce the costs, in fact they're known for actually making a profit off their hardware, not just the software.  I mean take a look at the gameboy, that's really, really old hardware.  The main thing that keeps nintendo afloat is that they have a massive collective of hot franchises that all have very good production values.
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CrayolaSmoker
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« Reply #8 on: January 12, 2006, 06:13:46 AM »

Quote from: "Turtle"
The same way microsoft takes a hit whenever they sell one for $300 or $400 USD.

They take a huge hit and go into negatives on console release, but get profit from the games, accessories, and other licenses that are released for the system.

Yes, but Microsoft is only losing $120-ish per 360.  The rumored SRP and manufacturing costs in this thread would have Sony taking a $300 hit per unit!   That's completely daft.  I don't care what kind of technology you're piggybacking on the device.

It's made even worse when you think about how, even if the sales numbers are similar in the U.S. market, the PS3's sales are gonna blow the 360 out of the water due to the Japanese market.  We're likely talking losses of over half-a-billion dollars in the first year alone.  Those arent' the kinds of losses that correct themselves lightly.

Edit: Forgot to say "due to the Japanese market."
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Sarkus
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« Reply #9 on: January 12, 2006, 06:19:21 AM »

Interesting to note that Bill Harris has joined the "PS3 in US not until next year" crowd, citing an insider source.

I think people are not paying close enough attention to Sony's overall financial health when prognosticating about the PS3 - there are all kinds of indicators that Sony can't afford to release the PS3 with cell and blu-ray technology anytime soon.  They have to wait until production costs drop to make it worthwhile.
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Jumangi
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« Reply #10 on: January 12, 2006, 06:52:26 AM »

Quote from: "Turtle"
The same way microsoft takes a hit whenever they sell one for $300 or $400 USD.

They take a huge hit and go into negatives on console release, but get profit from the games, accessories, and other licenses that are released for the system.


According to all of the stuuf I've seen the PS3 is going to cost a fair amount more than the 360 to produce though. Console mfgs take a loss on hardware but only to a point. You can see with the Xbox what happens when you take too much of one. With the PS3 having Blue-ray I just dont see how they could match the $400 price. I think it would be too much of a a loss.
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Calvin
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« Reply #11 on: January 12, 2006, 07:21:16 AM »

Quote from: "CrayolaSmoker"
Quote from: "Turtle"
The same way microsoft takes a hit whenever they sell one for $300 or $400 USD.

They take a huge hit and go into negatives on console release, but get profit from the games, accessories, and other licenses that are released for the system.

Yes, but Microsoft is only losing $120-ish per 360.  The rumored SRP and manufacturing costs in this thread would have Sony taking a $300 hit per unit!   That's completely daft.  I don't care what kind of technology you're piggybacking on the device.

It's made even worse when you think about how, even if the sales numbers are similar in the U.S. market, the PS3's sales are gonna blow the 360 out of the water.  We're likely talking losses of over half-a-billion dollars in the first year alone.  Those arent' the kinds of losses that correct themselves lightly.


yeah this is exactly what I am talking about.
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Kevin Grey
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« Reply #12 on: January 12, 2006, 07:25:53 AM »

Quote from: "Sarkus"
They have to wait until production costs drop to make it worthwhile.


Production costs really aren't going to drop though until the production lines get rolling.  Yeah Bluray and Cell will launch in other products later this year but likely in considerably smaller numbers than the PS3 would ship so a year's time with no production isn't going to drive down production costs much.
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Turtle
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« Reply #13 on: January 12, 2006, 07:35:16 AM »

If I recall, the 360 cost around 700 to make, that's around a $300 loss.  So, MS really is taking that kind of loss on this.  People suspect that's why we're seeing so few.
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Kevin Grey
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« Reply #14 on: January 12, 2006, 07:51:09 AM »

Quote from: "Turtle"
If I recall, the 360 cost around 700 to make, that's around a $300 loss.  So, MS really is taking that kind of loss on this.  People suspect that's why we're seeing so few.


