The Lynch Mob (No longer available) takes a stab at FUD.


They’re predicting some rather pricy components will go into the PS3, but they’re completely forgetting their own previous estimates along with many recent news items that show some of their claims to be completely false. First of all, Take a calculator, go to where they list the costs, and add them up. It adds up to $800 not $900. Do you really want to trust your money to someone who makes that mistake?

Here’s a link to a story that mentions their previous analysis where they came up with a price $494. Now they say it costs $800? Where did they dig up this extra $300 to tack onto the price? Well, they just took two components where the price wasn’t fully known to the public because they would be produced in house and jacked them 3-4x higher than they likely will cost.

First, they took the Cell chip.

In particular, Sony’s decision to implement an ambitious new processor architecture – the Cell – not only took a great deal of design effort, but also has resulted in a processor that we think will cost Sony at least $230 per unit initially. Leaving development costs aside, the Cell itself looks like it’s going to be expensive to manufacture. The die, at 235 square millimeters initially, is large, and Sony plans to manufacture it on a leading-edge 90nm process. Add to that the fact that the die is mostly logic, not memory arrays that can easily be repaired, and you’ve got a part that looks like it will be difficult and expensive to manufacture.

Actually, there’s a great deal of memory arrays, along with the fact that there are 8 redundant regions on the chip, any one of which can be disabled and shipped if it is defective. There’s also this report from IBM that the cell’s yield management is coming together extremely fast and they are likely to not have any problems in that department. I really don’t want to see anyone estimating the cost of a Cell chip anymore without actually breaking down as “They will use X sized wafer that gives Y chips and costs Z per wafer” and “The I sized die will have J defects per wafer with an K chance of more than one SPE or a non-spe component being affected”

Then they go to throw the Bluray drive under the bus as costing $350.

The Blu-Ray drive also looks expensive at an estimated $350, and Sony will not be able to leverage off additional Blu-Ray shipments in DVD players because the standard is still so new.

Ok, Estimated by who? You? What do you know about the cost of a bluray drive Merrill Lynch analyst Joe Osha? Are you an expert in optical drives wholesale costs?

This may seem like a reasonable price for wholesale of a bluray read head since it’s “a completely new drive technology.” The fact is though, that BLURAY IS NOT COMPLETELY NEW! Sony has been shipping cartridge based Bluray Recorders in japan for *3 years.* DVD+-RW drives are going RETAIL for under $50 now. The DVD+RW standard didn’t come out very far from 2002. It seems entirely reasonable that a Bluray read head/servo could be had for $100-150 wholesale after stripping out the write capability. The motor to spin the disc will be pretty much the same as a standard dvd drive so that shouldn’t add to the cost much. They don’t have the economies of scale that DVD+/-RW enjoyed but they still have had plenty of time with the technology to distill it down in price.

The other thing I’ve been hearing from other analysts is that the Bluray spec isn’t finalized yet so how can they even release the product? Well, this may be true for a purely hardware player, but PS3’s Bluray playback will be entirely software. The physical characteristics of the system have had to be done for ages especially since they have been shipping Bluray recorders all this time. The main thing that has changed is the software aspects of the system. Are they going to stick to only BDJava or will they add iHD? Will they allow managed copy? How will they manage it? These are the things that remain in flux and they are the very same things that could be patched over with a firmware update later.

Nice try, but you really should back your analysis up with, you know, facts. I know you’ve learned from the best in the FUD game, but this is still pathetic to anyone who has been following bluray and knows chip technology. Sadly, the investing world isn’t smart enough to see through this mostly transparent ruse. Ah well, I suppose this goes in the “People are too stupid to have freedom” column.