Comments on: PlayStation 3, Console Wars & the Costs of Complexity http://techliberation.com/2006/09/07/playstation-3-console-wars-the-costs-of-complexity/ Keeping politicians' hands off the Net & everything else related to technology Tue, 14 Feb 2012 19:26:00 +0000 hourly 1 http://wordpress.org/?v=3.2.1 By: MikeT http://techliberation.com/2006/09/07/playstation-3-console-wars-the-costs-of-complexity/comment-page-1/#comment-53427 MikeT Fri, 08 Sep 2006 03:05:53 +0000 http://techliberation.com/2006/09/07/playstation-3-console-wars-the-costs-of-complexity/#comment-53427 <p>Noel, I think it's safe to say that a lot of it is sheer hatred for Sony after all of the myriad ways they have managed to screw their customers in the past year or two. Remember the rootkit they put on their CDs? Microsoft couldn't have bought better anti-Sony publicity!</p> Noel, I think it’s safe to say that a lot of it is sheer hatred for Sony after all of the myriad ways they have managed to screw their customers in the past year or two. Remember the rootkit they put on their CDs? Microsoft couldn’t have bought better anti-Sony publicity!

]]> By: Noel Le http://techliberation.com/2006/09/07/playstation-3-console-wars-the-costs-of-complexity/comment-page-1/#comment-53426 Noel Le Fri, 08 Sep 2006 02:16:34 +0000 http://techliberation.com/2006/09/07/playstation-3-console-wars-the-costs-of-complexity/#comment-53426 <p>This brings up the whole point that gamers are the most technologically oriented and demanding of consumers. Funny then that the company that "dumbs it down" might be the one that wins. Many other sectors might learn from this:)</p> This brings up the whole point that gamers are the most technologically oriented and demanding of consumers. Funny then that the company that “dumbs it down” might be the one that wins. Many other sectors might learn from this:)

]]> By: MikeT http://techliberation.com/2006/09/07/playstation-3-console-wars-the-costs-of-complexity/comment-page-1/#comment-34930 MikeT Fri, 08 Sep 2006 02:05:53 +0000 http://techliberation.com/2006/09/07/playstation-3-console-wars-the-costs-of-complexity/#comment-34930 <p>Noel, I think it's safe to say that a lot of it is sheer hatred for Sony after all of the myriad ways they have managed to screw their customers in the past year or two. Remember the rootkit they put on their CDs? Microsoft couldn't have bought better anti-Sony publicity!</p> Noel, I think it’s safe to say that a lot of it is sheer hatred for Sony after all of the myriad ways they have managed to screw their customers in the past year or two. Remember the rootkit they put on their CDs? Microsoft couldn’t have bought better anti-Sony publicity!

]]> By: Noel Le http://techliberation.com/2006/09/07/playstation-3-console-wars-the-costs-of-complexity/comment-page-1/#comment-34929 Noel Le Fri, 08 Sep 2006 01:16:34 +0000 http://techliberation.com/2006/09/07/playstation-3-console-wars-the-costs-of-complexity/#comment-34929 <p>This brings up the whole point that gamers are the most technologically oriented and demanding of consumers. Funny then that the company that "dumbs it down" might be the one that wins. Many other sectors might learn from this:)</p> This brings up the whole point that gamers are the most technologically oriented and demanding of consumers. Funny then that the company that “dumbs it down” might be the one that wins. Many other sectors might learn from this:)

]]> By: Adam Thierer http://techliberation.com/2006/09/07/playstation-3-console-wars-the-costs-of-complexity/comment-page-1/#comment-53425 Adam Thierer Fri, 08 Sep 2006 00:23:17 +0000 http://techliberation.com/2006/09/07/playstation-3-console-wars-the-costs-of-complexity/#comment-53425 <p>Tim... You may be correct about the Merrill Lynch figures. Take a look at the many comments to that Engadget column I cited above [ <a href="http://www.engadget.com/2006/02/18/playstation-3-costs-900-sez-merrill-lynch-mob/#comments">http://www.engadget.com/2006/02/18/playstation-...</a> ].<br><br>You will see that several of those commenting on the report find errors with not only the underlying cost figures, but the actual calculations made in the report! So, it certainly could be the case that the ML report is over-estimating the costs Sony faces.<br><br>Then again, all that processing power, hard drive capacity and high-def capabilities must add up at some point. I'm no expert on the cost of computing processing and storage, but I would think that the ML figures are probably not that far off the mark. Of course, the figures will fall over time.<br><br>Incidentally, however, there are rumors floating around out there in the video game world that some of the most popular PS3 games could break the $60 mark, perhaps even go over $70 bucks per title. But I really wonder if fans are that dedicated to certain titles that they would spend that much. Again, if that's how Sony hopes to recoup its upfront fixed costs, this represents a huge gamble for the company. (It's the old razor & razor blades issue again, right?. How much will people be willing to spend on blades for a razor that is sold below cost? Same thing is going on here except I'm no longer certain this strategy will work for video games.)</p> Tim… You may be correct about the Merrill Lynch figures. Take a look at the many comments to that Engadget column I cited above [ http://www.engadget.com/2006/02/18/playstation-... ].

