Overview / Main Features
The PS3 represents the latest generation Playstation console. Its initial arrival in November 2006 was highly anticipated, as it had taken Sony six years to replace the existing PS2 console, which was purportedly 2 years more than originally planned. As soon as the product was released in Japan, in November 2006, iSuppli immediately set to work analyzing two PS3 consoles from Japan, both the initial 20GB and 60GB versions. Our initial analysis looked at the unit at a high level and estimated the cost of key components using iSuppli standard teardown methodology, however, for non-major components, we had estimated most of the "rest of" the cost of the console at an aggregate level. This analysis represents the completion of a full teardown on the product with a complete, detailed BOM.
In our analysis, although our hardware analysis only reflects the BOM as it was initially released, we will make comments in the executive summary to show how some of the more recent changes may affect the current cost of the BOM. Furthermore, to make the analysis time-relevant we are analyzing this product in June 2007, and are re-analyzing all the components to represent an updated "current" snapshot in time, all the way down to the core silicon cost modeling.
Also - in our analysis we will refer to the 20GB portion of the design as the "Console Core", and refer to all the added assemblies and incremental costs for those options added in the 60GB model as "Console - 60GB". The 20GB model, it should be noted is no longer promoted in favor of only the 60GB model. This makes sense from a consumer perspective, but especially from Sony's perspective, as the 20GB version was a bigger margin loss item for them than the 60GB, as the incremental $40 in cost to Sony was rewarded by an additional $100 (or more, depending on country) revenue for Sony per unit. The 60GB, in a nutshell, produced less lost dollars per unit.
Nonetheless, the PS3 is a powerful computing device with a lot of expensive components that make will make hardware profitability for Sony an ongoing challenge.
It is also interesting to note that while Sony have already begun to respin the box in ways that makes it cost less, they are, in effect, raising the price for the PS3 by charging European consumers approximately 35% more (based on the Euro vs. Dollar exchange rate) than US consumers for roughly (but not exactly) the same hardware. The combination of ASP hiking, and ongoing cost reductions have already begun to bring the hardware closer to the goal of hardware profitability, but it is still critical to understand that iSuppli's teardown research still does not account for the development costs, IP costs, and other important, non-hardware-related costs, that must be considered in a "total cost per box" analysis.
Although all game consoles obviously are targeted to game players and the gaming community, the PS3 is the first console that, based on it's feature-set and price point are making an effort to shift from the "kid's room to the living room" - primarily due to the Blu-Ray drive feature, which give the PS3 the possibility of being more of a media-hub (a la Apple TV) in the future - which would broaden the PS3's market considerably, but would also represent a significant strategy shift which, unlike Apple, does not appear to be part of Sony's game-plan short-term.
Initial release - Japan, November 11, 2006 (both consoles in our analysis come from this initial launch), USA - November 17, 2006, Europe - March 23, 2007. It is interesting to note that despite the short span between the initial rollout and European rollout of the PS3, some apparent internal electronic design changes have already been made (the elimination of the legacy "Emotion Engine & Graphics Synthesizer" chip primarily).
Pricing and Availability
Upon initial release, the PS3 20GB model analyzed (now obsolete) retailed for $499, while the 60GB version retailed for $599. This still, at the time of writing (June 07) appears valid for the US market. Also at launch time in Europe (March 2007), the same product was going on sale in Europe for 599 Euros (or approximately 33% more than the US version, and 425 pounds Sterling in the UK (>40% more than the US). To some extent these differences may be explained by high local VATs throughout Europe, but may also be part of a Sony pricing strategy to minimize hardware losses over time as well.
Normally, in most teardown analyses, we will assume a "lifetime volume production" estimate for the total life of a product. This is trickier with the PS3 as we expect the product to be "rev'd" or redesigned several times over the course of production. Although we do not expect major respins in the first year, it is possible that over the course of the lifetime the product may morph significantly, as the PS2 did.
For the purposes of this teardown analysis, we have assumed a lifetime production volume of 30M units. Again, this figure is less than iSuppli's overall projections for the model through 2010, which we currently estimate at a total of nearly 63 million units shipped, however, it is assumed that after 2 years or so, some significant changes in the box itself may require the retooling of housings and other components.
