PS3 Could Cost Double of a 360 in Late 2006

[bapenguin]

According to Next-Gen.biz (http://www.next-gen.biz/index.php?option=com_content&task=view&id=1497&Itemid=2) when the PS3 launches next year in the US, it could end up costing as much as twice that of the XBox 360.

"…The PS3 will not only be significantly more costly than Xbox 360 at launch, but will continue to operate at a cost disadvantage for several years. … We think that the Xbox 360 could be selling at half the price of PS3 in the latter half of 2006."
The report predicts that Microsoft will break even in year one of the 360's release and that profits will come in year two. The report predicts that 2 million hardware units will be sold in 2005 with 7 million shipping in 2006.
There's a nice breakdown towards the bottom that shows where the cost estimates came from.
Thanks Joystiq (http://www.joystiq.com)

[MasterEvilAce]

Wow, if that's accurate... Maybe Sony could start a magazine company?

I don't think Sony will have anything on the Xbox360 except for any exclusive titles..

[Achilles]

Analysts huh? I don’t think some of their costs are accurate since I’m pretty sure the 360 costs more to make than that. They also include the HDD in the cost, but not the wireless controller and headset, which is a package that doesn’t exist. The PS3 will probably cost more though, if for no other reason than the blu-ray drive and the extra plugs.

[zorper]

If it isn't a selling point, maybe Sony should drop the blu-ray? Maybe make a PS3-BR later?

[score]

Remember everyone saying how expensive the PSP was going to be?

[Silversmith]

Same fear mongering applies to PSP when it came out. The system will be $300 and $400 That's the price point MSFT set. Sony has to follow... but not higher. unless by some act of Engineering at of god to get it lower. Sony PS3 design doesn't look as sleek nor attractive as PSP.

[DigitalFirefly]

My predictions, PS3 will launch end of 2006 for $399. By then the Xbox360 will be dropped by about $50.

[Goronmon]

I would be suprised if they tried to sell the PS3 for over $400...

[thecrazyd]

In other news: The PS3 could be infected with the dreaded mtambo virus.

[Phades]

I agree that there's no way this will be true. Sony isn't going to make a system that is so ridiculously overpriced. I don't know where these analysts pull these wild speculations from like the $500 PSP. The PS3 will likely be more than the Xbox360 but I'd be surprised if it's more than a $100 difference (I think the more likely is about $50).

Sony didn't build the brand that they have just to let Microsoft have the market without a fight. If they launch that high, that's what will happen. It's not the Playstation 3DO.

[Onea]

WARNING, THIS POST IS LABELED INCORRECTLY AND IS EXTREMELY MISLEADING.

The PS3 will NOT cost DOUBLE the price of a 360. According to the analysts in the article, the PS3 will cost 50% more than the 360.

PS3's $195 is not even close to twice 360's $145, and thats estimated after THREE years not the latter half of 2006.

I'm a statistics major and I hate it when people poorly report their statistics.

[bean19]

I think Sony will have to take a loss on all their units and sell at $400. While I hesitate to buy a system for $400, I WON'T buy a system for more than that.

Not even for Metal Gear, Devil May Cry, or Resident Evil.

[bean19]

WARNING, THIS POST IS LABELED INCORRECTLY AND IS EXTREMELY MISLEADING.

The PS3 will NOT cost DOUBLE the price of a 360. According to the analysts in the article, the PS3 will cost 50% more than the 360.

PS3's $195 is not even close to twice 360's $145, and thats estimated after THREE years not the latter half of 2006.

I'm a statistics major and I hate it when people poorly report their statistics.

Did you read the first quote? IN THE LATE PART OF 2006! Not 3 years from the PS3 launch.

It is entirely possible that Sony could launch at $600 and that Microsoft could cut their price to $300 by late 2006.

[Zanzibar]

Did you read the first quote? IN THE LATE PART OF 2006! Not 3 years from the PS3 launch.

It is entirely possible that Sony could launch at $600 and that Microsoft could cut their price to $300 by late 2006.

Actually, what's more likely is that the PS3 would launch at $450 and X360 would be price-cut to $225 (without a HDD).

