Sony adds new PS3 manufacturer to supply chain

[gofreak]

Articles like this can be notoriously misleading, but there were some eyebrow-raising parts that I figured others might find interesting.

Hon Hai precision to deliver PS3 consoles to Sony

Hon Hai Precision Industry Co., Ltd., one of the world's largest manufacturers on electronic manufacturing service (EMS) basis, recently joined Sony's supply chain to deliver Play Station 3 (PS3) consoles, according to industry sources. The sources noted that Sony has set a shipment goal of 10 million PS3 consoles for the first quarter of 2008. This means fierce competition in the global market for game consoles and will lead to a boom in the sector making consumer electronics.

Insiders in the sector said that Sony has cut the selling price of PS3 consoles, and, at the mean time, planned to launch low-price models, with ASUSTeK Computer Inc. and Hon Hai Precision to supply the models.

Not sure I quite follow that part. Different models, or lower priced models in time, or both?

Like I say, stuff like this can be notoriously misleading, but I couldn't help but stick on my speculative cap, even if only momentarily.

[titiklabingapat]

Are they trying to force Nintendo's hand by taking in all the manufacturer, restricting Wii supply, thus killing sales for the holidays? :p

[Gadfly]

Articles like this can be notoriously misleading, but there were some eyebrow-raising parts that I figured others might find interesting. Hon Hai precision to deliver PS3 consoles to Sony Not sure I quite follow that part. Different models, or lower priced models in time, or both? Like I say, stuff like this can be notoriously misleading, but I couldn't help but stick on my speculative cap, even if only momentarily.

shipping 10 million PS3 "for" first quarter? does "for" here means "in"?

[gofreak]

shipping 10 million PS3 "for" first quarter? does "for" here means "in"?

I think it means 'by' Q1-08.

[Elios83]

Sony shipped 5.5 million units in the 06 fiscal year, now they want to ship 11 million units in the 07 fiscal year for a total of over 15 million units shipped by the end of March 08.
Their current installed base (sell through) is at 4.5 million units ww, even if they can sell an other 4 million units ww in the October-December quarter it seems a really lofty goal (they can't have 5-6 million units in the retail channel,it's suicidal because it would tie their hands for future actions, Microsoft lost the first half of 2007 to deal with overshipment ) unless they have a really agressive strategy in place for the coming months.

[Acosta]

Maybe they are planning somre agressive pricing strategy and they need systems on the market for that.

Sony can´t ignore the situation they have with PS3, I would expect something radical from them, not only for videogames but for Blu-Ray- HD-DVD fight.

Or maybe is nothing.

[jmcoo7]

I have a funny feeling Sony have something big planned , maybe use that huge amount of money coming in October to enable either huge price cut or new lower spec model at xbox360 prices . Should be a very interesting month or two .

[Kingsgoon]

I guess this makes the $399 40gb ps3 sku rumor a bit more credible.

[Eteric Rice]

I know this is going to come off trollish but...

Why are they making "more" PS3s when they can hardly get rid of the ones they currently have?

[HomShaBom]

I know this is going to come off trollish but... Why are they making "more" PS3s when they can hardly get rid of the ones they currently have?

The Wii fad is over, haven't you heard.

[Metalmurphy]

I know this is going to come off trollish but... Why are they making "more" PS3s when they can hardly get rid of the ones they currently have?

Maybe because they are getting rid of them?

World != America.

[Draft]

I know this is going to come off trollish but... Why are they making "more" PS3s when they can hardly get rid of the ones they currently have?

Haven't you been paying attention? The PS3 is like... so hot in Sweden right now.

[felipeko]

Sony is so lost...

[legend166]

Maybe because they are getting rid of them? World != America.

lol


oh wait... you're not joking.



lol

[Metalmurphy]

lol oh wait... you're not joking. lol

No, I am joking. I'm sure Sony is really THAT dumb enough to put even more consoles on shelfs....


*sheesh*

[ThePeter]

These are the fruits of a greater Sony!

[TheRagnCajun]

$399

BELIEVE.

