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[SmokeMaxX]

A controller is $50-$60 or so new (at launch) and it costs about $20 to make. A Sony made and published game yields them about $15 out of $60, perhaps more. So you get very close to $50 with one of each.

Eh. Maybe a DS3, but people think a DS4 will cost just as little to make? The WiiU controller sure doesn't cost $20 to make thus negating that argument.

I think some of these estimates are lowballs. I also think that the cost will be either cheaper or more expensive than people think when you factor in the subscription. $599 is expensive even if it comes with two years of PS+ but if PS+ was required at $50/year and the system was $499, people wouldn't really blink.

 

[deviljho]

Considering any cost estimate, if the Yen doesn't weaken gradually over the next few years, this shit will be a nightmare for Sony.

 

[Mlatador]

It have a feeling the PS4 will be 550

 

[yurinka]

I like the idea of :

• $399 w 500GB HDD
• $499 w 1TB HDD

Both SKUs would include console, DS4, PS4 Eye

 

[Last Hearth]

If the parts cost 450-490, that's not a good sign.

Because remember retail price have to have a margin for the retailers, and that's usually at what, 20%-30% mark up? Add to that this price doesn't take into account assembly, R&D, shipping etc. Either this thing is going to be prohibitively expensive, or Sony will be taking a huge loss per unit.

 

[mcfrank]

I think it will be
499 - small HD, base pack
599 - big HD, PS+, and Knack as a pack in

 

[infiniteheteroskdasticity]

So a couple of us at the bank have done a costing analysis this morning. I won't be able to give exact figures, as if we ever decide to release them publicly it will definitely blow my cover.
....

Total estimated system cost (no shipping and packaging) - $450-490

Please, please, please remember that this is based on the specification only and cost prices that we know, without a PS4 in the hand there will be mistakes.

Yup. I work at a hedge fund covering the digital entertainment space and that's very similar to what we came up with. We do not anticipate an initial BOM in excess of $500 per SKU. That's a little more than half of that for launch PS3s. I like Sony's prospects on this news. The biggest chunk of those costs are the 8GBs of GDDR5 which are likely to be the quickest to drop in price because Sony will be such a huge customer. I wouldn't be surprised to see a year 1 BOM under $450.

One of the reasons we did not see a price is because I'm almost certain Sony will wait for MSFT to go first with pricing. Sony would want to have a bundle available at not more than $50 over the cheapest next XBox SKU. If the next XBox prices at $349, I'd expect to see Sony take the PS eye out of the base SKU and price it at $399. If the next XBox is $399 I'd expect to see Sony price at $449 which would mean they'd be profitable on every box sold because of software sales etc. I do not think the next XBox will have a much lower BOM because of the integrated Kinect 2 so sub $350 for it would likely mean a real all in price well north of that because of a subscription plan. Sony and MSFT have been clever enough to not repeat Nintendo's mistakes and realize that nearly everybody already has a second screen handy anyway keeping their performance/cost ratio very acceptable. I definitely think the next generation will be good for both customers and the industry in terms of costs.

Above the base SKU I'd definitely expect Sony to try a (around) $550 PS4 + Vita bundle.

 

[BurnOutBrighter]

Dollar sign goes before the number, guys.

$499 at launch seems reasonable. Sony will be making a bold move going any lower.

 

[TheRagnCajun]

I have to wonder if Sony suddenly just realized that they can make more money if their studios don't have to spend 4 years to get a game out.

 

[Vic]

I like the idea of :

• $399 w 500GB HDD
• $499 w 1TB HDD

Both SKUs would include console, DS4, PS4 Eye

Cosigned.

 

[deviljho]

So a couple of us at the bank have done a costing analysis this morning.

Have you guys forecasted the rate of price decreases for the various components over time yet?

 

[LCfiner]

I like the idea of :

• $399 w 500GB HDD
• $499 w 1TB HDD

Both SKUs would include console, DS4, PS4 Eye

I mostly agree with this but I bet the PS4 eye camera will only be included with the more expensive model (edit: or maybe not at all). I don't think Sony's gonna push it as a must-have, in the box item. And they can really use the money it could generate as an accessory.

