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[McFly]

http://ps2.gamespy.com/articles/561/561434p2.html

But moving on to the PSP itself, the price is insane! A friend in Japan suggests that Sony will be losing over $350 per unit manufactured, and looking at how advanced the tech is I wouldn't be surprised. Taking such a huge hit on hardware is unprecedented, and makes Microsoft's early Xbox losses look modest in comparison. It tells me that Sony really, really wants to be a handheld player for the long haul, and that it'll do anything possible to captures and hold a nice chunk of that market.

I personaly think this guy got something wrong, but if true ... holy shit!

Fredi

 

[DarienA]

Yes we needed another PSP thread... this didn't fit in any of the other threads?

 

[Lhadatt]

$350? What?

Let's be reasonable. Seeing as Sony can shrink the PSTwo down to the size of a DVD case, it seems logical to me that they can produce slightly inferior hardware with a screen for not that much more money. I estimate they're losing $100 on each unit at the most.

 

[McFly]

this didn't fit in any of the other threads?

No.

Fredi

 

[ge-man]

$350? What?

Let's be reasonable. Seeing as Sony can shrink the PSTwo down to the size of a DVD case, it seems logical to me that they can produce slightly inferior hardware with a screen for not that much more money. I estimate they're losing $100 on each unit at the most.

It's not just a minature hardware issue. Have you seen the screen for instance?

 

[akascream]

Yeah.. lets leave all the big, interesting news in a couple bloated threads nobody reads anymore. That way we won't crowd the forum with interesting stuff to talk about.

 

[jarrod]

$350? What?

Let's be reasonable. Seeing as Sony can shrink the PSTwo down to the size of a DVD case, it seems logical to me that they can produce slightly inferior hardware with a screen for not that much more money. I estimate they're losing $100 on each unit at the most.

Unfortunately, they're not producing the screens... in fact it's been said Sony's only producing about 50% of PSP (WiFi, screen, memory) is outsourced... the most expensive components at that.

 

[kaching]

Bonnel was right!

 

[sohka88]

So now it cost $550 to make a psp? Come on....

 

[jarrod]

$550 sounds a bit over the top... most estimates I've seen say around $300-350 per unit. Meaning about a 40-50% loss upfront, which is in line with PS2 & Xbox launches.

 

[madara]

Why are you selling drugs to children? thats what I want to know.

 

[sohka88]

most estimates I've seen say around $300-350 per unit

where did u see this estimates? from who?

 

[krypt0nian]

But moving on to the PSP itself, the price is insane! A friend in Japan suggests that Sony will be losing over $350 per unit manufactured, and looking at how advanced the tech is I wouldn't be surprised. Taking such a huge hit on hardware is unprecedented, and makes Microsoft's early Xbox losses look modest in comparison. It tells me that Sony really, really wants to be a handheld player for the long haul, and that it'll do anything possible to captures and hold a nice chunk of that market.

My friend in Japan said that his friend in Japan is lying.

 

[Link316]

Sony said the PSP hardware will be profitable by March 2005, think I'll believe them over some "friend in Japan"

 

[jarrod]

where did u see this estimates? from who?

People in the industry on this forum mainly. Estimates elsewhere range all over the map from $200-$500.

Sony said the PSP hardware will be profitable by March 2005, think I'll believe them over some "friend in Japan"

Technically they said "fiscal year starting April 2005" I believe... meaning it could actually be March 2006. :/

 

[Mrbob]

Technically they said "fiscal year starting April 2005" I believe... meaning it could actually be March 2006. :/

Well if PSP is a 10 year plan if it takes a year to turn a profit on hardware that is a small price to pay.

 

[DarienA]

Well if PSP is a 10 year plan if it takes a year to turn a profit on hardware that is a small price to pay.

Wow Sony is gonna be in the red for quite a bit... PSP launch... PS3 launch....

 

[ypo]

Sounds like his friend is someone from this board.

 

[User Tron]

Sony said the PSP hardware will be profitable by March 2005, think I'll believe them over some "friend in Japan"

I think they said: It won't be profitable this fiscal year (ends March 2005). IMO this does NOT mean it will be immediate afterwards.

End of Line

 

[Mrbob]

Wow Sony is gonna be in the red for quite a bit... PSP launch... PS3 launch....

PS2 sales will help offset much of this like it has for the past year or so.

 

[sohka88]

People in the industry on this forum mainly

Just like I thought... You keep bringing up numbers that people on the forum guessed.. great source. I estimate the psp cost $210 to make... GO SPREAD IT JARROD...

 

[jarrod]

Well if PSP is a 10 year plan if it takes a year to turn a profit on hardware that is a small price to pay.