You will see that several of those commenting on the report find errors with not only the underlying cost figures, but the actual calculations made in the report! So, it certainly could be the case that the ML report is over-estimating the costs Sony faces.

Then again, all that processing power, hard drive capacity and high-def capabilities must add up at some point. I’m no expert on the cost of computing processing and storage, but I would think that the ML figures are probably not that far off the mark. Of course, the figures will fall over time.

Incidentally, however, there are rumors floating around out there in the video game world that some of the most popular PS3 games could break the $60 mark, perhaps even go over $70 bucks per title. But I really wonder if fans are that dedicated to certain titles that they would spend that much. Again, if that’s how Sony hopes to recoup its upfront fixed costs, this represents a huge gamble for the company. (It’s the old razor & razor blades issue again, right?. How much will people be willing to spend on blades for a razor that is sold below cost? Same thing is going on here except I’m no longer certain this strategy will work for video games.)

]]> By: Tim Lee http://techliberation.com/2006/09/07/playstation-3-console-wars-the-costs-of-complexity/comment-page-1/#comment-53424 Tim Lee Thu, 07 Sep 2006 23:49:24 +0000 http://techliberation.com/2006/09/07/playstation-3-console-wars-the-costs-of-complexity/#comment-53424 <p>I don't believe Merrill Lynch. $580 of the $800 is for two components: the processor and the optical drive. Those are both parts that were custom-designed for Sony. So I don't think there's any reliable way to know how much Sony's paying for them. Sony doubtless negotiated deep discounts for them based on a commitment to buy several million.<br><br>This is especially true since a lot of the cost of the CPU is in fixed capital expenses. The reason that new chips are so expensive is that companies are trying to recoup their investments during the few months when the new product is hot. Sony doesn't have to do that as much, because it's going to be using the same chip for a couple of years. I don't know anything about the economics of BluRay drives, but I wouldn't be surprised if something similar is going on there.<br><br>If those are the real numbers, then Sony is insane. There is no way that you could recoup $200 from licensing PS3 games. Even if they charge $20/game, that would mean that the average consumer would have to buy 10 games just for Sony to break even.<br><br>Anybody know how much Sony charges per title for PS3 game licenses?</p> I don’t believe Merrill Lynch. $580 of the $800 is for two components: the processor and the optical drive. Those are both parts that were custom-designed for Sony. So I don’t think there’s any reliable way to know how much Sony’s paying for them. Sony doubtless negotiated deep discounts for them based on a commitment to buy several million.

This is especially true since a lot of the cost of the CPU is in fixed capital expenses. The reason that new chips are so expensive is that companies are trying to recoup their investments during the few months when the new product is hot. Sony doesn’t have to do that as much, because it’s going to be using the same chip for a couple of years. I don’t know anything about the economics of BluRay drives, but I wouldn’t be surprised if something similar is going on there.

If those are the real numbers, then Sony is insane. There is no way that you could recoup $200 from licensing PS3 games. Even if they charge $20/game, that would mean that the average consumer would have to buy 10 games just for Sony to break even.

Anybody know how much Sony charges per title for PS3 game licenses?