[Tennistoad]

It doesn't matter what the ps3 will cost.. It won't be worth spending the extra dough for Jax and dexter 6, or sly 5. Metal Gear is stupid and Grand Turisimo is so real it's boring...

Flame ON!

[JazGalaxy]

I really wish I could remember where I read this, but something I was reading stated that Sony made the PS2 operate at something like 100 loss vs. production costs and became profitable in that same year. That being the case The PS3 was schedule to operate at double the loss. This was Sony figuring on having MORE PS3 users than they had PS2 users. If they realize now that they are going to lose customers to Microsoft, then it may very well be the case that they have to charge more than they had counted on. (and if that more is 100,and they were already planning on charging 100 over microsofts 360 price...)

[novicius]

Heh, the numbers are more catchy with the PS3 debuting at $499 while the 360 drops down to $249 -- but I *highly* doubt it.

Sony will take the $100+ hit and launch at $399; MS will probably ride out Halo 3/Halo movie hype/Xmas '06 and then drop 360 Core to $199-249 in early '07, depending upon the PS3's market performance. Just a thought...

[Dracula-X]

I'm calling it at $399 (EA bookie, where are you?). I was wrong before when I called the 360 at $349 (http://www.evilavatar.com/forums/showthread.php?t=4357&page=5&pp=10&highlight=bookie), never expected two SKUs. However, I'm not gonna be surprised if they debut at $499...

[PantherModern]

if they put out the PS3 for more than 400 dollars, then Sony is signing its own death warrant, at least in the US. To me, it seems that the 360 Core system is there simply to make the "value" of the 399 premium package to consumers and somehow make that price point more palpable. One of those "I get how much more stuff for a measley 100 dollars? Sign me up!" kind of things.

If Sony pushes the cost higher than 400, well, it will be tough. Selling it as an all in one convergence device for the living room is great and all, but that is still a hefty chunk of change.

[EternalGamer]

You know, part of me has a lot of respect for the (supposed) technical sophistication of the PS3 hardware and the fact that Sony (again supposedly) is not going to cut corners on it. But the other part of me is highly skeptical that this extra power is going to make any real difference in terms of the gameplay experience, even graphically. Developer and financial limitations seem like they are the new bottleneck (especially with multi-thread programming), not hardware. Essentially I have the sneaking suspicion that after all the hype settles, what we get with the PS3 will be a considerably more expensive machine without much of a noticable jump beyond what is already available.

Dan

[Twigz'N'Berries]

We all remember Kutaragi stating that people will just have to work extra hours for it. With everything new that Sony is putting into the PS3, I'd be shocked if production costs were not high. They have to get the blu-ray players, which means start up costs for the manufacturers. The Blu-Ray disks (though it was said that the initial PS3 games will launch on DVD format) will cost more initially. The Cell chip not only has to recover the costs associated with manufacturing, but it will have to cover the costs of R&D (shared w/their sales to PCs). All of the high def promises they made (running in 1081p??), dual HMI ports, 6 usb ports, blue tooth for 7 controllers, tivo like capability...these promises all come at a price. Not to mention, that we have heard that the costs to developers to utilize the PS3 platform will be nearly $17 million as opposed to 360's $9 million.
I'd be suprised if the PS3 comes in for less than $499. I think Kutaragi and Sony honestly believe that their brand is so strong, that consumers will pony up the money to own the machine. It would be a classic case of business arrogance. Much like they felt the DS wasn't even in the same market.

However, given Sony's masterful dominance of the console market, I can't forsee them screwing up the PS brand. The console is far too important to their company as a whole. I honestly wonder if Sony is waiting for price drops on its materials to launch their system...hell I really wonder how 'set' their system is. I've heard that the memory architecture is already being beefed up.

[EternalGamer]

Wait, I thought one of the main differences between HDVD and Blu-Ray was the lack of standard DVD compatibility in the latter. How is Sony expecting to launch games on standard DVD discs if this is the case?

Dan

[trip1eX]

Come on. Get off the crack pipe. The PS3 ain't going to be $600. These analysts are smoking crack. MS breaks even in the first year? Yeah right. MS is losing $75 a 360 in the first year or so from what most other analysts report.