I agree with that, I also thnk Sony's looking at PSP to have a longer active lifespan than the average PlayStation (ie: don't expect PSP2 in 2009). More likely we'll see new models every 2-3 years or so, with various cosmetic and functional advancements (added rumble, added camera, OLED screen, larger capacity battery, clam shell design, etc).

Taking a loss upfront was a good move though imo. Had Sony gone with the previous for profit model, they'd have priced themselves out of the market immediately. By gambling with the lower price and trying to take out DS upfront, they've immediately secured PSP as an attractive alternative for both publishers and consumers... the only real problem here might possibly be Sony's finacial situation as a whole. Eating losses on PSP upfront wouldn't be so bad if they didn't have to do the same thing (likely on a much larger scale) a year later with PS3. It's risky... but then again, that's how PlayStation got where it is today.

If Nintendo was smart, they'd immediately start dropping the DS price to $99 and try to get a price war going with Sony (who likely can't drop PSP much further if at all). Use the same tactics aginst Sony that Sony used to drive Sega out of the industry... unfortunately, I doubt that's Nintendo's plan. :/

 

[jarrod]

Just like I thought... You keep bringing up numbers that people on the forum guessed.. great source. I estimate the psp cost $210 to make... GO SPREAD IT JARROD...

Actually we've had this exact conversion before and I brought up sources before (to which you never responded)... maybe you should look into our post histories rather than being an ass?

 

[Screenboy]

Theres no-way business wise that Sony would let themselves loose that much on the PSP for the Hand-held market.




-SB

 

[borghe]

Theres no-way business wise that Sony would let themselves loose that much on the PSP for the Hand-held market.

-SB

agreed.. even the most aggressive strategies won't have someone losing 60% on each unit sold. Hell, at that kind of loss not even software and acesories can make up for it.. that would be like 10 first party games or 35 third party games FROM EVERY PERSON THAT BUYS A PSP!

 

[sohka88]

Actually we've had this exact conversion before and I brought up sources before (to which you never responded)... maybe you should look into our post histories rather than being an ass?

How can guesses from people be sources? How will sony hardware be profitable in 1 1/2 years if they are losing so much? You cannot pass estimates/guesses as factual info.

 

[JackFrost2012]

Hrms, I think I might be that friend in Japan! $350 may be a bit high, but I think $300 per unit is a reasonable estimate of Sony's losses, once you factor in packaging/distribution costs on top of their manufacturing costs. Yes, I know you don't believe me. Yes, I know it doesn't make any sense that Sony would be willing to lose $300/unit to build their userbase.

Why do you think I (and others in Japan) were predicting a per-unit cost of $350-400? I didn't believe Sony would be willing to lose more than $150 per unit. No sane person would. But ... they are. Hope it works out for 'em!

 

[Project Midway]

My guess is PSP's BOM is ~$250. Of course the bill of materials isnt the only cost when developing new hardware.

 

[jarrod]

How can guesses from people be sources? How will sony hardware be profitable in 1 1/2 years if they are losing so much? You cannot pass estimates/guesses as factual info.

I actually had links before (from people outside this forum... mainly analysts and publishers). On the forum, I've just been listening to the JP crew mainly, who's 'guessing' I'm assuming has more insight than yours.

I expect Sony will bring down costs immensely once they start making the screens internally (via their Samsung partnership which should be up and running in mid 2005). Sharp's just there for the first 5-6 million PSPs I suspect. The biggest costs here are definitely the screen & memory.

 

[JackFrost2012]

I expect Sony will bring down costs immensely once they start making the screens internally (via their Samsung partnership which should be up and running in mid 2005). Sharp's just there for the first 5-6 million PSPs I suspect. The biggest costs here are definitely the screen & memory.

Yeah, it goes without saying that the cost of parts is going to reduce dramatically over the next 1-2 years. I doubt that PSP hardware will be profitable by March 2005 (that's just Kutaragi telling people what they want to hear), but March 2006 isn't out of the question. I'm tempted to pick one up at launch, just because with those kinds of losses per unit, I fully expect artificial hardware "shortages" to stem Sony's financial bleeding.

 

[sohka88]

he didn't say march 2005

 

[JackFrost2012]

he didn't say march 2005

Ah, I see Jarrod's clarification above. In the other thread, people were claiming he said BY March 2005, which I know isn't right. But during that fiscal year - late during that fiscal year - is certainly a possibility.

On that note, expect artificial hardware shortages through March 2006! Or at least until the Samsung partnership is up-and-running. That's when the "real" launch will begin - this is just a shadow launch to build prestige.