]]> By: Adam Thierer http://techliberation.com/2006/09/07/playstation-3-console-wars-the-costs-of-complexity/comment-page-1/#comment-34928 Adam Thierer Thu, 07 Sep 2006 23:23:17 +0000 http://techliberation.com/2006/09/07/playstation-3-console-wars-the-costs-of-complexity/#comment-34928 <p>Tim... You may be correct about the Merrill Lynch figures. Take a look at the many comments to that Engadget column I cited above [ http://www.engadget.com/2006/02/18/playstation-3-costs-900-sez-merrill-lynch-mob/#comments ].</p> <p>You will see that several of those commenting on the report find errors with not only the underlying cost figures, but the actual calculations made in the report! So, it certainly could be the case that the ML report is over-estimating the costs Sony faces.</p> <p>Then again, all that processing power, hard drive capacity and high-def capabilities must add up at some point. I'm no expert on the cost of computing processing and storage, but I would think that the ML figures are probably not that far off the mark. Of course, the figures will fall over time.</p> <p>Incidentally, however, there are rumors floating around out there in the video game world that some of the most popular PS3 games could break the $60 mark, perhaps even go over $70 bucks per title. But I really wonder if fans are that dedicated to certain titles that they would spend that much. Again, if that's how Sony hopes to recoup its upfront fixed costs, this represents a huge gamble for the company. (It's the old razor & razor blades issue again, right?. How much will people be willing to spend on blades for a razor that is sold below cost? Same thing is going on here except I'm no longer certain this strategy will work for video games.)</p> Tim… You may be correct about the Merrill Lynch figures. Take a look at the many comments to that Engadget column I cited above [ http://www.engadget.com/2006/02/18/playstation-3-costs-900-sez-merrill-lynch-mob/#comments ].

You will see that several of those commenting on the report find errors with not only the underlying cost figures, but the actual calculations made in the report! So, it certainly could be the case that the ML report is over-estimating the costs Sony faces.

Then again, all that processing power, hard drive capacity and high-def capabilities must add up at some point. I’m no expert on the cost of computing processing and storage, but I would think that the ML figures are probably not that far off the mark. Of course, the figures will fall over time.

Incidentally, however, there are rumors floating around out there in the video game world that some of the most popular PS3 games could break the $60 mark, perhaps even go over $70 bucks per title. But I really wonder if fans are that dedicated to certain titles that they would spend that much. Again, if that’s how Sony hopes to recoup its upfront fixed costs, this represents a huge gamble for the company. (It’s the old razor & razor blades issue again, right?. How much will people be willing to spend on blades for a razor that is sold below cost? Same thing is going on here except I’m no longer certain this strategy will work for video games.)

]]> By: Tim Lee http://techliberation.com/2006/09/07/playstation-3-console-wars-the-costs-of-complexity/comment-page-1/#comment-34927 Tim Lee Thu, 07 Sep 2006 22:49:24 +0000 http://techliberation.com/2006/09/07/playstation-3-console-wars-the-costs-of-complexity/#comment-34927 <p>I don't believe Merrill Lynch. $580 of the $800 is for two components: the processor and the optical drive. Those are both parts that were custom-designed for Sony. So I don't think there's any reliable way to know how much Sony's paying for them. Sony doubtless negotiated deep discounts for them based on a commitment to buy several million.</p> <p>This is especially true since a lot of the cost of the CPU is in fixed capital expenses. The reason that new chips are so expensive is that companies are trying to recoup their investments during the few months when the new product is hot. Sony doesn't have to do that as much, because it's going to be using the same chip for a couple of years. I don't know anything about the economics of BluRay drives, but I wouldn't be surprised if something similar is going on there.</p> <p>If those are the real numbers, then Sony is insane. There is no way that you could recoup $200 from licensing PS3 games. Even if they charge $20/game, that would mean that the average consumer would have to buy 10 games just for Sony to break even.</p> <p>Anybody know how much Sony charges per title for PS3 game licenses?</p> I don’t believe Merrill Lynch. $580 of the $800 is for two components: the processor and the optical drive. Those are both parts that were custom-designed for Sony. So I don’t think there’s any reliable way to know how much Sony’s paying for them. Sony doubtless negotiated deep discounts for them based on a commitment to buy several million.

This is especially true since a lot of the cost of the CPU is in fixed capital expenses. The reason that new chips are so expensive is that companies are trying to recoup their investments during the few months when the new product is hot. Sony doesn’t have to do that as much, because it’s going to be using the same chip for a couple of years. I don’t know anything about the economics of BluRay drives, but I wouldn’t be surprised if something similar is going on there.

If those are the real numbers, then Sony is insane. There is no way that you could recoup $200 from licensing PS3 games. Even if they charge $20/game, that would mean that the average consumer would have to buy 10 games just for Sony to break even.

Anybody know how much Sony charges per title for PS3 game licenses?

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