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Share price sinks 3.6 percent on predictions of $900 per-console cost, spring 2007 US launch; contradictory corporate statements follow.
Across the United States, most Americans were relaxing this Monday, courtesy of the long Presidents' Day holiday weekend. Not so across the Pacific in the corporate offices of Sony. The electronics and entertainment giant saw its stock price sink 3.6 percent, dropping to 5,300 yen ($45) per share. The fall affected the entire Tokyo stock market, with the Nikkei index dropping 1.75 percent to 15,437.93 yen ($130.57).
Monday's drop follows a 2.8 percent decline in Sony stock on Friday, after Wall Street stock-brokerage firm Merrill Lynch published a report skeptical of the company's next-generation console plans. It predicted the launch of the PlayStation 3 console could be delayed by 6 to 12 months from its current spring 2006 window, resulting in an autumn launch in Japan and a late 2006 or early 2007 launch in the US.
"We wrote last November that Sony’s design choices for the PS3 had resulted in an expensive and difficult-to-manufacture product," read the report, "and we think that we’re seeing the consequences of those choices play out now. In particular, we think the problem points are the Sony Cell processor and the Blu-ray drive." Merrill Lynch also cited heat-generation issues with PS3 hardware and the far-from-finished state of most games for the platform as factors.
While other analysts have predicted that the PS3 might not hit North America until Q4 2006 or Q1 2007--which would miss the all-important holiday shopping season--Merrill Lynch's stature made many-a-trader skittish. The fires of unease were fueled further by another component of the report, which predicted the manufacturing cost of the console could be much higher than previous estimates of around $500 per unit.
"Our updated analysis indicates that the initial bill of [production] materials for PS3 could approach $900," read the report. The report said that the production cost of a single Cell processor will be $230 at launch, with the Blu-ray drive setting Sony back $350 per unit. If that estimate is correct, that means the PS3 would have to sell for around $775-$800 to maintain a $125-$100 per-unit-loss similar to that of Microsoft's Xbox 360.
Merrill Lynch expects PS3 production costs will start falling after 2007, when Sony can shift the Cell chip's manufacture from the complex 90nm process to the more cost-effective 65mn process. Scaling Blu-ray to other devices will also bring down the drive's price. Merrill Lynch predicts that the PS3's production cost will fall to $320 in the three years after its launch, by which time the Cell will only cost $60 per unit and the Blu-ray drive $100 per unit.
In the wake of the report, Sony issued a series of contradictory statements. In Japan, Sony Computer Entertainment spokesman Kei Sakaguchi flatly denied that there would be any delay to Bloomberg News and other press outlets, saying, "there isn't any change in our plan to release the console in spring 2006."
However, a Sony Computer Entertainment America spokeswoman was more cautious when she spoke with USA Today. "We're aiming for spring, but we haven't announced specific regions," she told the daily broadsheet. "We're waiting for [final PS3 specifications] until the last possible minute, but the launch could be pushed back if they're not decided soon."
As usual I encourage you to read the comments at the bottom of the gamespot link provided before posting.
My take on it: If it does cost even as low as $700 (in which case Sony will be taking a massive hit), it will kill the PS3 in the US. Especially since the 360 will have fallen even futher in price and have the likes of Halo 3, GR3, Oblivion and many more "killer apps" not to mention Xbox Live! - It may seem like I give Sony a hard time, but I still want them to do well, because it means that it pushes Microsoft more and makes games on the 360 better.
Also, if what these guys say is true about the components costing around $900, Sony cannot afford to take a huge hit per console like Microsoft can. I seriously doubt they could take more than $150 per system.
Discuss.
Last edited by WrinklyNinja; 21-02-2006 at 01:09..
Just been having a read through forums etc. Something that has cropped up a few times, is that this analyst group or whatever you call them, were on the ball with the 360 launch and price predictions.
I mean I hope this isent true, for all the kickings I give the PS3 I still look forward to the possiblities of the machine, although Im not excited by a catalogue of sequels and a cobbled together online system.
This really is damning for Sony. I cant remember the last time I heard posative news about the PS3. I also think they have handled this so wrong. They could at least say something to stop speculation. But then again, the reason they havent said anything could be because there is no good news...
"Analysts generally agree that Sony will do whatever it can to avoid missing the key year-end holiday season this year, but many believe it will be unable to make the PS3 in great volumes."
People are saying "Oh E3 will be Sonys E3" No it wont. Not at all. For starters I think there will be huge letdowns for potential customers and fanboys alike. Akward questions will be asked, and they will have to adress alot of speculation. Not to mention that Microsoft will be blowing holes out of Sony at this point, demonstrating a second wave of games.
And for the first time, I admit that the Nintendo Revolution is a dark horse in all of this. If this really does all go tits up for Sony, I think Microsoft will come out on top, and Nintendo will come in second.
