Xbox360 or PS3

[NatiRedGals]

Report: PS3 to sell for $399, cost $494 to make
Merrill Lynch Japan predicts Sony will lose more than $1 billion on hardware during its next-gen console's first year on the market--a sum it may not be able to recoup.
By Staff, GameSpot
Posted Jun 28, 2005 4:01 pm PT

According to the latest issue of Japanese magazine Toyo Keizai, Merrill Lynch Japan Securities has recently calculated an analysis that the production of a single PlayStation 3 console will cost Sony approximately 54,000 yen to make ($494), as of its initial release in 2006.

Merrill Lynch Japan estimates that the machine's main components--namely its Cell chip, RSX, and BD-ROM drive--will cost about 11,000 yen ($101) each. After adding the other electronics that will be used in the PS3, the machine's production cost goes up to 54,000 yen.

Given that Sony's PS3 will face stiff competition from Microsoft's Xbox 360, the chances that Sony will release its console at its production cost is slim. Under the assumption that the Xbox 360 is expected to sell at around $299, Merrill Lynch Japan predicts that Sony will sell each PS3 at the price of 44,800 yen ($410) in Japan and $399 in America. That would mean Sony would suffer a loss of more than 130 billion yen ($1.18 billion) during the first year of the PS3's release.

By comparison, the PlayStation 2 cost 39,800 yen ($364) in Japan and $299 in America when it launched in 2000. During its first year of release, Sony Computer Entertainment suffered a loss of 51.1 billion yen ($458 million), but it recovered the next year with a profit of 82.9 billion yen ($759 million), followed by 112.6 billion yen ($1.03 billion) the year after.

It is normal for game companies to take a loss on hardware whenever a new console launches, since they typically focus on acquiring market share rather than generating a profit during the first year. During the second year and afterward, they can recover the losses with the savings that come from mass production and with licensing fees from publishers.

However, Merrill Lynch Japan warns that the normal console business cycle may be disrupted if Microsoft cuts the Xbox 360's price when the PlayStation 3 launches. The report goes on to say that such a move could hurt Sony's plans, bringing an additional loss of 80 billion yen ($730 million) in its second year and 50 billion yen ($457 million) in its third year. Thus far, Sony has already invested 200 billion yen ($1.83 billion) into development and production for the Cell chip alone.

Toyo Keizai goes on to interview Sony Computer Entertainment president Ken Kutaragi, who avoided revealing the PS3's price but hinted that it would not be marked down excessively. "Whether consumers think a product is expensive or cheap all depends on the balance between its appeal and price," he said. "Our ideal [for the PS3] is for consumers to think to themselves, 'OK, I'll work more hours and buy it.' We want people to feel that they want it, no matter what."

"When Nintendo was selling its 16-bit machine at around 12,500 yen ($114), we sold the first PlayStation at 39,800 yen ($364)," continued Kutaragi. "The press was saying that it was expensive, but it was a huge hit. It's the same thing with the PlayStation Portable from last year. The Game Boy Advance is a same handheld gaming machine, and it costs less than 10 thousand yen ($91). On the other hand, our PSP had cost 25,000 yen ($229). But people lined up overnight to buy it, and it sold out on the day of its launch. It all depends on whether people want it. Of course, I'm confident that the PS3 is a product that people will actually want

[reds1869]

Originally Posted by NatiRedGals

Posted Jun 28, 2005 4:01 pm PT

This is VERY old news. Sony themselves said at E3 this month that the PS3 would go for about $600. So the article's claim of $399 is way off base.

[reds1869]

http://www.gamespot.com/e3/e3story.html?sid=6149470

[KronoRed]

Originally Posted by saboforthird

SONY might be thinking of getting out of the video game market, down the road.

That would be awful, Nintendo would be the niche market like Apple is on the PC and then you would have the monopoly king dictating prices, they would skyrocket.

