This is a rather unique position we are in. The E3 is nearing, and yet we've got just about the biggest surge we've had the past couple of months. Okay, that might well be an exaggeration, but still. You gotta agree with me when I say it was a busy past week, yes? Rumors, confirmation of rumors, and surprising - yet at the same time not-so-surprising - NPD results for this month all proved to be the cherry on top for this game-filled, fun-filled week. Hmmm.. imagine all those cherries on top.... Dig in, then.

Sony's PlayStation 3 may pick up its pace this year instead of ambling along like it did for the most part of 2007. According to research firm iSuppli the PS3, which they considered as a "great bargain", may enjoy a surge of increased installed base by the end of this year. Do hit the full article for iSupply's predicted 2008 sales numbers for the three main consoles: PS3, Xbox 360, and Wii.

As many previous articles have reported, we all know by now that the Wii has achieved a level of success  in console gaming arena over the other leading console platforms, the Sony PlayStation 3 and Microsoft's Xbox 360. Another group of analysts, iSuppli, agrees and provides proof that Nintendo's success managed to spread into the software gaming market as well.

iSuppli reported that Nintendo managed to gain US$ 1.2 billion in worldwide revenue for the Wii and DS in this year's third quarter. On the other hand, Sony's combined third-quarter revenue for the PS2, PS3 and the PSP games amounted to US$ 1 billion, and Microsoft managed to net US$ 317 million for their gaming software.

Somehow echoing the results of current gaming polls such as Japan's Media Create, iSuppli said that a "lack of compelling titles" hurt PlayStation 3's software sales. Meanwhile, Nintendo managed to win gamer's hearts (and pockets) with their chart-topping titles. However, Sony is moving to fix this problem by trying to win over third-party game developers.

If iSuppli is right, Nintendo's winning streak isn't over yet. The analyst group expects Wii software revenue to reach US$ 1.1 billion in next year's fourth quarter. "Nintendo is likely to maintain its lead in this area, as it expects by the end of 2007 to ship about 200 additional titles," said iSuppli's vice president of multimedia content and distribution, David Carnevale.

While gamers all over the world are crying for a price drop, our friends over at India buy their PS3 and Xbox 360 at US$ 980 and US$ 600 respectively. Even with such expensive consoles, analyst group iSuppli believes that the industry will reach US$ 125 million on 2010, from last year's US$ 13 million.

Milestone Interactive Software distributed the PS3 at almost a thousand bucks, but 1,200 units have been sold so far. Year end goal of 10,000 units sold will be hard according to the group, because of Xbox 360 and its "major price differential compared to its competitor."

Having to pay for duties doesn't help, which is almost 35% the product price in India. Microsoft's box also have the earlier release advantage, and localizing support that iSuppli calls "its commitment to customizing its titles for Indian tastes."

“The console gaming segment is not very sizeable in India. However, future growth expectations and consumerism are prompting companies to establish themselves in India," said analyst Ashish Thakre from the group. That means there shouldn't be any wars - we should be happy that the industry is booming in more countries.

Here's yet another reason why there could be a PS3 price cut in the near future: Blue-ray diodes are not only getting cheaper, but they're being produced in increasing quantity as well - so much that Taiwan-based game console makers are predicting no less than a US$ 100 production price cut of Sony's shiny black console, as Yen Tin Cheng and Adam Hwang of Digitimes reports.

With Sony Shiraishi Semiconductor's announcement of expanding its monthly production capacity of blue-violet laser diodes to 1.7 million (as well as beginning production of 240mW blue-violet laser diodes), it's not hard to connect the dots: increase in supply means decrease in price, which should affect the PS3's production price tag a hefty 0's worth.

It's also something to note that besides this potential drop, the Xbox 360 Elite's production cost has dropped down to 3.30, based on latest estimates by iSuppli, a research firm, which could mean that price drop we've been waiting for can't be all just wishful thinking.

And for your reading convenience, we've attached the production cost breakdown of both the Sony PlayStation 3 and the Xbox 360 Elite.

PS3 and Xbox 360 Elite Breakdown of production costs:

Item                            PS3 (60 GB version) Xbox 360 Elite
Motherboard, CPU,                  352                          204        
graphics processor,
chipset, etc.
Hard Disk Drive                        125                        19.45
Power supply                             54                         43
Bluetooth,                                19.60                       N/A
802.11 b/g
network modules
Other components                  150.50                     N/A
Chassis and related                61.75                      25.25
Assembly                                   40                         6.10
Total cost                                840.35                   323.30
Retail price                               599                         399

Will the PS3 ever get its price cut we've all been waiting for? Updates as they happen!

 

At the moment, there is sentiment that the future Sony's 20GB model for their PS3 seems murky. The reason for this doubt is that firstly, Sony isn't even going to offer that 20GB model in Europe, noting that they may do so "dependent on demand." Secondly, according to iSuppli, Sony loses more money on the 20GB PS3 compared to the 60GB model.

There have been reports that the 20GB model of the PS3 have been hard to find recently, and supposed evidence suggest that the 20GB version is headed for a form of extinction. However, Next Generation reports that Sony claims that the 20GB version of their PlayStation 3 isn't dead ...yet.

Sony Computer Entertainment America PR head David Karraker explains:

The type of model found in stores is completely up to what the retailer orders, so if they don't see a big demand for a particular SKU, they simply don't order it from us ...We continue to manufacture both.

