One of the biggest problems that Sony is currently facing is the component cost of the PS3. Without having to spend over $800 per unit, Sony could cut the losses per sale and also offer a price drop. In a continued effort to reduce chip production costs, Sony has now decided to move its more advanced chip production out of house.
Thanks to the cost of the Blu-ray drive and cell processor, the PS3 has been a huge drain on Sony as far as the Playstation 3 is concerned. Because of that simple fact, Sony wants nothing more than to reduce the cost of the internal PS3 components in order to minimize losses and reduce per-unit cost to consumers, and the easiest way to do that is to reduce the size of the chips that they put into the PS3. If a chip size is reduced, then more chips can be manufactered per sheet, and that reduces your raw material cost substantially.
In a move to hurry along the process of chip size reduction, Sony has decided to work with manufacturers that specialize in chip production. In a statement to Reuters, Yutaka Nakagawa, Sony’s Executive Deputy President, spoke with reporters about the advantages of moving chip production to another company: “When we first offered the PS2, there were no semiconductor companies that were able to make chips for the machine, so we did it ourselves. But now, there are companies that specialize in chip production,” said Nakagawa. “They are aggressively investing in cutting-edge technology. Our basic understanding is that we probably won’t need to do everything by ourselves for next-generation chips.”
This decision comes after the PS3’s slightly disappointing launch in which the Nintendo Wii outsold it at a rate of 3 to 1. The lower than expected sales figures can be attributed to manufacturing problems and the PS3’s high price tag. However, if Sony can manage to get chip costs down and drop the price on the PS3, they should be in a great position for this years holiday season.
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