Sunday, February 19, 2006

PlayStation3 will cost more than $800, says analyst

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. (...)

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.
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.

EDIT has now picked up on the story and gone into more detail. Check it out.

Source: Merrill Lynch,
Thanks to: Joystiq, Joystiq


Snoozer said...

So if they would sell it around 400-500$ they would take a HUGE loss, things are not looking so good for sony now right now.

:D <----Mandatory semi-fanboy smiely

Anonymous said...

This brings me back to when the "analysts" predicted the PSP would cost $450.

ONboy said...

I don't trust any analyst but myself. my friend told me all the analysts say xbox 360 is going to be the best console out of the 3. total bs. the only component I can see it hard getting the price down is the blu-ray, but even w/o lowering that one component's price they could get the console to about $600. if they can lower the bluray i'm thinking 4-500$

THE I.A.l.S said...

Thought I would share this..
It's related to game design,and what's needed to meet up to the requiremnts of it.It's an interesting read primarily for people interested in game design..

I Want to be a Game Designer!
What does it take to be the idea man?
by Ralph Edwards

February 15, 2006 - You've been playing games all your life and have come to the conclusion that you want to make them for a living. And not just work on the games, program the games, test the games, or do art or music for the games, but you actually want to design them. You want to be the person who creates the blueprint of the game and defines its play mechanics, structure, rules of play and goals. You want to be a game designer.

So what is it that you need to know to do this? Well, first, you will need to know exactly what a game designer does and this is unfortunately one of the most blurred fields in the entire gaming industry and what a company asks of its game designers vary wildly. In some cases, you will have a lead designer who oversees the entire project and is responsible for coming up with the overall design goals of the title while managing designers under him who are responsible for designing specific aspects, features or levels of the game. In other cases you may have just a single designer, or multiple designers without an official lead or just members of the production or engineering teams handling the designs themselves.

Nevertheless, there are some fundamental skills that one must possess if he wants to get into this field. The most important skill - and also the hardest to judge or learn - would be the need to be a creative genius. If you're going to want to get a job as a game designer, or better yet, become a major player in this field you best have a creative mind and be very imaginative.

Even though some may suggest that this is a skill that you either have or you have not, there are some things that you can do in order to help harness any creativity that may lay dormant inside you. For one, just open yourself up to as many different things in life as possible. Play and experience as many games as you can, both good and bad and both in genres you like or dislike. Watch movies, read books, and listen to all different kinds of music.

The truth is that there's a very fine line between being creative and being a thief. While many people today complain about the lack of creativity in art or music and like to say that everything's already been done, that's not necessarily a fair assessment. Many of the great musicians and artists of the past got inspiration and learned technique from people before them, as well. Vincent Van Gough used to copy Japanese prints and other art the inspired him in order to improve his technique. The bottom line is that the more games, movies or just life that you experience, the better equipped you will be when it comes to creating a new and original game.

For instance, Nintendo's Shigeru Miyamoto, who is one of the industry's most esteemed game designers, used to talk about how whenever he would go to a new place, such as New York City, he would do things like hop on a bike and go for a ride without a map and not knowing where he was going or how to get around and just explore the city. It allowed him to explore the world around him, see things for the first time, and experience things from a fresh perspective. Of course, it also could've led him to a quick mugging, a beat-down or even worse if his explorations took him to the wrong parts of town, but I think you get the picture.

In addition to just opening yourself up to knew things and expanding your knowledge, there are also some game design tests that can help you practice your creativity and hopefully shock the creative part of your brain into actually working - something that a lot of people begin to neglect more and more as they progress from a wide-eyed child to a mature adult.

One such game design test, which is also known as scenario-based rapid prototyping and is commonly used as part of the interview process at companies such as Electronic Arts, has just you take a few random words - such as "Microwave" and "Adventure" - and then just a straight up design a game based around that. You come up with a title, what the first five minutes of the game will play like, what the last five minutes of the game will entail, the goals, its genre, the controls, a basic rundown of the levels, the marketing angle, and just exactly what the game will look like.

