Manufacturing the PlayStation3 will cost Sony $900 a piece, according to analyst Joe Osha from the financial management and advisory giant Merrill Lynch. In a recent report, Osha estimates the console´s so-called ´bill of material´ (BOM) to add up to a staggering $800. As a result, a delay may be likely. Osha writes:
Our updated analysis indicates that the initial bill of materials for PS3 could approach $900, falling to $320 three years from launch. (...)A delay for the PS3 would benefit both ATI and Microsoft, Joe Osha writes. It is interesting to note that Nintendo is not mentioned in the report at all.
Sony’s decision to implement an ambitious new processor architecture – the Cell – not only took a great deal of design effort, but also has resulted in a processor that we think will cost Sony at least $230 per unit initially. (...)
There are additional reports that delays have surfaced on the NVIDIA-designed RSX graphics processor, although that part does not look to be as much of a long-term challenge as Cell. (...)
The Blu-Ray drive also looks expensive at an estimated $350, and Sony will not be able to leverage off additional Blu-Ray shipments in DVD players because the standard is still so new. The specialty XDR memory is unique to PS3 and likely to be expensive initially. Overall, (...) we think that PS3 will cost about $900 initially to manufacture.
We note that shifting Cell to 65nm manufacturing should help, as will scaling Blu-Ray drive volume in other device – both of those changes should hit in 2007, and we think that the BOM could be down to $320 three years after launch. (...) Sony may be backing away from those losses until the company can move to reduce the system’s costs in 2007. The result could be 2006 unit volumes for PS3 in the 2 – 3 million unit range.
EDIT News.com has now picked up on the story and gone into more detail. Check it out.
Source: Merrill Lynch, News.com
Thanks to: Joystiq, Joystiq