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Analysts: Sony lose $100 per PS3 Slim
Analysts: Sony lose $100 per PS3 Slim
andriasang - August 20, 2009
Submitted by apujanata (14935) at 5:11PM PST on August 22, 2009
Analyst at Daiwa Institute of Research: The slide lists the material cost for the PS3 as ¥40,000. The announcer explains that a price drop to ¥29,800 means that Sony's losses will increase with each system they sell. However, if they increase their sales, the material cost will gradually go down, and so too will the losses.
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1welshbloke posted on PLAYSTATION 3 (PS3) at 11:16PM PST on August 24, 2009. RE: Analysts: Sony lose $100 per PS3 SlimI think the previous article was based on a best estimate price and the comment during the investors call recently of a 70% reduction in cost which was then used to derive this cost reduction figure.
The problem of course is the cost was only a guess and we do not know if the 70% was based on production costs or what would seem just as likely pre production.[ Oracle ] [ Level 30 ] [ Rank: 60 ]bids
1apujanata posted on PLAYSTATION 3 (PS3) at 4:17PM PST on August 24, 2009. RE: Analysts: Sony lose $100 per PS3 Slim@KultofCows,
I am not aware of that $220 cost article, but I think zeromous explanation makes sense. Logically, if PS3Slim really could be made with $220 cost, the price cut would have come much sooner than Sept 1.
Personally, I have no idea whether Daiwa Research's figure are close to reality or not. If it is close to reality, then kudos to Sony for taking a loss for every PS3 Slim sold, to minimise PS3 marketshare erosion.[ Oracle ] [ Level 30 ] [ Rank: 14935 ]bids
1zeromous posted on PLAYSTATION 3 (PS3) at 2:07PM PST on August 24, 2009. RE: Analysts: Sony lose $100 per PS3 Slim@zeromous,
I should add, the reason Sony is willing to increase production costs to do this is because it will be pro-rated over the lifetime of the fab.
The current production cost will be quite a bit cheaper once they start selling through more units of the 45nm.[ Veteran ] [ Level 21 ] [ Rank: 878 ]bids
1zeromous posted on PLAYSTATION 3 (PS3) at 2:05PM PST on August 24, 2009. RE: Analysts: Sony lose $100 per PS3 Slim@KultofCows,
KOC, new cost to produce figures as a result being built at a new 45nm fab.
Those cited figures were in reference to the 65nm, vs the original 90nm CELL.[ Veteran ] [ Level 21 ] [ Rank: 878 ]bids
2KultofCows posted on PLAYSTATION 3 (PS3) at 1:55PM PST on August 24, 2009. RE: Analysts: Sony lose $100 per PS3 Slim@apujanata,
I thought someone had posted an article that said Sony has reduced the material cost to $220...or does the PS3 slim cost more to make?[ Admin ]bids
20apujanata posted on PLAYSTATION 3 (PS3) at 5:11PM PST on August 22, 2009. Article: Analysts: Sony lose $100 per PS3 SlimAnalyst at Daiwa Institute of Research: The slide lists the material cost for the PS3 as ¥40,000. The announcer explains that a price drop to ¥29,800 means that Sony's losses will increase with each system they sell. However, if they increase their sales, the material cost will gradually go down, and so too will the losses.[ Oracle ] [ Level 30 ] [ Rank: 14935 ]
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The slim probably costs a bit more to make. But for some perspective....
Imagine when they drive the 220$ cost down 70% in over the next 5.
(a new FAB's value in terms of production increases exponentially over time, but potential efficiencies are harder to gain).
Assuming the same cost inroads can be made in 5 years...(slightly more than the original PS3 model) that $220 cost in YEAR8 will be down to 53$ to produce a PS3 in 2014.
If in fact Sony is selling the Slim at a slight loss, let's assume is cost of production to be $330. Let's also assume Sony is unable to optimize as much as they have with the PS3 Orig (let's say 60%).... They will sell at a small profit at a future 199$ pricepoint 2012, and production costs I estimate to be $108 in 2014, based on the figures we have currently.
I think Sony will reduce costs much more than 60% over 3 years (we should assume at least 20% in component cost reduction per year on avg thanks to Dr. Moore) and this doesn't even take into account a 35nm or 27nm process in the PS3s future.
Much has been made of Sony's decision to sell at a loss. I think it was a better decision than delaying the PS3 in the face of the upstart Microsoft.