I think adoption will be slow of the 360. I think cause of the higher price of games, lack of folks with an hdtv, games not taking total advantage of the system at launch (more so than ever with multi-cores,) the xbox still being pretty new (not even 4 yrs old yet) and the fact that consumers will wait and see what the other guys bring to the table.

Sure you'll have your early adopters. The nerds that have to have the latest shiny new thing. That alone will sell millions up front. NO denying that.

But I think there's a lot of factors at work here that say this will be the console generation with the slowest rate of adoption yet.

[Oddmaker]

Mahahah! I hope Sony rots.

[PSyMastR]

Sure you'll have your early adopters. The nerds that have to have the latest shiny new thing. That alone will sell millions up front. NO denying that.

But I think there's a lot of factors at work here that say this will be the console generation with the slowest rate of adoption yet.
Yes. I also think that Sony is really screwing up this generation. They said that Gaming would be a secondary feature...
Right there means that they aren't even trying to compete with the Revo and 360...

[Zanzibar]

Come on. Get off the crack pipe. The PS3 ain't going to be $600. These analysts are smoking crack. MS breaks even in the first year? Yeah right. MS is losing $75 a 360 in the first year or so from what most other analysts report.



Wellllll... maybe not. The report was that MS's Xbox DIVISION would 'break even', that doesn't limit itself to hardware-only. Game sales and accessories are where big profits can come in.

Plus, the $375-per-X360 number that you're getting (from crack-smoking analysts, BTW) also did not anticipate a HDD-less and non-wireless SKU; since MS is charging $400 for the Premium version, the amount lost per-unit goes down somewhat.

[Phades]

Come on. Get off the crack pipe. The PS3 ain't going to be $600. These analysts are smoking crack. MS breaks even in the first year? Yeah right. MS is losing $75 a 360 in the first year or so from what most other analysts report.


Anyone else see the irony in this paragraph??

[resikel]

Originally Posted by Phades
Anyone else see the irony in this paragraph??

Yeah. That was funny.

[Paltry]

ok how many of you actually read the article?

and if redcloak had posted this youd all be yelling at him...

[Dracula-X]

Wait, I thought one of the main differences between HDVD and Blu-Ray was the lack of standard DVD compatibility in the latter. How is Sony expecting to launch games on standard DVD discs if this is the case?

Dan
The spec for Blu-ray calls for compatibility with DVD. They don't have to support it, but the idea not to support DVD now (at the height of its success I might add) would be ludicrous (suicide).

[Dracula-X]

ok how many of you actually read the article?

and if redcloak had posted this youd all be yelling at him...
We'd be yelling because that's pretty much all he fucking does, and you KNOW damn well what I'm talking about.

[monster1234]

Wow, I doubt this is true because it would too much of a killer for Sony. I think being an electronics company, they wouldn't let that happen.

[bobbler]

I'll say one thing:

If the Cell costs more to fab than the RSX (both of which are being fabbed at Sony's plants) then Sony has the most unique fab in the entire universe.

Analysts are stupid =(.

Okay, two things:

PS3 will inevitably cost more to make, based on BR alone. But that mini BOM cost sheet they have is completely fabricated. They wouldn't even have access to that stuff anyways.

[Stormeh]

This is why you launch ahead of your competition.

[trip1eX]

Wellllll... maybe not. The report was that MS's Xbox DIVISION would 'break even', that doesn't limit itself to hardware-only. Game sales and accessories are where big profits can come in.

.

Ah no sht shirley. How much do you think MS gets per 360 game sold? What's the attach rate of the 360 in the first year? Do some of the math and get back to me.

Let's then include all the money spent on advertising and designing the thing etc.

Some analysts just don't like to include those extra details. Too messy. Suffice to say the 360 ain't breakin' even in 2006 and the PS3 ain't going to be $600.

You don't need an analyst to tell you that. You heard it hear first.

[Paranoia]

However, given Sony's masterful dominance of the console market, I can't forsee them screwing up the PS brand.

That's what they say about Nintendo and look what happened. Sony even screwed up their electronics business.

[bean19]

Ah no sht shirley. How much do you think MS gets per 360 game sold? What's the attach rate of the 360 in the first year? Do some of the math and get back to me.

Let's then include all the money spent on advertising and designing the thing etc.