[justjohn]

$399 BELIEVE.

looking more likely

[RSTEIN]

$399 BELIEVE.

I've moved to the "this is the only option" camp.

[womfalcs3]

No, I am joking. I'm sure Sony is really THAT dumb enough to put even more consoles on shelfs.... *sheesh*

I have to laugh here.

[DenogginizerOS]

This just makes me think we will see $399.99 before the year is over (or less).

But where are the games???? UT3 (maybe), Uncharted (maybe), Ratchet (savior), and what else? Third party support? Sony needs to get games on the shelves that aren't massive letdowns or massively short so they can slow down the massive damage being sustained by their massive price.

[gofreak]

I'm not quite sure how they'd make a 'lower price' PS3 though.

I would have said "well, you can start by stripping out wifi and card readers", but a recent report said sony had increased their orders of those for PS3.

Another option would be stripping out BC altogether ala that Microsoft rumour, but how much would the EE really save them?

Another could be upsetting the storage strategy by - gulp - taking out the HDD altogether, and maybe bundling a cheaper memory stick or something, with the hearty recommendation to pick a HDD up off the shelf (or to start selling Ps3-branded HDDs as they did memory cards last gen).

Asides from that, I'm not sure how it could happen (that is, to go below $499), at least not without screwing up the balance sheet for another year.

[Busty]

I've moved to the "this is the only option" camp.

Agreed. But from what I've heard recently from some friends in (UK) retail Sony may yet be planning to try and weather the storm at this price point effectively writing off Xmas 07 and then make a price drop and full on assault in 2008.

Seems risky to me.

[gregor7777]

I'm not quite sure how they'd make a 'lower price' PS3 though. I would have said "well, you can start by stripping out wifi and card readers", but a recent report said sony had increased their orders of those for PS3. Another option would be stripping out BC altogether ala that Microsoft rumour, but how much would the EE really save them? Another could be upsetting the storage strategy by - gulp - taking out the HDD altogether, and maybe bundling a cheaper memory stick or something, with the hearty recommendation to pick a HDD up off the shelf. Asides from that, I'm not sure how it could happen (that is, to go below $499), at least not without screwing up the balance sheet for another year.

At this point in the manufacturing process, stripping out things like wifi and a card reader would have a relatively nominal effect on the overall cost of the unit.

[titiklabingapat]

I'm not quite sure how they'd make a 'lower price' PS3 though. I would have said "well, you can start by stripping out wifi and card readers", but a recent report said sony had increased their orders of those for PS3. Another option would be stripping out BC altogether ala that Microsoft rumour, but how much would the EE really save them? Another could be upsetting the storage strategy by - gulp - taking out the HDD altogether, and maybe bundling a cheaper memory stick or something, with the hearty recommendation to pick a HDD up off the shelf. Asides from that, I'm not sure how it could happen (that is, to go below $499), at least not without screwing up the balance sheet for another year.

If it means a choice between a few billion dollar loss(and maybe lady luck will smile upon them) or complete irrelevance(and a few more billion dollar loss)? It's not really that tough of a choice.

[gofreak]

Well, I think if anything significant on the price front is going to happen this year (sans a $499 80GB system), it'll be announced next week at TGS. But I think Busty's suspicions will probably prove correct. If talking about different 'low-price' SKUs, I'm not sure how much room they have to maneuver on the production side.

[Tobor]

Sony continues to try CPR when what is needed is a shovel and a witch doctor.

What can they take out of the unit to drop it below $399?

Agreed. But from what I've heard recently from some friends in (UK) retail Sony may yet be planning to try and weather the storm at this price point effectively writing off Xmas 07 and then make a price drop and full on assault in 2008. Seems risky to me.

This would be game over, in America at least.

[GameGamer]

No, I am joking. I'm sure Sony is really THAT dumb enough to put even more consoles on shelfs.... *sheesh*

Is it that hard to believe that they are simply out of sync?

They read the table wrong.

A company that big can't turn on a dime.

