"Sony's shares fell as much as 4.4 percent on Monday after Merrill Lynch (MER) said in a research note last week that the PS3's launch might be delayed by six to 12 months and the cost of production could initially approach $900 per unit." UGH! $900 per unit to make? you thought $400 a system for the 360 and $60 games were bad, this could make things worse. Video Game Crash Part II Here We Come! PlayStation 3 Launch May Be Pushed Back Monday, February 20, 2006 TOKYO — Sony Corp.'s (SNE) launch of its next-generation PlayStation 3 video game console could be delayed if industry specifications for some of its technology are not finalized soon, although it is still aiming for a spring rollout, it said on Monday. The launch of the PlayStation 3 (PS3) has been the subject of heavy speculation in the industry as expectations are high for the powerful machine, which will feature cutting-edge technology in its DVD player, processors and graphics. PS3 will be competing with Microsoft Corp.'s (MSFT) Xbox 360, which went on sale last November, and Nintendo Co. Ltd.'s Revolution, which is expected later this year. "We're aiming for spring, but we haven't announced specific regions," a spokeswoman for Sony Computer Entertainment said, adding that it was waiting for the final specifications on some of the technology it is using in the PS3, such as that related to the Blu-ray DVD drive and to input and output video and sound. The specifications are decided by industry consortiums. "We're waiting for them until the last possible minute, but the launch could be pushed back if they're not decided soon," the spokeswoman said. If the PS3 is not ready in time, the company will choose the next best timing for the launch, she said. Sony has been promising a spring launch but has been deliberately vague about exactly when that would be. Analysts have said it could mean anytime between March and the end of Japan's rainy season in June. Sony's shares fell as much as 4.4 percent on Monday after Merrill Lynch (MER) said in a research note last week that the PS3's launch might be delayed by six to 12 months and the cost of production could initially approach $900 per unit. The shares closed down 3.6 percent at 5,300 yen, underperforming the Tokyo stock market's electrical machinery index IELEC, which fell 1.85 percent. Manufacturers typically sell new game consoles at a loss initially to gain market share so they can later make money by selling software — a $25 billion global market. But the higher-than-expected cost estimate by Merrill means Sony will have to take a much larger loss on each PS3 unit it sells or sacrifice market share to Microsoft, which is selling its Xbox 360 for about $400. Sony currently has about 70 percent of the global market for game consoles, but some analysts have said it could lose as much as 20 percentage points to Microsoft, which is making an aggressive push to increase its 15 percent share. Nintendo, which also has a 15 percent market share, is taking a different strategy as it aims to increase the number of game players with a unique console and original games. Merrill Lynch also downgraded its rating on Sony to "sell" from "neutral," saying in its note that Sony could see its earnings decline in the business year from April. SPRING LAUNCH 'UNREALISTIC' Most analysts took the report in stride as they already expected Sony to launch the PS3 this summer in Japan, followed by a U.S. launch before the Thanksgiving holiday in November. They expect a launch in Europe in early 2007. "No one is seriously thinking a spring release is realistic any more," said Hiroshi Kamide, an analyst at KBC Securities. "If I were Sony, I wouldn't be that worried about releasing as soon as I possibly could." Kamide said Sony may wait until it is fully prepared, especially after seeing slow initial sales of Microsoft's Xbox 360 even though it was launched in time for the holidays. Having led the worldwide console gaming market for the last decade, Sony is counting on the new machine to dominate in all aspects of networked home entertainment — games, movies, music and more. Yuta Sakurai, a senior analyst at Nomura Securities, said the price of the PS3 was more important than its timing. "I don't think it matters when Sony launches in the U.S. as long as it's in time for Christmas," Sakurai said. He expects Sony to try to launch the PS3 in Japan in early summer, in time for the big selling season when schools go on holiday in July. Sakurai estimated that Sony could charge at most 50,000 yen ($420) for the console. Retail price estimates by analysts in Japan vary widely from about 40,000 yen to several times that much, primarily because of all of the technology that is packed into the machine, which is expected to be the size of a laptop computer. The PS3, which can be played simultaneously by up to seven people, will be powered by the "Cell" chip, which is significantly more powerful than Intel Corp.'s Pentium 4, the most common chip for today's PCs and existing game machine processors. It will also feature a super-powerful graphics chip, a built-in Ethernet port for high-speed Internet access, and Blu-ray, a next-generation DVD format backed by Sony. 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. Game development for the PS3 is also seen being delayed because the technology specifications have not been finalised. "Game makers are developing games according to their guesses on what the final specifications might be," said Takeshi Tajima, a BNP Paribas analyst.
If PS3 costs anywhere near $900, there wont be a PS4. I just dont see how they can afford to keep going at those costs. Anyway, maybe I'll put off a PS3 this year. Im also planing on getting a Revolution, and I dont want to have 2 new consoles at the same time. As for a new video game crash... the way Sony and Microsoft run things... I wouldnt be suprised if one was not far off.