[Jpup]

I have a XBOX 360 and my opinion is that there isn't enough games to warrant the purchase thus far. Hopefully that will change soon.

[reds1869]

Originally Posted by Jpup

I have a XBOX 360 and my opinion is that there isn't enough games to warrant the purchase thus far. Hopefully that will change soon.

I disagree completely...I am thrilled with the selection, but perhaps that's because I bought it last week when I'd been using the Gamecube exclusively for a year. It's like I entered new-release heaven. The coming line-up is very exciting imo. Games I currently own more than paid for teh purchase: Top Spin 2, Rock Star Table Tennis and Call of Duty 2 are all great games that I personally own. Once the new cycle hits the sports gaming experience is going to be unparalleled.

I know I sound like a fan boy, but the fact of the matter is I'm a Nintendo fan who bought a 360 due to the great game selection. There have been very few bad games released for the 360 so far; perhaps games that were not of my taste, but not many that were bad--and a few that are excellent (G.R.A.W. in particular). Most 360 games have been reviewed highly by critics, and I've tended to agree with their reviews, good and bad.

[Jpup]

Originally Posted by Herd Fan

I disagree completely...I am thrilled with the selection, but perhaps that's because I bought it last week when I'd been using the Gamecube exclusively for a year. It's like I entered new-release heaven. The coming line-up is very exciting imo. Games I currently own more than paid for teh purchase: Top Spin 2, Rock Star Table Tennis and Call of Duty 2 are all great games that I personally own. Once the new cycle hits the sports gaming experience is going to be unparalleled.

I know I sound like a fan boy, but the fact of the matter is I'm a Nintendo fan who bought a 360 due to the great game selection. There have been very few bad games released for the 360 so far; perhaps games that were not of my taste, but not many that were bad--and a few that are excellent (G.R.A.W. in particular). Most 360 games have been reviewed highly by critics, and I've tended to agree with their reviews, good and bad.

There has yet to be a game for the XBOX 360 that I can warrant throwing 60 bucks at, since launch. That's saying something for me. I used to buy a ton of games, but the 360 just doesn't have any excellent ones yet. I bought Madden and Tiger at launch and the lady bought me NBA 2k6 for Christmas, while all decent games, not anything special. NBA 2k6 was a great game, but it was a port. Give me something original.

I've been playing MLB 06 since March and don't plan to stop anytime soon. I haven't played my 360 or even turned it on in over 2 months. nothing about it excites me. The sports games for it have been very lackluster at best.

[GIK]

Blazing Angels is great, IMO.

Also, I've had a lot of fun with PGR:3 and I really should pick up Tiger Woods golf.

I do wish there was a better baseball title, though, but am looking forward to Madden, Forza 2 and Halo 3.

[reds1869]

Originally Posted by Jpup

There has yet to be a game for the XBOX 360 that I can warrant throwing 60 bucks at, since launch. That's saying something for me. I used to buy a ton of games, but the 360 just doesn't have any excellent ones yet. I bought Madden and Tiger at launch and the lady bought me NBA 2k6 for Christmas, while all decent games, not anything special. NBA 2k6 was a great game, but it was a port. Give me something original.

I've been playing MLB 06 since March and don't plan to stop anytime soon. I haven't played my 360 or even turned it on in over 2 months. nothing about it excites me. The sports games for it have been very lackluster at best.

Well, if you expect the first round of sports games to be much more than weak ports I understand your dissapointment. But just because there aren't a lot of great sports games doesn't mean there aren't great games for the system. G.R.A.W., COD2, Perfect Dark, Table Tennis and Kameo are all great XBOX 360 specific games. Just because your genre is under represented does not mean "there are no great games" on the 360. And I'll get burned for this, but I feel games were underpriced in the last generation, which led to the failure of so many software firms. $60 is pretty fair if you've ever seen what goes on behind the scenes of a game developer. Remember, NES and N64 games went for over $60 at one time.


Edited because I can type first thing in the morning!