Karraker said that the ratio between the 60GB model and the 20GB model still remains the same since launch – 80 percent for the former, and 20 percent for the later. Also, if any of you are still hopeful that a cheaper, hard-disk-less PS3 will be available soon, Karraker had this to say: "At this time there are no plans to change our US model offerings."

Well, it only makes sense that they put more emphasis on the larger model. Especially since they've been marketing the thing as an all-around media solution for months now.

 

Microsoft and Sony are both aggressively preparing to migrate chief components of their latest consoles to 65nm silicon-on-Insulator (SOI) technology production in order to help shrink the gap between retail prices and production costs.

iSuppli's research shows that at present, manufacturing costs of the 20GB and 60GB PS3 are around US$ 306.85 and US$ 241.35 more than current retail prices. iSuppli also notes of Microsoft's situation saying that the Xbox 360 Premium package priced at $US 399 actually costs the company US$ 525 to produce. The DigiTimes reports that:

during a recent Sony investor conference, the company said that it has already started production of various sized chipsets on 65nm node and noted that die-size could be shrunk by 40% in comparison to 90nm process, indicating that corresponding costs could be reduced along with the reduction in die size.

On the Microsoft side of things, they've announced last April that they would start producing Xbox 360 CPUs on 65nm SOI technology in the first quarter of 2007. However, DigiTimes does note that rumors suggest that the move to 65nm might be delayed to mid-2007.

A recent Chinese-language Commercial Times report comments that if 65nm manufacturing is introduced, three key Xbox 360 components - the CPU, northbridge, and graphics chip - may see their prices reduced by 30% to 40%.

On the Sony side, they add that they also plan to reduce the number of parts in the PS3 in an attempt to see "drastic" cost reductions.

You think ONE HUNDRED MEEEEEELION DOLLARS (mandatory Dr. Evil pinkie salute) for a PS3 is something? Try TEN DOLLARS (we dunno how we're gonna salute this):

We don't think when iSuppli said that the PS3 "was a bargain", they meant that. At the same time, we'd like to point out that something smells fishy about this. Spidey sense tingling very much. Note the portions of the screencap we've encircled. "The seller ended this listing early to sell to the high bidder(s) at current bid price." And there was only ONE bid, and the auction was terminated afterwards. Come on, no one could be that desperate to get rid of a PS3... especially when you've paid for the 60GB SKU.

He could be trying to rip the buyer off - except that his eBay rep is good, albeit it's not like he's gotten many ratings from eBuyers. So is the buyer's rep - same deal, same conditions. If there really is a PS3 in the deal, and this isn't that kind of rip-off, then... Hmm... We have our theories, but we would be mean to air them out in this post.

Put it this way, however: eBay hasn't cracked down on this concluded auction yet. Nor have we heard word on teh intarwebs about it. But, unless the seller's a Good Samaritan of the first order, something still feels dodgy about this...

It's common for console makers to sell their new systems at a loss, banking instead on software sales to make up for the losses. At the Xbox 360's launch last year, Microsoft was estimated to have lost around US$ 125 per console. Nintendo, however, has traditionally sold its consoles at a profit, with the upcoming Wii continuing this practice.

Last month, Sony revealed that its game division expects to lose ¥ 200 billion (US$ 1.7 billion) this year due primarily to expenses associated with the company's new PS3 console. An in-depth analysis of the next-gen console shows that materials and manufacturing costs for the system amount to US$ 805.85 and US$ 840.35 for the 20GB and 60GB version, respectively.

According to electronics supply chain researcher iSuppli, analysis shows that Sony loses US$ 306.85 per 20GB hard-drive equipped PS3 sold. This amount is greater than what Sony loses on the 60GB PS3, which has a US$ 241.35 difference between the cost and retail price. These losses do not include the packaging, cables, and the cost of the SIXAXIS controller.

iSuppli said that while the size of Sony’s loss per console sold is "remarkable, even for the videogame console business," the components within are all highly impressive pieces of electronics, including the US$ 129 RSX graphics chip from Nvidia and IBM's US$ 89 Cell processor.

"The reason why the PlayStation 3 is so costly to produce is because it has incredible processing power," explained Andrew Rassweiler, teardown services manager and senior analyst at iSuppli. "If someone had shown me the PlayStation 3 motherboard from afar without telling me what it was, I would have assumed it was for a network switch or an enterprise server."

Overall, iSuppli called the PS3 a "great bargain," saying the console has "more processing power and capability than any consumer electronics device in history."

At least one game industry analyst thinks so. While others may think that Sony's move to cut the price of the Japanese 20GB PS3 (and throw in an HDMI port) was in reaction to Microsoft's earlier announcements of Japan-targeted Xbox 360 package deals, iSuppli's Chris Crotty - we've met him before - thinks Sony's looking more in the direction of the Wii.

And nervously: "I am wondering if this announcement has more to do with Wii and how strong the console will be in Japan," Crotty says when asked by TG Daily. "It could be an indication that Sony feels less confident about its content."

But then Crotty hedges his bets, thinking that rather than being worried about competition from Nintendo (or Microsoft, for that matter), Sony might be thinking that the PS3 will do better, period, because of all its great games. "Whenever you lower the price of the console, you increase the burden to back the money through software. In this respect, you can argue that Sony could be feeling more confident that they will have great content (and can sell more games)." Some of that content was laid out and playable during TGS 2006, come to think of it.

(Well, at least we be proven right about one thing: Economists confuse us. Especially with this "on the one hand... on the other hand..." line.)

On the other side of the Pacific, Crotty thinks that even without a similar price cut, the US 20GB model will do "just fine." "There will be plenty of demand."