Some analysts just don't like to include those extra details. Too messy. Suffice to say the 360 ain't breakin' even in 2006 and the PS3 ain't going to be $600.

You don't need an analyst to tell you that. You heard it hear first.

Have you taken any business courses? Microsoft is not selling the system at a significant loss (even with development time and marketing costs).

Peripherals are about a 100% markup from cost (generally) and another 100% markup at the retailer (they cost about 200% of their actual cost to make - for example the 20 Gig hard drive being sold for $100 probably costs around $25 to make - they make their stuff in foreign markets where $25 is worth more and wages for workers are lower).

Console makers have different deals with different game developers and the amount they get per title fluctuates with the amount of a title that is sold, but I have read the amount for titles that sell at $50 is around $10 until a certain amount are sold or a certain amount of time passes. Hitting this number early is a way for game companies to make extra cash as they earn more if they have to share less with the Microsoft, Ninentdo, or Sony.

If the average user buys 3 games and spends $50 on any peripheral during the year after launch, then Microsoft gets $55 out of the deal, which should be enough to cover their losses on the system sale. Keep in mind some people will buy a whole lot more than that over a year, while others may just be almost pure rentals. I'd guess the average is a tiny bit above this, but I'm trying to be conservative.

[Pumped'Up]

It may be 2x the cost, but it'll be 4x the power of the 360.

[Rafer]

I'll say one thing:

If the Cell costs more to fab than the RSX (both of which are being fabbed at Sony's plants) then Sony has the most unique fab in the entire universe.


How would you calculate the costs if things are manufactured at sony's plants, like if they spend a billion dollars on a plant that can produce cell chips for $10 each, is that more or less expensive then buying chips for $100 each?

[The Iron Weasel]

It may be 2x the cost, but it'll be 4x the power of the 360.

wow you'll just eat up any semen that sony shoots out wont you? :D

(god i cant pull it off, Kelegacy WHERE ART THOU!?!?!)

[Sl1pstream]

It may be 2x the cost, but it'll be 4x the power of the 360.

I guess I'll have to buy 2 then.

[Twigz'N'Berries]

Have you taken any business courses? Microsoft is not selling the system at a significant loss (even with development time and marketing costs).

Peripherals are about a 100% markup from cost (generally) and another 100% markup at the retailer (they cost about 200% of their actual cost to make - for example the 20 Gig hard drive being sold for $100 probably costs around $25 to make - they make their stuff in foreign markets where $25 is worth more and wages for workers are lower).

Console makers have different deals with different game developers and the amount they get per title fluctuates with the amount of a title that is sold, but I have read the amount for titles that sell at $50 is around $10 until a certain amount are sold or a certain amount of time passes. Hitting this number early is a way for game companies to make extra cash as they earn more if they have to share less with the Microsoft, Ninentdo, or Sony.

If the average user buys 3 games and spends $50 on any peripheral during the year after launch, then Microsoft gets $55 out of the deal, which should be enough to cover their losses on the system sale. Keep in mind some people will buy a whole lot more than that over a year, while others may just be almost pure rentals. I'd guess the average is a tiny bit above this, but I'm trying to be conservative.
Spot on comment. I have already pre-ordered my system, 4 games and an extra wireless controller. I know I'm not the norm, but I don't think the money I'm shelling out will be that rare. Hell, the 360 will make a great deal of money back when it sells the extra controller...lets not even talk about the profit on a faceplate. Then MS gets money to license out the third party accessories that companies make.
If the average user is buying the $399 model, then the margin of loss is much less for MS...that ($75) figure came from the $299 version of the 360. More of MS's components are 'off of the shelf' compared to the PS3. The BR and the Cell chip will push up the cost of the system, as well as the extra USB ports, the flash drive, the 7-way bluetooth controllers, dual HMI outputs...etc.
I personally believe a 'cannibalized' version of what was presented at E3 will be hitting our shores closer to X-mas 06' than Spring of 06'.

[mister_slim]

How would you calculate the costs if things are manufactured at sony's plants, like if they spend a billion dollars on a plant that can produce cell chips for $10 each, is that more or less expensive then buying chips for $100 each?
Well, Sony's already invested and written off 1 billion in Cell manufacturing capacity. So it's cheaper now.