It takes lots of time and effort even to slightly vary some plans if they are in the middle of a chain.

[gofreak]

What can they take out of the unit to drop it below $399?

Crikey, let's get to 399 first Like I say, though, I think on the production side their options seem pretty limited. The article suggests different, lower-price/cost skus, but I don't know where they can go with that right now on the production end. It's quite possible the whole thing is rubbish..it wouldn't be the first time that reports like this have been misleading. That paragraph isn't articulated particularly well either.

[Tobor]

Crikey, let's get to 399 first Like I say, though, I think on the production side their options seem pretty limited. The article suggests different, lower-price/cost skus, but I don't know where they can go with that right now on the production end. It's quite possible the whole thing is rubbish..it wouldn't be the first time that reports like this have been misleading. That paragraph isn't articulated particularly well either.

Wasn't the deal with the 20GB unit that Sony lost even more money than they did on the 60GB unit?

Maybe they should artificially lock some features out to differentiate, like no BluRay movies on the cheaper sku.

[Gantz]

Will this cut production costs so I can finally get a PS3 at the sweet spot of $250?

[gofreak]

Wasn't the deal with the 20GB unit that Sony lost even more money than they did on the 60GB unit?

Yes, probably.

Maybe they should artificially lock some features out to differentiate, like no BluRay movies on the cheaper sku.

I'd say papa Sony would have something to say about that. Though maybe they could offer to unlock it for a fee, or via the Remote peripheral, or something.

I did see the suggestion floated that Sony would reintroduce a lower-capacity HDD SKU at a lower price (like a 40GB), just so they could maintain a higher priced, lower-loss SKU (like the 80GB), so that on average their losses would be lower than if they just cut the price of the 80GB. But they had that option with the 20GB, and they got rid of that, so..

[RSTEIN]

This just makes me think we will see $399.99 before the year is over (or less). But where are the games???? UT3 (maybe), Uncharted (maybe), Ratchet (savior), and what else? Third party support? Sony needs to get games on the shelves that aren't massive letdowns or massively short so they can slow down the massive damage being sustained by their massive price.

Exactly. This holiday season is huge - it will go along way to defining next gen leadership. Will it determine the winner? No. But it's huge. The biggest problem for Sony is they dont have any big guns this holiday season. I cannot believe that Sony is willing to 'wait out the storm,' throw away this entire year, and come out guns blazing in 2008. I'm not saying it will be too late by then, but it will be awfully close. Why not announce the price drop now to protect yourself?

There's also another problem. If there was ever a time for key Playstation franchise (i.e. Metal Gear, Final Fantasy, etc etc) to explore Microsoft's platform it's now. The PS3 is in serious trouble - 130K a month after a price drop? Are you kidding me? If these franchises don't go multiplatform now, they never will. Collectively, these franchises are giving up hundreds of millions in revenues by continuing to ignore the 360 (and the Wii).

[Tobor]

Yes, probably. I'd say papa Sony would have something to say about that. Though maybe they could offer to unlock it for a fee, or via the Remote peripheral, or something. I did see the suggestion floated that Sony would reintroduce a lower-capacity HDD SKU at a lower price (like a 40GB), just so they could maintain a higher priced, lower-loss SKU (like the 80GB), so that on average their losses would be lower than if they just cut the price of the 80GB. But they had that option with the 20GB, and they got rid of that, so..

The irony is, had they kept the 20GB around, they would have a $399 unit for sale right now. Sony's decisions baffle me.

I was thinking about a BluRay unlock over PSN as well for my little scheme. Again, makes too much sense, so they won't try it.

[gofreak]

Exactly. The irony is, had they kept the 20GB around, they would have a $399 unit for sale right now. Sony's decisions baffle me.

Well, the reason they did that was because they were losing too much on it. Maybe it would become an attractive option for them again now though, depending on how things have turned out for them vs how they expected.

I was thinking about a BluRay unlock over PSN as well for my little scheme. Again, makes too much sense, so they won't try it.

