Sony targets a break-even goal for year's end

by Nick Doerr { Jul 28th 2007 at 3:00PM }

A few days ago we posed the question how much Sony was actually losing on each console, or, how much each PS3 cost Sony to manufacture. Apparently, it's approximately US $200. That's a pretty harsh blow, considering, right? Not so! Sony executive VP Nobuyuki Oneda commented on such things, saying that Sony aims to break even by the end of this fiscal year (end of March '08). Is this so unbelievable? We don't think so -- there are so many heavy-hitting titles coming out before then, our fingers can't count that high.

But wait, you say, selling games won't help Sony break even! Lowering manufacturing costs would. Yes, you are right and Oneda said the negative margin will be removed when steps have been taken to lower the cost of the Cell, RSX chip, and Blu-ray optical components. All of the chips are working on getting moved from 90nm to 65nm, starting with the Cell then moving on to the RSX chip. Combine these cost reductions with our aforementioned game sales and what do you get? The possibility to break even. Best of luck in this endeavor, Sony!

Tags: cell, rsx, sony

Reader Comments (Page 1 of 1)

Andy @ Jul 28th 2007 3:17PM

So the way I interpret this is it is still -$200 per console sold. I'd imagine by now it'd be less by now

Aim for the moon Sony, if you miss you be amongst the stars. I love inspirational sayings.

Nick @ Jul 28th 2007 3:19PM

Breaking even is definitely beneficial for the fans and the future of the PS brand. But what may not be factored into those figures is marketing, R&D expenses etc.

ryano @ Jul 28th 2007 3:27PM

yeah, that .65 chip will be for the 360 this fall as well. and yes it'll have smaller less costly parts. i'm only confused why MS or SONY didn't implement these chips in the first place? they've been available for CPUs a while now...

but either way i can't wait to buy these next-gen consoles at a cheaper price knowing that the hardware inside them will be better built. so many great games out for PS3 and X360 this year and next!

Andy @ Jul 28th 2007 4:01PM

I need some help folks.

I have a 18GB PS3 console and I want to upgrade my HDD because 18 gigs isn't enough.

Can I use a 7200RPM hard drive or do I have to use a 5400 RPM drive?

How do I save my saves so I can play them on my new hard drive?

Andy @ Jul 28th 2007 4:06PM

Is this one here a good choice?

http://www.compusmart.com/Product/Default.aspx?SupplierPartNo=78132A&CatalogID=102

pizzanerd @ Jul 28th 2007 4:24PM

That one would work just fine, although it is totally ok to go to a 7200RPM drive. I'm going to in two weeks, you'll just pay a slightly higher price.
For 5400RPM look at this baby http://www.newegg.com/Product/Product.aspx?Item=N82E16822136071

for 7200RPM look at this one
http://www.newegg.com/Product/Product.aspx?Item=N82E16822146226

I'm probably going with that 7200RPM one.

Cheers
Mantooth on psn btw for more Qs

apease @ Jul 28th 2007 4:38PM

Andy: That would probably work. It's sata and it's 2.5", those are the only requirements I know of. Keeping it at 5400 rpm is good to keep the heat down.

ryano: 65nm has been available for some CPU manufacturers, mainly AMD and Intel, but they have their own factories. IBM developed the CPUs being used in all the current consoles, and although they invented a lot of the technology being used to shrink semiconductors, my understanding is they don't actually build the CPUs, it's done by third-parties that can't afford to be quite as cutting edge as AMD and Intel.

And that $200 estimate is from the launch, since then, the blu-ray diodes have dropped from $140 to something like $8. Take out the Emotion Engine for another unspecified cost savings, and I'd say they're not far from breaking even with the 80 GB model... at $600. So shrink the chips to get more of them per die, and get rid of the last vestiges of ps2 hardware (Graphics Synthesizer), and they'll be making money on $500 ps3s by spring, no problem. Only problem? They'll have at least one more model, with the 65nm chips. That's a lot of console revisions in the first year, not good for keeping consumers educated.

Andy @ Jul 28th 2007 4:43PM

Why would you go for the smaller sized hard drive that is cheaper?

Is 7200RPM better?

(sorry I am new at all this computer stuff)

Andy @ Jul 28th 2007 4:46PM

Thanks for the help folks except I still have one more question.