If the base package were to cost $450, then I'd think it'd be included.

 

[Dead Prince]

I like the idea of :

• $399 w 500GB HDD
• $499 w 1TB HDD

Both SKUs would include console, DS4, PS4 Eye

add $50 if they are including the PS4Eye

 

[Lovely Salsa]

If the parts cost 450-490, that's not a good sign.

Because remember retail price have to have a margin for the retailers, and that's usually at what, 20%-30% mark up? Add to that this price doesn't take into account assembly, R&D, shipping etc. Either this thing is going to be prohibitively expensive, or Sony will be taking a huge loss per unit.

No way. Its more like 5%

Remember that PS3 cost 800+ dollars for Sony to make

 

[Codeblew]

If the parts cost 450-490, that's not a good sign.

Because remember retail price have to have a margin for the retailers, and that's usually at what, 20%-30% mark up? Add to that this price doesn't take into account assembly, R&D, shipping etc. Either this thing is going to be prohibitively expensive, or Sony will be taking a huge loss per unit.

Markups are extremely low for consoles. Think %3- 5%.

 

[Vic]

I mostly agree with this but I bet the PS4 eye camera will only be included with the more expensive model (edit: or maybe not at all). I don't think Sony's gonna push it as a must-have, in the box item. And they can really use the money it could generate as an accessory.

If the base package were to cost $450, then I'd think it'd be included.

If Kinect really comes with every Xbox3, I wouldn't be surprised if Sony did the same.

 

[TheGreyHulk]

I dont think they can take the ps eye out of any sku because the controller has the LED to specifically interact with the PS eye. It must be included and doesn't even seem to be a very expensive thing to include

 

[SquiddyCracker]

Sounds like the whole kit might cost sony $500.
Hmmm, they miiight take a loss of $100 by selling it at $399, but I think it's more likely they'll go for a $425-450 price point instead.

 

[Vic]

I dont think they can take the ps eye out of any sku because the controller has the LED to specifically interact with the PS eye. It must be included and doesn't even seem to be a very expensive thing to include

Good points.

 

[AranhaHunter]

A controller is $50-$60 or so new (at launch) and it costs about $20 to make. A Sony made and published game yields them about $15 out of $60, perhaps more. So you get very close to $50 with one of each.

Assuming the same as this generation and if you believe this old report from forbes, Sony would get about $17-20 per game and the dev studio would get about $27, so Sony would actually get about $40-45 bucks per game it published from one of its WWS, though most of it would be directed to their first party studio for their expenses and future projects.

On 3rd party studios, Sony would only get about $7 per game sold.

 

[Giant Panda]

If it comes out at 500 or above it will bomb. A $450 or a $400 SKU is needed if Sony wants this to still be selling after Christmas.

 

[weekend_warrior]

1 SKU- Console, controller, PS4eye, 500GB HDD, power cord, HDMI cable. $449.99

 

[onipex]

High end price? The Vita itself is cheaper than anybody expected. Pre-E3, numerous people thought it would cost at the minimum of $400.

Really? In any case $250 is still on the high end for a game dedicated handheld. Sony could eat the cost and sell the PS4 for less but they could use the profits right now.

 

[James Sawyer Ford]

Cost analysis seems rather high.

 

[Iacobellis]

Really? In any case $250 is still on the high end for a game dedicated handheld. Sony could eat the cost and sell the PS4 for less but they could use the profits right now.

They could easily make the profits back on PS+ and accessories such as additional DS4's and the new Eye.

 

[Insane Metal]

The PS3 cost $900+ at launch and Sony sold it for $499 and $599. They had a huge loss at the time.

Considering the supposed cost of the PS4 (~$490), is there a possibility of a $399 console? I'm betting on $499 anyway, but... $399 would be better... lol

 

[BlackJace]

Can't see it under 500.
And Sony cant afford to eat shit right now.

 

[demosthenes]

The PS3 cost ~$800 at launch and Sony sold it for $499 and $599. They had a huge loss at the time.