Also, if what these guys say is true about the components costing around $900, Sony cannot afford to take a huge hit per console like Microsoft can. I seriously doubt they could take more than $150 per system.
Discuss.
nah Sony is still a massive company bringing in billions in revenue and remember playstation only makes a small part of what they sell.
Dont forget PS2 is still around and still has 70% of the market share, that console alone can hold off 360 for a good while with games like kingdom hearts 2 and final fantasy 12 still to be relesed.
Its not just the 360 dancing around on its own waiting for compertition, its not as black and white as that, those two games alone will over shadow any 360 game except Halo3 or something on that level.
Think I might get me a 360 and have some fun with that and my PS2 until the price of the PS3 comes down to a reasonable level.
Seriously though, I don't honestly know why Sony have gone for HD only output and a BluRay drive. For one, I know I won't have a HD ready TV by the time the console is released (so thats one point the 360 has over the PS3) and BluRay is still a very new (and possibly unnecessary) technology.
Hopefully Sony won't miss their launch date, 'cause if they do it could end up as another Xmas with only the 360 on the market - and I don't think Microsoft will have supply issues...
One good thing about all this is that Nintendo have been left pretty much alone to work on the Revolution.
look at that they are doing more then fine, and could take a hit if the have too.
Revenue means **** all. Sony are making **** poor profit. They can't take a hit like that, and I honestly doubt a PS3 will cost more than £400 tops. The 3DO was £799 anyway. A lot of people would still buy a PS3 at £400, though I'd personally rather get two Xbox360s.
Quote:
Originally Posted by Baggins
Dont forget PS2 is still around and still has 70% of the market share, that console alone can hold off 360 for a good while with games like kingdom hearts 2 and final fantasy 12 still to be relesed.
Its not just the 360 dancing around on its own waiting for compertition, its not as black and white as that, those two games alone will over shadow any 360 game except Halo3 or something on that level.
Don't kid yourself. Most people are not going to be faffing around with Final Fantasy 12 when a proper next gen console is out that can do so much more.
Sony better hurry up. And that stuff about 2007 in Europe better not be true, or I'm going to have to import. Sony, get your **** together.
Revenue means **** all. Sony are making **** poor profit.
Evidence?
Quote:
Originally Posted by darktidus
Don't kid yourself. Most people are not going to be faffing around with Final Fantasy 12 when a proper next gen console is out that can do so much more.
It FF, where have you been the last 15 years?
It is a very big deal that i am willing to bet that game out sells any game the 360 puts out until the launch of PS3 big deal.
Seeing at KH2 sold over a millions units in it first weekend in japan i aint worried
I dont think it only supports HD TVs, i am sure it will come with a composite cable like all consoles do.
If it doesnt well then i just give up.
I have never heard any official source say it HD only, but people are so creamed over HD that they never mention it in relation to normal definition TVs
... and have the likes of Halo 3, GR3, Oblivion ...
Quote:
Originally Posted by WrinklyNinja
I mean I hope this isent true, for all the kickings I give the PS3 I still look forward to the possiblities of the machine, although Im not excited by a catalogue of sequels and a cobbled together online system.
i really cant see the console costing that much to buy. i know how much suppliers are asking for and it's no where near that figure. i wouldnt worry to be honest
Just to throw my abstract perspective into the fray here (and and to say, chill out peeps, no need for flames)...
When the Spectrum 48K was first released, it sold retail for £160 and the C64 for roughly £180-£190 and those prices were considered extremely high, yet almost every household with kids ended up having one or the other (or the posh kids who got the BBC Micro, which sold for silly money).
Anyway, 3 years later, the Atari ST and Amiga emerged, selling at £320 and £400 respectively and that was considered a huge amount of money, considering your talking about the mid 80's. Yet... Every singe computer type person who could lay their hands on that kind of money had to have one or the other, simply because they wanted the best available.
I don't think it matters how much the PS3 sells for, it will sell and in large quantities. Just the same as the XBox has done and the price of that when it first hit the shelves was completely stupid money.
It's no different from people upgrading their cars to the latest model every couple of years, just to stay ahead of the jones's. People want the best they can get hold of as soon as it's available, no matter what it costs and how much financial difficulty people might end up in as a result. The bigger grip for getting the latest consoles though, is the possiblity of playing bigger and better games, which you couldn't on your existing console.
Why do people keep on buying brand new mobiles phones every time a new and "improved" model comes out... It's basically a status symbol. The consoles are basically no different.
meh, 360 was pretty unimpressive so i doubt the ps3 can provide anything more... it would have to be significantly better than the 360 to justify paying that ridiculous amount of money for one
PS3 launch, price doubts batter Sony stock
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