How do I save my saves so I can play them on my new hard drive?

(is it even possible)

Figboy @ Jul 28th 2007 4:52PM

this doesn't surprise me at all, and is completely possible. Sony has been taking steps to lower manufacturing costs, and the plus side of using cutting edge, albiet expensive technology is that it drops in price really fast.

1.) Sony's removed the PS2 Emotion Engine from PS3 motherboards, reducing production costs.

2.) Speaking of motherboards, by eliminating the 20gig SKU, they don't have to manufacture *TWO separate motherboards for the console, reducing production costs.

3.) The Cell has already moved from the costly 90nm production process, to the much cheaper 65nm process. the RSX will be following shortly.

4.) Blu Ray is steadily becoming the HD format of choice amongst consumers, and that alone will help bring in profit for Sony.

5.) Speaking of Blu Ray, the big money saver is that the cost of the blue laser diode for Blu Ray players (including the PS3), has gone from $90 a diode, to just $8 a diode, as of a month or two ago (can't remember when, exactly, this happened).

with all that in mind, i can see how they've probably shaved about $100 or more off of the production costs of the PS3, which is why they can lower the machine by $100, which means they're *STILL losing about $200 a console (assuming they were losing $200 to begin with).

i can see them breaking even by March 2008, considering that that's a whole 8 months away. that's plenty of time to reduce production costs further, but i wouldn't expect to see a $400 PS3 *THIS year, maybe summer/fall 2008.

shase @ Jul 28th 2007 5:23PM

I think Sony will probably drop another 100$ or so when MS does it. Because we all know 360 will drop soon and MS will say how they "paritied it" with the ps3 price drop. Sony could do a pricedrop to match it. Also, the 65nm might be in production sooner than we think (or they tell us). They are stopping the 60gigs production and making way for new 80gig without the ps2 hardware and i wouldn't bee suprised at all that at TGS they announce the 80gig will have the 65nm chips or a new model with the 65nm chips.

Either way it is great that Sony is cutting the price and getting to break even. I forget if MS said they started breaking even this march or not but certainly whatever profit MS did make went to the repairmen.

pizzanerd @ Jul 28th 2007 5:28PM

Andy: The current HDD in your PS3 is 5400rpm. The 7200rpm ones spin faster, so you'll be able to load, save, and boot quicker. Some people think that the 7200rpm will produce too much heat, but I've read somebody else put one in without a problem. It requires power on the order of Watts, so heating shouldn't be a problem unless you keep it in a hot room already. The main thing you're looking for is a SATA150 connection. Its just basically the plug for the PS3, and its what most notebook HDDs have.

If you think your PS3's load times and saves are fast enough, stick with 5400rpm since you'll get more space for your dollar.

WTangoFoxtrot @ Jul 28th 2007 5:31PM

@2
i think the reason Sony and Microsoft did not implement the 65 nm tech beforehand is because IBM is the one manufacturing the Cell and the Xenos power pc processors and they have not yet switched their fabrication techniques unlike AMD and Intel that have been using 65nm for a while now.

Stellarpimp @ Jul 28th 2007 6:39PM

The reason for the cell and xbox not using 65nm process at the time was because the 90nm process was more mature. To make sure their products make it out to the public on time or close to on time, the respective companys will use the mature process. If you follow nVidia and ATi much...both companys have had serious delays in video cards coming out when they changed to smaller chip. It is not always simply just shrinking the lines...because some lines can't handle the shrinkage and leaks. So basically, using the 90nm was best at the time. Intel has already finished work on 45nm and those chips should be out soon if not already out.

As for the HDD of 5400 and 7200rpm reports on the web are there are no differences between the two while installed in the PS3. They say the PS3 still only takes the data at a certain rate regardless of how fast the HDD is.

Andy, just back your files up on an external HDD. You also don't have to worry about the OS or anything as it stays in the PS3 memory. So after you back your files up, drop in the new HDD and power it up you are ready to go.

