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.

"If you look at the last five years, if you look at what major innovations have occurred in computing technology, every single one of them came from AMD. Not a single innovation came from Intel." -- AMD CEO Hector Ruiz in 2007

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