PS3 News: Merrill Suggest PlayStation 3 Delays, $900 to Build - PS3 News

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Merrill Suggest PlayStation 3 Delays, $900 to Build

Last week, research analysts at Merrill Lynch released a report (PDF link) supposing that the PlayStation 3 might not ship until late 2006 in Japan, and not until 2007 in North America and Europe.

In the report, production costs are cited as the main reason for the delayed schedule. Lynch's analysts tallied up the costs of the individual components going into the PS3 and found that each unit will cost Sony approximately $900 to manufacture (Note: the cost of components add up to $800 in the report, so we are not sure if the $900 is a misprint or not). The Cell processor ($230) and Blu-Ray drive ($350) alone account for more than half the cost of each unit.

Companies typically sell video game hardware at a loss during the first year or two of a system's life span, but not to such an extent that Sony would be willing or able to eat a $500 per unit loss just to match the Xbox 360's current $400 price point. Thus, say the Merrill Lynch analysts, it's more likely that the PlayStation 3 won't ship on a large scale until 2007, when part costs will be a bit more down-to-Earth.

(Note: Although the total shows $900, the actual total is $800. We are not sure if this is a misprint or if the extra $100 represents other costs such as labor, shipping, etc.)

Further adding to the "PlayStation 3 will be late" bandwagon, Nvidia executives said in a conference call this week that the company wasn't expecting any royalty payments from Sony for its RSX chip during the quarter ending in April. The RSX chip is the graphics processor in the PlayStation 3. The reasoning here is that since Sony won't be paying any royalties for the chip, they also won't be manufacturing any up to that point, which means they probably won't be shipping any PS3 consoles for quite some time (because it takes months to produce and put together systems).

Of course, then there are well-placed sources that suggest that Sony fully plans to launch the PlayStation 3 in September, in Japan and North America.

Frankly, it's all SPECULATION right now. However, if we put all of the rumors, conference call comments, and analyst opinions together, we at least have a clearer idea of when to expect the first retail PlayStation 3 units. It's looking more and more like Japan (at the least) will get the system during Q4 2006... and perhaps shell out upwards of $600 for the privilege.

2/19/2006 Frank Provo

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