Andy if this doesn't make any sense...do a Google search for PS3 harddrive replacement. You'll find all kind of set by step websites with pictures too!! Anyways good luck in the HDD swap...I'm getting the 250g 5400rpm HDD from Newegg.

pizzanerd @ Jul 28th 2007 6:54PM

@Stellarpimp
Hey, could you point me to anything that says the 5400 and 7200 don't make a difference? This has actually been a big question for me but I haven't been able to find out anything.

Jeremy @ Jul 28th 2007 7:01PM

I agree with you, apease. While the article says Sony "currently" takes a $200 loss, that claim is unsourced and is identical to the figure reported last fall. I think this is just sloppy reporting. Your estimate that they are close to breaking even on the 80g is probably about right.

As for the 65nm issue, while Intel and AMD are using the smaller process, AMD is having A LOT of problems with it. Specifically, they can't make them go very fast. If you are making chips for a computer, this isn't a big problem because you can sell the slow chips cheaper. But, if you are making chips for a console and those chips are supposed to run at 3.2 GHz. Well, even if the chip will only do 3.1 GHz it is trash. So, while it may be the case that you can make two 65nm chips for the same price as a 90nm chip, you still need to wait until the process is mature enough that your yields are at least half as good as the 90nm process. Otherwise you just end up wasting a lot of silicon(=$$$).

gilbran9 @ Jul 28th 2007 9:42PM

right... all of my friends who own a ps3 only have 1-2 games... and the ones who have a wii have around 4-6 and 360...welll most of them have around 10
so yeah i dont think they havea very good attach rate

Andy @ Jul 28th 2007 11:09PM

But of those friends who have PS3's the games they own are probably Resistance and Motorstorm which are made by Sony.

Thank you so much for all the help folks. I think I will stick to 5400 RPM because its cheaper and I find the saving and loading quick enough. I can't wait,,,soon I won't have to delete the demo's and can load all my pics,songs and movies....YAY.

Sorry for turning this post into something it wasn't supposed to be.

Andir3.0 @ Jul 28th 2007 11:21PM

@Stellarpimp: I think I read that too... but they said there was a difference, but it was marginal. The 7200 RPM WILL generate a bit more heat, but you shouldn't have to worry about it. What you will notice on the 7200 is in situations where you have a long list (you put a lot of music on the drive.) The list will populate faster with the 7200 RPM drive. As far as load times in games, it is marginally faster, but not earth shattering.

Stellarpimp @ Jul 29th 2007 4:42AM

Here are a couple links that ya'll may find helpful in the debate between 5,400 and 7,200 rpm HDD.

Here is a link regarding the differences.

http://ps3.ign.com/articles/745/745407p1.html

Here is a link that gives you step by step how to with pictures.

http://www.gamersreports.com/article/43/1/playstation-3-hdd-replacement-mini-guide

Here is a 250gig (largets currently on the market for @5,400 rpm) for $190

http://www.newegg.com/Product/Product.aspx?Item=N82E16822136123

Here is a 200gig (largest one currently on the market @7,200 rpm) for $255

@17 Hursh talkin that nonsense. LoL I own 6 PS3 games. *winks*

Stellarpimp @ Jul 29th 2007 5:01AM

Ooops. Forgot the link to the 7200 rpm one... anywho here it is.

http://www.newegg.com/Product/Product.aspx?Item=N82E16822145160

miglaugh @ Jul 29th 2007 7:10PM

@7 - apease

IBM does make their own chips. Right down the road from me in East Fishkill, NY. They manufacture the Cell there, and their Power6 as well.

http://www.semiconductor-technology.com/projects/ibm_fishkill/index.html

Consolcwby @ Jul 29th 2007 7:24PM

@Andy: What the hell did you do to this thread??!! lol! =DD

If Sony is still losing $200 per console, then maybe a $500 SKU isn't the best idea right now. While I'm sure Sony could absorb that amount of punishment, I wouldn't want the loss to affect 1st party game development. I'd rather have the games than see people saving a quick buck. Then again, the more PS3s people buy the more likely 3rd parties will come back... Arrgh! Talk about a "chicken and the egg" scenario! =S

Andy @ Jul 29th 2007 8:49PM

"@Andy: What the hell did you do to this thread??!! lol! =DD"

I'm sorry, I'm sorry. I don't know how to use forums so I have to ask on the only site I know how. And it is sortof related because if the price of HDD's goes down then profits for Sony go up.