Considering the supposed cost of the PS4 (~$490), is there a possibility of a $399 console? I'm betting on $499 anyway, but... $399 would be better... lol

~$900+

 

[Insane Metal]

Yeah but more specifically CELL and blu-ray?

~$120 for Cell and ~$200 for the BD drive.

@demosthenes: woah, that's expensive.

 

[Tom Penny]

If the parts cost 450-490, that's not a good sign.

Because remember retail price have to have a margin for the retailers, and that's usually at what, 20%-30% mark up? Add to that this price doesn't take into account assembly, R&D, shipping etc. Either this thing is going to be prohibitively expensive, or Sony will be taking a huge loss per unit.

LOL I think you have that backwards.

 

[andthebeatgoeson]

Yup. I work at a hedge fund covering the digital entertainment space and that's very similar to what we came up with. We do not anticipate an initial BOM in excess of $500 per SKU. That's a little more than half of that for launch PS3s. I like Sony's prospects on this news. The biggest chunk of those costs are the 8GBs of GDDR5 which are likely to be the quickest to drop in price because Sony will be such a huge customer. I wouldn't be surprised to see a year 1 BOM under $450.

One of the reasons we did not see a price is because I'm almost certain Sony will wait for MSFT to go first with pricing. Sony would want to have a bundle available at not more than $50 over the cheapest next XBox SKU. If the next XBox prices at $349, I'd expect to see Sony take the PS eye out of the base SKU and price it at $399. If the next XBox is $399 I'd expect to see Sony price at $449 which would mean they'd be profitable on every box sold because of software sales etc. I do not think the next XBox will have a much lower BOM because of the integrated Kinect 2 so sub $350 for it would likely mean a real all in price well north of that because of a subscription plan. Sony and MSFT have been clever enough to not repeat Nintendo's mistakes and realize that nearly everybody already has a second screen handy anyway keeping their performance/cost ratio very acceptable. I definitely think the next generation will be good for both customers and the industry in terms of costs.

Above the base SKU I'd definitely expect Sony to try a (around) $550 PS4 + Vita bundle.

What is that performance to cost ratio? And I suspect you may be missing the point of the second screen. But then again, that's Nintendo's fault by not showing more games where it's evident.

 

[kikonawa]

a controller doesnt cost 20$ to make, its more like 5-10$ max.
A ds4 will probably cost around 15$ for a order of a few million

 

[Lovely Salsa]

The PS3 cost $900+ at launch and Sony sold it for $499 and $599. They had a huge loss at the time.

Considering the supposed cost of the PS4 (~$490), is there a possibility of a $399 console? I'm betting on $499 anyway, but... $399 would be better... lol

Sony would win next gen if they priced it at 399 and a year later at 299

 

[USC-fan]

I would be shock if they have a "prime pack" under $500. Maybe a tard pack at $499.

 

[Lovely Salsa]

I would be shock if they have a "prime pack" under $500. Maybe a tard pack at $499.

Why? Considering the console most likely costs under 500 to make

 

[Tom Penny]

I would be shock if they have a "prime pack" under $500. Maybe a tard pack at $499.

Well if the price of admissions is 499..good luck.

 

[spwolf]

A controller is $50-$60 or so new (at launch) and it costs about $20 to make. A Sony made and published game yields them about $15 out of $60, perhaps more. So you get very close to $50 with one of each.

Sony made and published game gets them a lot of revenues... $40-$50 per game, depending on how it is sold - via retail or PSN. Profit is something else of course, it requires game selling a lot of copies.

 

[Baki]

The PS3 cost $900+ at launch and Sony sold it for $499 and $599. They had a huge loss at the time.

Considering the supposed cost of the PS4 (~$490), is there a possibility of a $399 console? I'm betting on $499 anyway, but... $399 would be better... lol

Yes. Because consumers are guaranteed to purchase at least one game with a new system (which is $41 for 1st party game and $7 for a 3rd party games). In addition, sales of accessories and services will further soak up this cost.

Not to mention their profitable PS3 business.