Even if it cost $500 to make sony would never charge the consumer that much on the hardware they would likely take $100-150 hit and sell it $350-400(not respectively)
If it even approaches $900 to make, there is no way they can retail it for $500. It'd be suicide even for a company as large as Sony.
Yeah thats true but I seem to remember the merril lynch people saying something similar about the cost of PS2 before its jap release.
Sounds like to much tech too soon! They are relying on untested technology that costs way to much. Usually I dont care what analysts say, but this is something that has been feared for a long time. If the system does cost anything over $550, good bye playstation! This is crazy! looks like Billy boy will get more multi millions with his 360! funny, for years sony looked invincable!
I personally would be happy to see both Sony and Microsoft out of the Console business, they are contributing to what I think will be another video game crash.
oh noes! Merril Lynch (or some other analysts) do this every system launch. They put out some crackhead estimate of what the system will cost to manufacture, and shareholders go batshit, and then the final cost never even approaches what the "expert" analysts predicted. I honestly don't know how they keep their jobs given their track record, nor do I understand why people always take them seriously. The PS2 allegedly was going to end up costing over $500. The PSP was expected to retail for $400-500. Microsoft wasn't going to be able to sell the Xbox 360 for a dime under $500. And yet, they're always wrong.
Heh funny... in a dumb kinda way. Thanks for the wellwishes everyone Quick FYI, if anyone is responsible for an industry crash, it would be Publishers. The big ones. Make your own conclusions.
I honestly disagree with this assessment. Microsoft has been working extremely hard to keep the costs of both hardware and development stable, or at least increasing as slowly as possible. To this end, they designed the Xbox 360 to be based almost entirely on existing technology, and they've implemented a development environment that is not only functionally and programmatically similar to that of Windows, but also takes full advantage of DirectX, which developers already know. The ease of development will be taken a step further with the eventual release of XNA, which combines several APIs into a framework that eliminates the need for a lot of "boilerplate" code. Moreover, XNA will be integrated with Windows Vista, allowing developers to literally use many of the same tools for each platform. Microsoft is very aware of the rising costs of the console business, and understands that the only way to offset them is to execute a ground-up streamlining of the whole process. Sony, in contrast, has offered up a brand-new hardware platform for which developers have had to learn from scratch how to code - and how to optimize that code. Combined with several new, non-standard components (including Blu-Ray), this shows that they've done nothing to make the PS3 proposition a lean one, for the developer or the consumer. I doubt that any market crash is imminent, but if there were one, I'd know exactly where to place most of the blame. The rest would likely go to greedy publishers that charged whatever the hell they wanted for their titles, regardless of how much it cost to make them. That's a factor beyond either manufacturer's control.
I thought I'd read somethign about the PS3 and programming it and that it would be similiar to programming for the PS2, and with using invidia they had another programming block already figured out for dealing with the graphics processor. I'm very tired right now and can't find said article so I may be giving out some incorrect or skewed info on that end. The PSP forum I'm on mentioned that article about the PS3 pricetag and a screenshost of all the pricelists and it ended up adding up to $800 bucks as opposed to the 900 they're quoting. That doesn't help their estimates in my opinion. The other problem with their quotes is that they're for retail versions of the products, not the prices that Sony is manufacturing them for. So again the price can be even further overblown.
So the PS3 was slated for release this spring??? I've always thought it was coming out after the Revolution???
It just seems to me that Sony is investing in a lot of technology that your average consumer (read: the majority of people who purchase the system) can't make use of. I recenty read a report that stated that the PS3 will have a framerate of 120fps, I'm not an expert on tech but I don't think that most current tvs can support anywhere near this rate. Also, having the technology to project the image over two bigscreen tvs. The average person who is going to buy the PS3 is not going to be able to hook it up to two big screen tvs for awhile so why the hell would Sony want to spend the money to incorporate this kind of technology into the PS3? It just seems to me that Sony is putting so much useless technology into this system that they are either going to have to take a substantial loss selling the PS3, as in more of a loss than MS would have dared to take with the Xbox, or the are going to have to price it so high that the would be average consumer can no longer afford it.
Esecially since the PS2 was Sony's biggest source of revenue in recent years. Even with billion dollar movies like Spider-man, as a whole, Sony is just bleeding money. They are only in the black because of the PS2.
Your being very short sighted here. any number of "this technology is too advanced" comments could have been made for the ps2 before its debut. The 120 fps thing is hype. The ability to ouput to two displays at the same exact resolution is something desktop pcs have been doing for 6 plus years its not exactly cost prohibitive. Dont believe the hype.
um picking up on the Industry crash, when was the other one? I don't remember hearing about such a problem? I was under the impression that the gaming industry has been enjoying a solid rise in the last couple of years...
the first industry crash came prior to the nes, uninspired gfx ang gameplay lead to it and the nes saved the gaming industry.