As a reminder, teardown volume production assumptions are primarily used for our cost analysis in terms of amortized NRE and tooling costs, especially for custom components specific to the model being analyzed (mechanical components especially). Unless assumed volumes are different by an order of magnitude, minor changes in volume (say 1 million vs. 2) rarely have a large net effect on our final analysis because of this.
Market / Sector Performance
In the game console market, iSuppli forecasts the 3 main contenders in this space (Xbox, PS3 and Wii) at near market parity for 2007, with total console units sold at around 30 million for 2007 for all 3 consoles. Over the course of 2007 through 2010 console unit sales are expected to continue their rise but at an increasingly slowing pace. The PS3 will, we forecast, take over increasingly as the dominant console.
Initial Analysis (~$840 for 60GB /$805 for 20GB) from November 2006
In our initial analysis we performed the week of the initial release in Japan, we had torn down the PS3 and had identified and analyzed in detail all of the major components one by one to derive a total manufactured hardware cost of approximately $840 for the 60GB version, and $805 for the 20GB (now obsolete) version. Although the major cost components were analyzed individually, much of the remaining PCB level components were estimated in aggregate. All of the costs used in that analysis represented a snapshot in time of the market at that time.
Current Analysis Represents a More Detailed Analysis and an Updated Snapshot in Time
This new analysis was performed using standard teardown methodology and cost estimates are based on a complete, detailed BOM analysis of the product. Some variances between our initial analysis and current analysis can be attributed to a) a changing market with continuously reducing prices for many components, b) assumed greatly improved yields on all core silicon (Cell Broadband Engine, Nvidia GPU, Etc.) and finally, to some extent the assumptions made in our aggregate cost estimations vs. those borne out by the standard, and very detailed teardown BOM costing methodology.
It is also important to note that Sony have not been standing still. To make the PS3 less expensive, they have been active on two major fronts to help cost reduce the PS3:
1) They have, in the Euro version of the PS3, removed the Emotion Engine, and other PS2 legacy chips which were there to support, at a hardware level, the backward compatibility with PS2 games. This eliminates 2 RDRAM chips, and 2 Sony chips (CXD9208GP, and CXD2953AB - the "Emotion Engine'). It also likely removes surrounding support components which are hard to account for without updated hardware to analyze. Furthermore, this change has also altered the I/O controller chip which may have also been cost reduced in this exercise. We estimate that minimally this change represents a $28 savings over initial our hardware analysis. This cost is still accounted for in our analysis - so note that a hardware analysis based on the current version should net at least $28 lower in cost.
2) IBM have, and possibly the other silicon suppliers have transitioned the Cell Broadband Engine (and again possibly many of the supporting chips) to 65nm process geometry. We do not have a way to account for the exact differences that this would make, as we would have to have new die measurements in order to cost model the silicon. All of the core silicon in the PS3 initial release were assumed to be in 90nm process geometry and were cost modeled based on that assumption. Even our new analysis, although the cost modeling parameters represent an updated snapshot in time, they are, to some extent, irrelevant, as some die have been shrunk with this new geometry.
3) Finally it is understood that Sony, as a general rule is likely exerting a great deal of pressure on all suppliers to provide year on year, quarter on quarter price reductions for components, and likely had contracts in place in their entire supply chain from the beginning to ensure regular ongoing cost reductions. That is assumed to be a given in this industry, and especially for this flagship application.
