PS3 Could Bleed Sony Dry

The next generation PlayStation, the PS3, could be delayed by as much as a year and cost the company as much as US$900 to build, according to reports.

Hitoshi Kuriyama, a Merrill Lynch analyst in Japan is reported by the Financial Times saying there are reports the PS3 could be delayed by between six and 12 months, pushing a Japan launch back to late this year and a likely Australia launch well into 2007.

The new game console might also cost Sony as much as US$900 per unit to produce initially, according Merrill Lynch, with costs falling to US$320 after three years. If true it would likely mean Sony will be forced to make a considerable loss on each console or risk pricing itself out of the market.

The analysts lay the blame on the cutting edge componentry specified for the new console, saying the Cell Processor at the core of the device is not only “difficult and expensive” to fabricate, but will cost at least US$230 per unit initially.

Add the price of the Blu-Ray DVD drive at US$350 and all the high tech memory, graphics processing and other components bumps up the price to $900 per unit in 2006.

If true, the console wars could take an interesting twist with Microsoft not only already in the key markets with its xBox 360, but if Sony is forced to subsidise the device to a level where it is price competitive, it could bleed the company dry quite rapidly.

One outcome could be for Sony to introduce the PS3, but severely limit supply in order to put a cap on its losses, suggest the analsysts.