Analysts had their loss pegged at about $120 so your numbers seem rather extreme.
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Sarkus
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« Reply #15 on: January 12, 2006, 09:09:43 AM »

Quote from: "Kevin Grey"
Quote from: "Sarkus"
They have to wait until production costs drop to make it worthwhile.


Production costs really aren't going to drop though until the production lines get rolling.  Yeah Bluray and Cell will launch in other products later this year but likely in considerably smaller numbers than the PS3 would ship so a year's time with no production isn't going to drive down production costs much.


I'm not so sure about that.  How many PS3's do you think would ship this year anyway?  1 million?  2 million?

If their Cel chip yields are very low right now (similar to what MS is apparently experiencing with XB360) then time and other Cel devices (being sold at a higher price than PS3) would increase yields.

Blu ray would also drop, if only because Sony's partners would be willing to drop their player prices later rather than sooner.  Let's say PS3 sells for $500 - that's like a third the price the first Blu ray players are supposed to ship at.  Sony forcing the market down that quickly would not be popular among the other Blu ray manufacturers.
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Kevin Grey
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« Reply #16 on: January 12, 2006, 10:56:55 AM »

Quote from: "Sarkus"

If their Cel chip yields are very low right now (similar to what MS is apparently experiencing with XB360) then time and other Cel devices (being sold at a higher price than PS3) would increase yields.


But the production process has to actually start.  Maybe I misinterpreted your post but it seemed like you were suggesting that Sony was sitting on finished technology waiting for the prices to fall.  Production of Cell chips needs to acutally begin for improvements in the process and economies of scale to reduce prices.  And even if Sony only ships a few million PS3s this year, I'm willing to bet that that is a helluva lot more Cell chips than are being used for other applications.  

Quote from: "Sarkus"

Blu ray would also drop, if only because Sony's partners would be willing to drop their player prices later rather than sooner.  Let's say PS3 sells for $500 - that's like a third the price the first Blu ray players are supposed to ship at.  Sony forcing the market down that quickly would not be popular among the other Blu ray manufacturers.


Only half the price- a $1000 Bluray player was announced at CES.  And that only accounts for two manufacturers- we could very likely see even lower Bluray players by the end of the year ($700 at the minimum and I would expect to see $500 stand alone players by December).  I don't think Sony is too worried about their partners here- these prices are  typical electronics early adopter pricing targeted at high end home theater owners.  Sony's Bluray partners were certainly under no illusions or expectations that Sony would price a game console at $1000-1800 in order to be fair with the other Bluray manufacturers.
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« Reply #17 on: January 12, 2006, 02:33:50 PM »

Quote from: "Turtle"
If I recall, the 360 cost around 700 to make, that's around a $300 loss.  So, MS really is taking that kind of loss on this.  People suspect that's why we're seeing so few.

Everything I read at time of release said ~$120 loss per console.  If you've got other data, I'd love to see it.
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farley2k
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« Reply #18 on: January 12, 2006, 03:55:06 PM »

Quote from: "CrayolaSmoker"
Quote from: "Turtle"
If I recall, the 360 cost around 700 to make, that's around a $300 loss.  So, MS really is taking that kind of loss on this.  People suspect that's why we're seeing so few.

Everything I read at time of release said ~$120 loss per console.  If you've got other data, I'd love to see it.



I think one of the biggest problems is no one has much data.  Everything I have seen is speculation but different people.  I am sure they are very knowledgable but they are still just speculating.
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Jumangi
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« Reply #19 on: January 12, 2006, 04:07:05 PM »

If MS was losing $300 per system the 360 would be another Xbox with no chance of financial success.
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shaggydoug
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« Reply #20 on: January 12, 2006, 05:52:47 PM »

Adding another point......I've read that MS has much deeper pockets than Sony does at the moment.   Or more specifically, Sony has very small pockets at the moment.  I don't know how Sony could come out that much cheaper than production.  

I've also read the $120 loss per 360 from a few sources.  

And finally, if the blu-ray players are coming out this year in the $800 - $1200 range....how can Sony undercut them by offering a game machine plus blu-ray device for $500?  True, that is the MSRP of the initial players this summer but how soon would you get a price drop on these?