 

[x3r0123]

Samsung is producing 4Gb chips too:

http://www.samsung.com/global/business/semiconductor/product/graphic-dram/catalogue

i feel that this was overlooked. Has anyone called samsung and quoted for a price?
their 4gb chips is under mass production

 

[Insane Metal]

Yes. Because consumers are guaranteed to purchase at least one game with a new system (which is $41 for 1st party game and $7 for a 3rd party games). In addition, sales of accessories and services will further soak up this cost.

Not to mention their profitable PS3 business.

Hmmm. Interesting. It's too bad they're in deep red when it comes to financial status. But even so I think <$100 of subsidy for the console doesn't sound impossible.

 

[Vic]

I would be shock if they have a "prime pack" under $500. Maybe a tard pack at $499.

Have you forgotten already about the PS3 debacle?

 

[Last Hearth]

Hmmm. Interesting. It's too bad they're in deep red when it comes to financial status. But even so I think <$100 of subsidy for the console doesn't sound impossible.

$100 subsidy per unit, that means if they sold 10 million units they've be in the red for $1 Billion.

I don't think Sony can afford to lose $1 Billion up front on the console. And we're not even taking into account the marketing cost of a launch which will by itself probably cost hundreds of millions.

Sony might have been able to do it with the PS3 because they were flush with PS2 cash. But right now? I just can't see it.

 

[Insane Metal]

$100 subsidy per unit, that means if they sold 10 million units they've be in the red for $1 Billion.

I don't think Sony can afford to lose $1 Billion up front on the console. And we're not even taking into account the marketing cost of a launch which will by itself probably cost hundreds of millions.

Sony might have been able to do it with the PS3 because they were flush with PS2 cash. But right now? I just can't see it.

Damn

So $499 it is.

 

[nib95]

Sony better stay well away from that $599 price bracket. They'd be a laughing stock if they jumped in the pile of shit twice in a row lol.

 

[Baki]

$100 subsidy per unit, that means if they sold 10 million units they've be in the red for $1 Billion.

I don't think Sony can afford to lose $1 Billion up front on the console. And we're not even taking into account the marketing cost of a launch which will by itself probably cost hundreds of millions.

Sony might have been able to do it with the PS3 because they were flush with PS2 cash. But right now? I just can't see it.

Its totally doable.

1) Sony will have a break even SKU ($500) which will represent at least ~20-30% of sales.

2)In addition, tie ratios for new consoles ensures that launch buyers (who are the most 'hardcore' of users) will pick up at least 2 software titles and an accessory. This should mitigate the loss to about $0 - $40 per unit.

3) Sony won't be selling 10M units with a $100 deficit on hardware because the design Sony has chosen should lead to quick cost cuttings within 6 months. Sony will only take a big up front loss during the holiday period which will be soaked up by their profitable PS3 business.

4) So that leaves about 4M units, of which, ~3M represent the high loss unit creating a deficit of anything between $120M to $0M. This can be soaked up fairly reasonably.
As an aside, I expect the loss per unit to be $60 at most.

 

[infiniteheteroskdasticity]

What is that performance to cost ratio? And I suspect you may be missing the point of the second screen. But then again, that's Nintendo's fault by not showing more games where it's evident.

It is the available performance (Flops or polygons or whatever metric you prefer) per $ of BOM. Mark Cerny actually referred to it directly a couple of times in his presentation and from everything we've heard, this is the driving force behind system design at both Sony and MSFT this generation. If you take the 2TF of performance in the PS4 and divide it by $500 in BOM you get 4 GF/$. The next XBox will be in the same ballpark.

Nintendo's problem is only partially the lack games. Yes they do have a solid and loyal base that will buy the WiiU to play exclusives. The problem is nobody else will. The casual Wii buyers will be happy with a tablet and the core gamers that aren't interested in Zelda or Mario will buy a PS4 and/or an XBox because both will be much more powerful and get all the 3rd party love. Both will also have a second screen capability via apps for iOS and Android (MS already has smartglass) and newer tablets like the Nexus 7 are already much more capable than the gamepad (capacitive screens, local processing etc).