 

[kaching]

Hrms, I think I might be that friend in Japan! $350 may be a bit high, but I think $300 per unit is a reasonable estimate of Sony's losses, once you factor in packaging/distribution costs on top of their manufacturing costs. Yes, I know you don't believe me. Yes, I know it doesn't make any sense that Sony would be willing to lose $300/unit to build their userbase.

I think the thing that makes it unbelievable is that you seem to have such a clear idea of how much cost they're eating but there's never been an itemized breakdown of that cost. And, meanwhile, no one says anything about the DS in this regard. Its $150 offering capabilities that have yet to be offered at anything close to that price anywhere else. If Sony is eating $300 in cost on the PSP, how much is Nintendo eating? Fill in the blanks, else there's not enough support to take it at face value.

Why do you think I (and others in Japan) were predicting a per-unit cost of $350-400?

Personally, I just figured you have bad sources.

 

[drohne]

why do people have such a hard time with the logical conclusion that their sources aren't any good? it seems more likely than the notion that sony's committing financial suicide, no? or for that matter the notion of a "shadow launch."

and if sony are committing financial suicide to bring me the psp at such a ridiculous price, then i salute them. from now on i demand a pound of flesh with my game consoles.

 

[jarrod]

Well, DS is a pretty cheap piece of kit when you look at things compared to PSP directly... the WiFi tech is probably the only comparable cost there (besides two screens maybe, but they're rather low quality by comparison, not even approaching "never been used in a handheld device before" quality PSP's screen). Then you've got a cart/card interface vs UMD drive, shelf ARM chips vs modded/custom MIPS chips, 4.5MB RAM vs 32MB RAM, 850 MAh battery vs 1800 MAh battery... Nintendo was willing to go down to 10,000 yen at launch, I doubt they're breaking the bank on DS. That's not how they design handhelds.

 

[drohne]

aren't they giving away wi-fi adaptors for free with copies of pokemon? can't be that expensive.

 

[jarrod]

aren't they giving away wi-fi adaptors for free with copies of pokemon? can't be that expensive.

No, those use custom Motorolla technologies which Nintendo licensed. And they jack up the game price $5-10.

 

[JackFrost2012]

or for that matter the notion of a "shadow launch."

Aww, I was just being cute. I'm sure Sony sees this as the "real" launch. but there's not gonna be many units in the pipeline until they start cutting costs and using parts from their longterm partners. Sorry you don't trust my sources, but not much I can do about that.

and if sony are committing financial suicide to bring me the psp at such a ridiculous price, then i salute them.

As do I! Sony fans should buy the PSP to play ... Nintendo fans should buy it to hurt Sony's bottom line!

 

[sohka88]

Aww, I was just being cute. I'm sure Sony sees this as the "real" launch. but there's not gonna be many units in the pipeline until they start cutting costs and using parts from their longterm partners. Sorry you don't trust my sources, but not much I can do about that.

Great business sence.... NOT

 

[Guns N' Poops]

Still trying hard to undermine, huh Jack Frost? You know, that could be your own troll comment from the other thread being quoted as the allegedly "friend from Japan" there. ^
That handheld POS is getting dirty.

 

[Project Midway]

wlan chips cost next to nothing nowadays. But when trying to make device as cheap as possible, every cent counts.

 

[drohne]

and i'm sorry you trust them so much. we're all sorry, here.

at any rate, i'm sure sony are pleased with murmurings that the psp is actually EIGHT HUNDRED DOLLARS WORTH OF HARDWARE. or whatever ludicrous figure. lends psp that aura of the occult. can't buy marketing like that.

 

[Fafalada]

Hrms, I think I might be that friend in Japan! $350 may be a bit high, but I think $300 per unit is a reasonable estimate of Sony's losses, once you factor in packaging/distribution costs on top of their manufacturing costs. Yes, I know you don't believe me. Yes, I know it doesn't make any sense that Sony would be willing to lose $300/unit to build their userbase.

Actually no - why it doesn't make sense to ME, is that similar devices are making large profits at 500$ mark, built almost entirely on outsourced components. So either Sony's current PSP manufacturing process is the alpha and omega of all manufacturing inefficiency, or your source is wrong.

I am not saying that I find the first option less believable then the second mind you - I am just making an observation.

 

[JackFrost2012]

Still trying hard to undermine, huh Jack Frost? You know, that could be your own troll comment from the other be quoted as the allegedly "friend from Japan" there. ^
That handheld POS is getting dirty.

How the hell am I "undermining"? I'm excited about the PSP and I'm gonna be in line day one to buy one. As a consumer, how much it costs Sony to make the machine is irrelevant - what matters is how much it costs in the store, and on that count, Sony delivered.