The problem with this is there's strategic value in having every system Blu-ray ready out of the box, with no extra cost. It could be a tough sell internally with Sony. I think also, just personally, that it would be something of a shame for Sony to start 'hiding costs', but unfortunately most consumers seem to not see beyond the sticker on the box, so it may be the wiser strategy.

[BobJustBob]

Finally it can stop being supply constrained.

[Busty]

Maybe they should artificially lock some features out to differentiate, like no BluRay movies on the cheaper sku.

I can honestly say, without hyperbole. That makes absolutely no sense whatsoever.

[Chittagong]

there is nothing Foxconn doesn't do it seems. Impressive, PS3 is really complex to produce.

[Busty]

There's also another problem. If there was ever a time for key Playstation franchise (i.e. Metal Gear, Final Fantasy, etc etc) to explore Microsoft's platform it's now. The PS3 is in serious trouble - 130K a month after a price drop? Are you kidding me? If these franchise don't go multiplatform now, the never will. Collectively, these franchises are giving up hundreds of millions in revenues by continuing to ignore the 360 (and the Wii).

Never it is then.

[Tobor]

I can honestly say, without hyperbole. That makes absolutely no sense whatsoever.

It works for Apple and Intel. /shrug

[TheRagnCajun]

The fact is, another sku is coming. They're clearing the channels of the 60GB. Timing leads me to believe that they plan to introduce this sku for the holidays. As for whats in the box and price point, well thats totally up to speculation. I would suggest that a cheaper sku is logical. $399 seems like wishfull thinking, but, at the same time, its exactly what they need to do.

[Omar Ismail]

Why are people speculating that a lower priced reduced storage SKU is coming out. Sony already HAD this, and it failed. Miserably. What would make a new SKU all of a sudden succeed?

[Tobor]

Why are people speculating that a lower priced reduced storage SKU is coming out. Sony already HAD this, and it failed. Miserably. What would make a new SKU all of a sudden succeed?

Sony never shipped proper amounts of 20GB to realistically prove that one way or the other.

Like we've been saying, the problem with the 20GB was that the margins were worse for retailers and that Sony lost more money per unit on the 20GB.

[Metalmurphy]

Why are people speculating that a lower priced reduced storage SKU is coming out. Sony already HAD this, and it failed. Miserably. What would make a new SKU all of a sudden succeed?

Hum, it did? I was under the impression it actually raised sales by 200%.

Or are you talking about the 20GB, if you are then you're not making any sense.

[Sir Fragula]

The irony is, had they kept the 20GB around, they would have a $399 unit for sale right now. Sony's decisions baffle me.

Would they?! The cost of a 20, 40, 60 and 80Gb HDD is pretty much the same for these manufacturers. Their entry price point is determined by how much the feel they can lose per machine, not by taking $100 off the price from the next SKU up...

[Davidion]

Finally it can stop being supply constrained.

Right?

And I agree that a new SKU is likely coming out. However, I also think that there's a good chance that it won't be a cheaper SKU.

go go holiday ramp up!

[Chiggs]

$399.99 next week. Believe.

[Tobor]

Would they?! The cost of a 20, 40, 60 and 80Gb HDD is pretty much the same for these manufacturers. Their entry price point is determined by how much the feel they can lose per machine, not by taking $100 off the price from the next SKU up...

Well, that's an interesting point. I'm assuming that after the pricedrop the 20GB would have dropped $100 as well, but we'll never know. The clearance units did drop to $399, but that means nothing.

The PS3 will need to drop to $399 this Holiday or the 360 will outsell it by 1 million or more units. I think the PS3 will be at $399 before the end of September.

[Stop It]

Agreed. But from what I've heard recently from some friends in (UK) retail Sony may yet be planning to try and weather the storm at this price point effectively writing off Xmas 07 and then make a price drop and full on assault in 2008. Seems risky to me.

Risky? retailers in the UK aren't going to accept carrying a unpopular product for very long, just look at Gamecube, if what you say is true, and Sony are willing to just "write off" Christmas 2007, they can say goodbye to the UK market, PS3 wise, seriously.