I'm increasingly convinced that making a 'game' console primarily and winning the core market is what is going to succeed this generation. The casuals aren't that profitable to begin with (they only buy a fraction of the games and services core gamers do) and are moving to tablets and phones for their gaming anyway. Once the inevitable Apple/Google/Intel TV push takes off their interest in consoles will be even lower. Sony has it just right. What they are saying is - "we're building a powerful game console that does everything the core gamer could ever want but can also do all the streaming/casual stuff for the everybody else in your household". That sounds like good positioning to me. You might not sell 100m consoles doing it but you will be extremely profitable throughout.

 

[JJD]

People arguing that when you consider the retailers's margin the PS4 will be sold for more than $500 bucks forget that consoles margin are generally lower than 5%.

And considering Sony is not looking to block used games sales it is practically guaranteed that videogame specific retailers like Gamestop will push the PS4 and place it prominently on their stands.

$100 subsidy per unit, that means if they sold 10 million units they've be in the red for $1 Billion.

I don't think Sony can afford to lose $1 Billion up front on the console. And we're not even taking into account the marketing cost of a launch which will by itself probably cost hundreds of millions.

Sony might have been able to do it with the PS3 because they were flush with PS2 cash. But right now? I just can't see it.

You forget to mention that Sony saved a lot of money on R&D going with off the shelves parts. They were actually profitable when they marked down PS4 R&D costs. Gaming division have money and can lose money on the launch with subsides if they need to. Doesn't mean that they want to do that. Designing, developing and testing a console can cost billions of dollars.

A big chunk of the PS2 cash was spend on PS3 R&D which was way, way more expensive than R&D on PS4 if you remember they had to pay up for the development of cell and push up Bluray adoption.

Sony would gladly lose one billion in subsides if they could sell 10 million PS4s at launch. They would recoup at least 30% of it just with accessories sales, probably way more considering the good margins on those. A controller costs 20, 30 bucks at max to be made and it's sold at 50, margins on official cables are even bigger.

I'm not even mentioning game sales.

 

[infiniteheteroskdasticity]

Its totally doable.

1) Sony will have a break even SKU ($500) which will represent at least ~20-30% of sales.

2)In addition, tie ratios for new consoles ensures that launch buyers (who are the most 'hardcore' of users) will pick up at least 2 software titles and an accessory. This should mitigate the loss to about $0 - $40 per unit.

3) Sony won't be selling 10M units with a $100 deficit on hardware because the design Sony has chosen should lead to quick cost cuttings within 6 months. Sony will only take a big up front loss during the holiday period which will be soaked up by their profitable PS3 business.

4) So that leaves about 4M units, of which, ~3M represent the high loss unit creating a deficit of anything between $120M to $0M. This can be soaked up fairly reasonably.
As an aside, I expect the loss per unit to be $60 at most.

Spot on. I'd add that the ever weaker Yen really helps them out here. I'd say its near certain that there will be a sub $500 SKU unless MS surprises everyone and prices its base SKU in the mid - high 400s. At $449 we'd be looking at 2-3 games at most for Sony to break even. And given how quickly GDDR5 prices will drop once the volumes start coming in the BOM drop over the first 2 years should be pretty steep.

 

[ElfArmy177]

Sony better stay well away from that $599 price bracket. They'd be a laughing stock if they jumped in the pile of shit twice in a row lol.

Why? Gamers make no sense. A tablet can cost over 600 and everyone is ok with it. I'd buy a 600 dollar console and not think twice about it. If it lasts 7 years or more wtf is the problem?

They sold the ps3 at 500/600 and still sold just below the Xbox worldwide didn't they? I'd rather the company not go out of business because everyone wont spend 500/600 on a new console in 2013, making Sony lose a ton on each console. They are in trouble as it is!

Wii u was 300 and that system has been collecting dust since a week after I purchased it. I want something with power in it. Something that is future proof for the life of the console.

I'm glad Sony is targeting the core gamer. I want a game console. If you want a 300 dollar console/multimedia system, get an Xbox or Wii.

 

[Zeal]

I'm calling $499, and that's fine.

Durango, $399-$450