Have a friend pick the two words, give yourself an hour to come up with everything that you need to know about the game, and then after you're done pitch it to your friend in a 15 minute presentation and then open yourself up to a Q&A session with him afterwards where he can ask you anything about the game and you have to come up with an answer quickly whether you've actually thought about it or not. It might seem silly, but doing these kinds of tests are commonly used in interview processes and also can help nurture what creativity you may have inside you.

Whilst creativity is the most important skill of a game designer, it's definitely not the only thing you need to be good at and all the creativity in the world is worthless if you can't get your idea heard or communicated clearly to the artists, engineers, producers and marketing staff of your team. It's a must to be able to communicate clearly both verbally and through written word or your creativity might be mistaken for the insane mumblings of a crazy man. Hone your writings skills, or at least make use of the spell and grammar check functions on your word processor, and do whatever's needed to help better your communication skills - doing the game design test above with a friend would obviously help greatly with this.

In addition to the creative and communicative skills that you must nurture, there are also a lot of more tangible ones that you're going to have to know or learn. You won't like need to draw a masterpiece or build a game-quality model or menu-screen, but when doing a design document a game designer does need to be able to visually display or mock-up certain aspects of the game.

To do this, you will need to be able to draw simple things with a pencil or use a 2D graphics package such as Adobe Photoshop to create these menu screens or flow charts or layouts that will be a part of the design document. You won't need to know how to create a brilliantly detailed texture or be able to Photoshop your one of your friend's head onto a body of a naked woman, but learning the basics of the software is a must and you'll want to know how to create geometric objects, add text, and spice it up as much as needed.

Also, it is becoming more and more common for companies to ask their designers to do things in 3D graphics programs such as Maya to help come up with and design levels for a game. You don't need to be able to intricately detailed and textured 3D models or levels - that's what the artists are for - but you should be able to use these programs and build simple things.

Most of these technical skills honestly don't require schooling and simply searching the web for tutorials or reading tech magazines and just jumping in and practicing will give you enough to get good enough to become a game designer if you work hard enough at it. Nevertheless, it won't hurt to actually have a degree in any applicable fields and for more information on game design opportunities at the post-High School level you should check out one of our previous articles on Majoring in Videogames where we list out all the institutions we currently know of that offer degrees in game related fields.

So, what are you waiting for? Get those creative juices flowing and be the one that creates the next revolutionary videogame. Then maybe 10 years from now when someone writes an article about wanting to be a game designer they can make a reference to you instead of someone such as Miyamoto.


Johnny B said...

After what so called analysts have said about the Revolution, I'm not inclined to believe much of anything they say. Nevertheless, it doesn't take incredible insight to see that Sony is trying to cram too much into the PS3. And Sony will lose ground because of it. I would guess a launch price of $450-550.

Anonymous said...

That was waaaaaaaay too much i.a.l.s...

SuperKeiji128 said...

The surprising part is that the GPU costs $50 to make.

Anonymous said...

SuperKeiji128 again,

Sorry, I meant $70

Sule said...

Look at the graph on this site. XBOX is losing 1 billion dollars every year. It's not uncommon to lose money on the console and then when people buy the games > tada jackpot.

Sule said...

Scotty beam me up! said...

The reason that Nintendo isn't mentioned? The industry doesn't seem to care that much about them anymore which is really sad since Nintendo is the reason the industry is like this. In many articles like one in particular I quote "The Xbox 360 is due this November while the PS3 is due next spring and a console from Nintendo next year as well." I'm sure they knew the code name but did they feel the need to use it, no, because it's just Nintendo that's all. Major magazines like Forbes don't even get their facts straight when it comes to Nintendo.

SNES Link said...

It's saddening really. I have been reding many newspaper articles since E3 of last year, and everytime: Xbox 360 gets a big writeup, PS3 gets a big writeup, Revolution.. a little sidenote. Neglect such as this will only make Nintendo have that much more of a comeback when it's released.

Anonymous said...

Eat my Falaffle