Saturday, November 18, 2006

PS3: what's under the hood?

DigiTimes via Paul Kedrosky's Infectious Greed

Research firm iSuppli said its recent PlayStation 3 (PS3) teardown analysis shows that the PS3 is an engineering masterpiece that sets a new high mark for computing price/performance – even when considering it is more expensive than its nearest rival, the Xbox 360 from Microsoft.
"With the PS3, you are getting the performance of a supercomputer at the price of an entry-level PC," said Andrew Rassweiler, teardown services manager and senior analyst for iSuppli.

Incredible, isn't it? We're playing video games with more calculating power than NASA used for the Moon Landing.

iSupply goes on to confirm what had been rumored about the PS3's costs:

It's common for video-game console makers to lose money on hardware, and make up for the loss via video game-title sales. Still, the size of Sony's loss per unit is remarkable, even for the video-game console business.
While many fret over the high cost and price of the PS3 compared to the competition, iSuppli believes the console provides more processing power and capability than any consumer electronics device in history. Because of this, the PlayStation 3 is a great bargain, well worth its US$599 price and US$840.35 cost, iSuppli believes.

In my opinion, there are two strategic factors critical to PS3's success, neither of which is rocket science:

*maximum saturation of consoles into consumer's homes.

*a steady stream of hot, engaging game titles, both as profit generators, as well as driving excitement to get fence sitters and non-hardcore gamers (like me) to consider buying a PS3, which leads to more software sales, and so on.

As far as accomplishing the first objective, right now Sony is down three runs in the eighth inning, with two out and one man on second. Tortured sports metaphors aside, they're behind, and with five weeks to hit their one million sold mark, right now, their greatest challenge is themselves. I hope they pull off a miracle ninth inning, I really do.*

On the second objective, that's a matter of opinion. Nothing gets game nerds wound up more than talking about the merits of game titles. I'm no expert, so I will leave it to the game nerds. Historically, a handful of titles end up being knocked-out-of-the-park successes, and even if the number of blockbuster titles is less then five, it can be enough.

Question is, how much software does Sony have to sell for market dominance to not be a Pyrric Victory?

*I didn't intend for my blog to turn into an axe-grinding anti-Sony dogpile over the last month. But bad news sells, and the copy for following Sony's trainwrecks pretty much writes itself.

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