Main Cost Drivers (Representing ~70% of total materials cost)
$107.00 - Sony - Blue-Ray Drive
$83.17 - Nvidia (Sony) - CXD2971GB - Reality Synthesizer
$64.40 - IBM (Sony) - CXD2964GB - IBM Cell Broadband Engine
$51.53 - Toshiba (Sony) - CXD2973GB - I/O Bridge Controller (Changed to CXD2979GB in EURO Version)
$45.00 (60GB) / $39.50 20GB version - Seagate - ST920217AS (ST96812AS in 60GB Version) - Hard Drive - 20GB, SATA 1.5Gb/s, 2.5', 5400rpm (60GB in 60GB Version)
$24.00 - Elpida - EDX5116ACSE-3C-E - DRAM - XDR, 512Mb (Second Source: Samsung K4Y50164UC-JCB3)
$23.40 - Furukawa Electric - - Blower / Cooler Assembly - Blower w/ 2 Metal Plate, 6 Copper Tubes & Extruded/Machined Aluminum Fin
$20.74 - Sony - CXD2953AGB - PS2 Emotion Engine + Graphics Synthesizer (Removed in EURO Version)
$16.71 - Nan Ya PCB - Motherboard - 8-Layer - FR4, Lead-Free
$12.50 - International Rectifier - iP2003APbF - Power Block - Synchronous Buck, Multiphase, Integrated Drivers & Passives, Pb Free
$12.00 - NEC Tokin - PFAF250E128MTE - Proadlizer - High Speed Decoupling Capacitors, 1200uF, 2.5V, 10A
$5.00 - Samsung - K4R271669F - RDRAM - 128M bit (Removed in EURO Version)
Total BOM Costs (Direct Materials Only) ~$639
Total BOM & Manufacturing Costs ~$665
The total materials and manufacturing costs reported in this analysis reflect ONLY the direct materials cost (from component vendors and assorted EMS providers), AND manufacturing with basic test. Not included in this analysis are costs above and beyond the material manufacture of the core device itself - cost of intellectual property, royalties and licensing fees (those not already included into the per component price), software, software loading and test, shipping, logistics marketing and other channel costs including not only EMS provider and the OEM's margin, but that of other resellers. Our cost analysis is meant to focus on those costs incurred in the manufacture of the core device and exceptionally in some circumstances the packaging and literature as well.
The main conclusion and point here is that despite our completeness with respect to hardware costs, there are many other costs we do not account for that will still keep the PS3 "in the hole" for a while still. Most of this is IP and development cost related as it relates to the platform and OS itself. Since none of this is accounted for in our hardware analysis, it is worthwhile to consider how much such costs might add to Sony's bottom line.
OEM/ODM/EMS Relationships / Manufacturing
ISuppli understand that the PS3 is currently built by Asustek, likely in Suzhou, China. It is also rumored that Foxconn may be participating in future production.
Country of Origin / Volume Assumptions
The units we analyzed were assembled in China (final integration), with some of the subsystems (hard drive, 802.11 module, etc.) coming from various countries of origin (see overview for details on this).
Furthermore, we have assumed that in order to keep costs low, that custom mechanicals (plastics, metals, etc. were manufactured in China. See the table in the BOM analysis labeled "COO & Test Notes" or the Overview section in the online presentation for a comprehensive list of countries of origin, labor rate assumptions, etc.
Country of origin assumptions relate directly to the associated cost of manufacturing, where calculated by iSuppli. In the cases of "finished" sub-assemblies (such as hard drives), we do not calculate internal manufacturing costs, but rather assess the market price of the finished product in which case country of origin assumptions may or may not have a direct effect on pricing.
Remember also that labor rates are applied directly only to hand inserted components and systems in our bill of materials, and although regional assumptions do, these new rates do not have a direct effect on our modeled calculations of placement costs for automated SMD assembly lines. "Auto" inserted components (such as SMT components) placement costs are calculated by an iSuppli algorithm which allocates a cost per component based on the size and pincount of the device. This calculation is affected by country or region of origin as well.
Design for Manufacturing / Device Complexity
The PS3 is complex in all aspects. It features a lot of discrete functional components, subsystems and power (literally), but to further complicate the matter of manufacturing, and increase costs is the density factor. The more dense a design becomes, the more the cost is elevated by increased cycle times due to the creative insertion and placement of components. Some of this creativity is also reflected in the component material cost - not just manufacturing costs.
The most measurable metric by which we can judge and compare device complexities is often simply by the component counts involved. The PS3 (60GB) version and single controller contain a whopping 4036 discrete components. This discrete count does not include all of the Blu-Ray subcomponents (the Blu-Ray drive is accounted for, in this analysis, as a single unit), or packaging and literature. This is far in excess of most other devices seen, including the Xbox which, using similar methodology and accounting for subsystems as a "unit" produced a component count of merely 1827 in our analysis.
