Blue-violet laser diodes production has increased, which in effect will result in cheaper Blu-ray components. The Blu-ray components have been to the most expensive part of the PS3, making it a good blame for the high prices of Sony's next-gen console. But now that this expensive piece of equipment is cheaper than ever before, it is an aspiration to get unit price below $499. And Sony states that, "the choice to include Blu-ray the smartest decision it has ever made."
PlayStation 3 could see a price cut with cheaper Blu-ray components
The Blu-ray Disc drive inside every PlayStation 3 is one of the console’s most expensive components. Fortunately, production capacity of blue-violet laser diodes required for the Blu-ray Disc drive is ramping up faster than originally projected, which could soon drive down costs for the PlayStation 3.
According to Semiconductor Today, Sony Corp. subsidiary Sony Shiroishi Semiconductor Inc. of Japan claims to have established an industry-leading monthly production capacity of 1.7 million blue-violet laser diodes, with preparations in place for upping it to 5 million blue-violet laser diodes per month.Increased blue-violet laser diode production means a lower bill of materials cost for Sony, which could help pave the way for the savings to be passed onto the consumer.
"The right question to ask is whether the full bill of materials is below $499, allowing them to cut price and still avoid losing money. I'm not competent to answer whether it is, but I am competent to say that when cost is below $499, we should look for a cut to that level," Wedbush Morgan Securities analyst Michael Pachter told GameDaily BIZ. "The point is that if they're ramping capacity to [5 million diodes], they probably are coming down the cost curve for MPEG chips, dedicated disc drive processors, and every other component. Hard to say for sure, but I'd guess that Sony could squeeze a hundred dollars out of its cost by mid-year, maybe more."
"My guess is that you will see a price cut this year," he continued. "I think that the introduction of the Xbox 360 Elite gives Sony an opportunity to cut price and claim that they offer Blu-ray for only $20 more."
The advanced Blu-ray hardware is partly to blame for the machine’s premium price, spotty launch supply and the European delay. In light of the challenges the PlayStation 3 has faced because of the next-generation optical format, Sony stands by its hardware, calling the choice to include Blu-ray the smartest decision it has ever made.
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However how soon in another story. I mean they were suffering some pretty severe production costs at the beginning here and I think it would make sense to retain the same price for a little while until they can get closer to starting to make profit.
My guess is a price cut at the soonest, this Holiday Season.
One reason why Blu-Ray is outselling HD-DVD in Q1 2007 is almost guaranteed to be the PS3.
Although Microsoft also didn't really care about HDMI at the beginning either, and look at them now with the Elite and it being the only absolutely new feature of the revised console.
I'm actually hoping HD-DVD ends up failing because I've invested a lot of money in Blu-Ray movies already and it is clearly the most statistically superior format of the two. Not that it would be necessarily bad if Blu-Ray failed, I'll always have my PS3 to play the movies I've already bought on, but it would make things much more easier.
It'll be an interesting console wars this year no doubt, because it's one of the first times where it seems someone who was down at the beginning may very well be able to pull ahead later.
Sony isn't out of the question for leading the pack out of this console war, unlike the original XBOX which always trailed quite a bit compared to the PS2.