- shaggy
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Kevin Grey
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« Reply #21 on: January 12, 2006, 09:50:56 PM »

Quote from: "shaggydoug"

And finally, if the blu-ray players are coming out this year in the $800 - $1200 range....how can Sony undercut them by offering a game machine plus blu-ray device for $500?  True, that is the MSRP of the initial players this summer but how soon would you get a price drop on these?


Sony's cost for Bluray in PC is strictly the cost of purchasing the optical drive components.  Decodeing and processing is done on Cell and RSX which are already included for gaming.  It takes a very beefy processor to decode HD streams (especially 1080p) so those stand alone players also have to account for video processing units too.  And you can bet they are significantly marked up to take advantage of the fact that early adopters don't have a problem playing a premium.
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shaggydoug
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« Reply #22 on: January 13, 2006, 01:36:23 AM »

Quote from: "Kevin Grey"
Quote from: "shaggydoug"

And finally, if the blu-ray players are coming out this year in the $800 - $1200 range....how can Sony undercut them by offering a game machine plus blu-ray device for $500?  True, that is the MSRP of the initial players this summer but how soon would you get a price drop on these?


Sony's cost for Bluray in PC is strictly the cost of purchasing the optical drive components.  Decodeing and processing is done on Cell and RSX which are already included for gaming.  It takes a very beefy processor to decode HD streams (especially 1080p) so those stand alone players also have to account for video processing units too.  And you can bet they are significantly marked up to take advantage of the fact that early adopters don't have a problem playing a premium.


You're thinking logically.  I'm thinking about the ramifications of undercutting the other manufacturers of blu-ray players.

My office mate who is actually against video games in his household (all right, his wife I should say because of the "violence") said he would buy a PS3 at sub $500 if it played blu-ray dvds over the standalone players.

- shaggy
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Kevin Grey
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« Reply #23 on: January 13, 2006, 03:43:57 AM »

Quote from: "shaggydoug"
You're thinking logically.  I'm thinking about the ramifications of undercutting the other manufacturers of blu-ray players.


As I said, I'm sure the other manufacturers were under no illusions that Sony would price the PS3 in line with standalone players.  

And its important to note that while they are all partners in Bluray, they are also competition too.  By your logic, Pioneer ($1800 player) should be pissed that Panasonic is undercutting them by $800.
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« Reply #24 on: January 13, 2006, 06:12:26 AM »

Things that make you go hmmmm....

Quote
IBM reckons Cell, potent and versatile, can do a lot more than just play games. It sees a role for it in mobile phones, handheld video players, high-definition televisions, car design and more. Scientists at Stanford University are building a Cell-based supercomputer. Toshiba plans to use the superchip in TV sets, which one day could let fans watch a football game from multiple camera angles they control. Raytheon is set to use Cell in missile systems, artillery shells and radar. Other companies envision new high-definition medical imaging. "Cell is the next step in the evolution of the microprocessor. It's a peek into the future," says Craig Lund, chief technology officer at Mercury Computer Systems, which makes medical and military systems and is taking orders for Cell servers.

IBM is already at work on beefier versions of Cell, and it has launched an allout campaign to woo a new generation of code-crunchers and game boys to write software for its futuristic chip. In an extraordinary move IBM disclosed hundreds of Cell's design secrets on the Internet, releasing a developer's guide that 10,000 programmers have since downloaded. IBM, with annual sales of $94 billion, says Cell could power hundreds of new apps, create a new video-processing industry and fuel a multibillion-dollar buildout of tech hardware over ten years.


LOL, nostalgia too-

Quote
In the early 1980s the chip in the Amiga home computer far outraced those in the Intel line, but Intel conquered the market anyway.
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Jumangi
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« Reply #25 on: January 13, 2006, 06:29:22 AM »

Ehh its IBM hype trying to get attention for their mutli-billion dollar investment.
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« Reply #26 on: January 13, 2006, 04:20:12 PM »

If the system comes out for $500, I'll be stoked.  I've been expecting this machine to be recockulously expensive... at least now it's just stupidly expensive.

gellar
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