To further put the component count, and to some extent manufacturing complexity of the Playstation into perspective, the master count for components, if the Blu-Ray components are all broken out, is the equivalent of roughly 4 low-end laptop computers.
The following is a breakout of component counts, both mechanical and other (primarily electronic and electro-mechanical) by assembly:
Total CountMechanical Count
* - Blu-Ray drive accounted for as a single unit in this count. The control PCB from the Blu-Ray alone (an integral part of the drive), already adds 645 more components. The details of this bill of materials are accounted for in the BOM analysis, but the cost of the whole board is considered a subcomponent of the Blu-Ray drive itself, which I priced, as it is assumed to be bought and sold - as a unit.
Component counts have a direct bearing on the overall manufacturing cycle times and costs, and also can increase or decrease overall yields and re-work. Our calculations of manufacturing costs factor counts and more qualitative complexities in the design. The cost of manufacturing is also, to some extent, decreased in this case because of assumed labor rate applied for China.
Note that manual labor has a much smaller effect on auto-insertion assembly lines (for the Main PCB, for example), where manufacturing costs are much more capital equipment intensive and driven by these investment costs.
The PS3 consists of several modular blocks or sub-assemblies:
- Main PCB / Motherboard
- Hard Drive - 2.5 Inch format
- Blu-Ray Drive
- Power Supply - 400W
- Wireless Interface PCB - Contains the 802.11g and Bluetooth modules
- 802.11b/g Antenna PCB - for the second 802.11b/g antenna for diversity
- Memory Card PCB - modular PCB from 60GB unit - provides interconnect for flash memory cards
- Front LED Indicators PCB - Self-explanatory
- Controller Main PCB
- Controller Vibrator PCB
- Enclosure, Etc.
Here is a summary of the major components used in the PS3 design:
Main PCB / Motherboard
- IBM (Sony) - CXD2964GB - IBM Cell Broadband Engine
I/O Bridge Controller
- Toshiba (Sony) - CXD2973GB - I/O Bridge Controller (Changed to CXD2979GB in EURO Version)
- Nvidia (Sony) - CXD2971GB - Reality Synthesizer
Legacy PS2 Emotion Engine / Other
- Sony - CXD2953AGB - PS2 Emotion Engine + Graphics Synthesizer (Removed in EURO Version)
- Sony - CXD9208GP - Legacy PS2 Chip (Removed in EURO Version)
I/O & Interface
- Sony - CXD4302GB - I/O Controller
- HDMI Transmitter - Silicon Image - SiI9132CBU - 1080p, 36bits/pixel
- 100Base-Tx Switches - Marvell Technology - 88E6108-LAR1
- Sony - CXR713120 - ASIC - MCP
- Sony - CXM4024R - ASIC - MCP
- Memory (Major devices only)
- DRAM - Elpida - EDX5116ACSE-3C-E - XDR, 512Mb (x4)*
- RDRAM - Samsung - K4R271669F (x2) - 128M bit (Removed in EURO Version)
- NAND Flash - Samsung - K9F1G08U0A-PIB0 - NAND, 1Gb, SLC
* - The application of XDR DRAM is the first and only application we are aware of using this technology. As a result of the uniqueness of this technology, and the non-commoditized nature of the device, pricing used in our analysis assumes a premium over market when compared with similar commoditized devices. No market pricing is established for this very unique product, and the real pricing is a matter that only the supplier and Sony really know.
Wireless Interface PCB
- WLAN Access Point - Marvell Technology - 88W8580-BAN1 - Gateway - 802.11b/g (60GB version)
- Bluetooth - SCEI / CSR - CXD3261GG - BlueCore4-ROM - Single Chip Bluetooth Solution, V2.0+ EDR System (coomon to both 20GB and 60GB versions)
Memory Card PCB
- Controller - Genesys Logic - GL819MXG - Memory Card Reader Controller - Multi-Slot, USB2.0
Blu-Ray Optical Drive - Sony
Power Supply - +-12V/+-5V - 400W - Sony Private Labeled (Source Unknown)
Hard Drive - SATA - Seagate - SI920217AS (20GB) / ST96812AS