I just thought that folks on the board would be interested in the business side of the PSP, but apparently everyone assumes I'm just a troll. Hardly surprising, though. Knowing what the PSP cost, I found the 2 man price to be utterly batshit insane. Given that the 2 man price is now established fact, it's no surprise that folks are finding the cost hard-to-believe and assuming I'm the batshit insane one, here.

And, you know, Ben IS my friend, so he's not just browsing GAF and taking comments from people out-of-context.

And that's the last I have to say about that - believe it, don't, whatever. And as I said earlier, cheers to Sony on delivering that price - I do hope it works out for them.

 

[SantaC]

someone mentioned earlier that 1 psp cost 50,000 yen to create. So he is not off.

 

[jarrod]

Actually no - why it doesn't make sense to ME, is that similar devices are making large profits at 500$ mark, built almost entirely on outsourced components. So either Sony's current PSP manufacturing process is the alpha and omega of all manufacturing inefficiency, or your source is wrong.

I am not saying that I find the first option less believable then the second mind you - I am just making an observation.

To be fair, good chunk of PSP is outsourced as well though... and how many $500 devices are reaping huge profits with a comparable quality screen?

 

[JackFrost2012]

Actually no - why it doesn't make sense to ME, is that similar devices are making large profits at 500$ mark, built almost entirely on outsourced components. So either Sony's current PSP manufacturing process is the alpha and omega of all manufacturing inefficiency, or your source is wrong.

Okay, I know I said I was shutting up, but: I'm pretty sure it's the former. Sony is jumping through hoops and paying through the nose to get the PSP out this year - it's a prestige thing, for the PSone's 10th anniversary. Costs will settle down a bit early next year as they find better/more stable long term sources for the components.

Also: that should be "your sources are wrong." This isn't just one-guy-who-told-me-something. I dunno, maybe the entire Japanese industry's the victim of a Nintendo-fueled whisper campaign. Stranger things have happened.

 

[Drek]

People need to lay off the crack. No way Sony is loosing 150% on the PSP, I'd guess more like 50% tops (i.e. total cost = $300).

Look at it this way. actual chipset etc. Sony can make in a damn small PStwo model now for $150 retail, making a profit at that. So with that you take care of the ram, the chipset, the wifi (about the same price as the network adapter for a hardware manufacturer to include), the casing, and the distribution. The only aditional costs you're looking at is the battery and the screen. The battery is somewhat figured in as well with the PStwo power supply, though that costs penauts in comparision. But do you really think that the battery and screen alone cost Sony more than $150? They'll sell extra batteries for less than $50, and we all know how much Sony loves to make big money on accessories.

You also need to keep in mind that screen technologies factor in size greatly in the price. The number one inflator of LCD screen costs is fracturing crystals during fabrication. Last I knew it happened at about a 30-50% rate depending on how good the fab. process is for that factory. Sony and IBM are actually working on a process that will greatly reduce screen fab. costs, but I don't think either one has that up and running yet. Smaller screens however are less likely to fracture or segment, simply because they're smaller. This makes the costs much lower compared to larger screens, especially when coupled with the reduced amount of materials needed.

For a retail price screen comparision look at Sony's own PSone LCD screen. It sold for $99, at a profit, with as many extra costs (casing, distribution, retailer mark-up) as the PSP unit as a whole will face.

Sony's plan to reduce the price is obviously relying on improved chipset manufacturing, along with getting their own LCD factories (Sony owns a few) turning out PSP screens. Those two benefits alone could pretty easily gaurantee a manufacturing cost well in the range of profitability.

I'm guessing that Sony's cost per PSP unit is about $250-$300, on the lower end of that estimate, from a strictly "what's in the box" basis. Of course it would be somewhat higher since they figure in recouping development costs in the initial handheld sales, but we all know that's not worth figuring in as initial cost per unit for Sony, the plan for recouping dev. costs on the back end of the life cycle.

 

[drohne]

i know nothing about the gaming industry specifically, but you should probably question the assumption that all rumors whispered by people "in the know" are true. neither is a rumor's ubiquity an indication of its truth.

at some point you have to evaluate the claim that the psp costs $550 to build on its own merits. and as you've recognized, that claim sounds ridiculous.

 

[JackFrost2012]

i know nothing about the gaming industry specifically, but you should probably question the assumption that all rumors whispered by people "in the know" are true. neither is a rumor's ubiquity an indication of its truth.

at some point you have to evaluate the claim that the psp costs $550 to build on its own merits. and as you've recognized, that claim sounds ridiculous.

5 man isn't $550, it's closer to $460. Of course ubiquity doesn't mean it's right. There's a difference between "in the know" and in the know. And you should recognize that, even though I recognize the claim sounds ridiculous, I'm making and defending it anyways.

Zat's all, no really, no more posting, argh.