What if Sony only made the 60GB PS3?

**Cera** · 05-19-2006

Originally Posted by Mr. Smith 01

what I'm saying is, if all the resources for manufacturing the 20GB unit were allocated to making the 60GB version or vice versa, that would almost certainly bring the costs
down becuz there would be more resources to spread around. that's a logical assertion. . .

That's flawed logic. If they only made the 60GB version, not as many people are willing to foot the big bill, so they will not sell as many. Less sales drive costs up, not down.

By having this 20GB version, Sony is actually able to sell more consoles and lower costs on the components which are in both versions.

**davin_g** · 05-19-2006

you are correct mr. smith...this is simple economics 101....remember if you have two different units you will thus need two different manufacturing lines to run them....granted these machines use almost identical features but non the less sony must set up two seperate production lines for each model....one with 20gb hard drive (minus hdmi and wifi) and one for the 60gb model (with all the bells and whistles). if you have one uniform production line than cost of production go down for many reasons....

1. economy of scale...production is cheaper the more you produce (reasons because you buy 5 million 60 gb hard drives they cost you less for each one because they discount them for the amount....as opposed to buying only 3 million) you run into this every day at the store...the more cans of corn you buy the cheaper each additional can becomes... $1.99 for one or 2/$3....you know. there are other parts to economy of scale but that is just one focus. another part is like saying 2 workers can produce 8 ps3's....but 3 workers can produce 16 and 4 can produce 30...you don't just get a direct correlation from adding one worker means one or two ps3s..it may mean tripling or more....point is allocating machines or people to other tasks mean you are losing production and effieciency...

2. marketing, advertising, and strategic shipping....meaning sony has to decide how to best allocate these ps3....that is alot of work..they can't afford for 20gb to be sitting on the shelves in japan and visa versa in the Uk.....this is very difficult to forcast but with two sku than they have to decide who gets which ones and how much of each...that is very hard to determine...ask microsoft. if they have only one product most of the work is cut out...just ship them where they sell....

3. as the workers and factories build these ps3 they come across problems and dilemas...it is much easier to be an expert at producing one machine than two....twice the products twice the potential problems...and as workers become experienced at the production of the product they become more efficient and effective...thus producing faster and cheaper....this is slowed by the fact that there are two machines they are producing.

4. retooling machines and lines cost money and more importantly take time...say sony has 6 production facitlities...4 producing 60gb premiums and 2 producing 20gb base ps3. well, say the demand for the 60gb is more than they can produce while the 20 gb is not selling out...what do they do....convert one 20gb factory to 60gb...this takes time away from producing precious product to ship the new parts and change up the assembly process...and train new workers...costs are higher than if everyone was just building one machine...no retooling.

why is sony then making two skus...i believe they see that not everyone needs the hdmi and hd output. there are those out there that just want the newest gaming console and not all the extra...and not to say that one region isn't as well off but comeon...the ps3 is global...and not every region's avg income is equal and inside each region it isn't either...sony sees a way to market to both sectors...do i like this...not so much...i fear having the smaller hard drive and no hdmi may cause devs to cut back knowing not everyone can experience the game equally so maybe they develope with only the core version in mind...limiting the experience of the premium...i don't know but that worries me...but as far as having 2 versions it will only mean shortages at launch but otherwise no sweat to me..i am sure markets like southeast asia and russia will sell way more 20gb than premiums and in the us and uk the other way around...but clearly sony could cut costs of production by having one model. that is simply the laws of economics...but the obviously feel that the benefit of two skus outweigh these costs of producing two units and thus have gone ahead. no doubt they researched it alot.

**davin_g** · 05-19-2006

consumers have no effect on production costs.....they effect the companies bottom line or profit but not the costs...costs come from suppliers and the actual production of the unit.

**wonders1982** · 05-19-2006

Originally Posted by Steroyd

The UK only gets the 60Gb PS3 thankfully.
I think that's because every HDTV over here has a HDMI port as standard.

No the 60Gb PS3 won't make the production price lower, i think the price rose an extra $100 the moment they decided to put a HDD in as standard.

Has sony said that they are only releasing the 60GB SKU here in England?

Can I have a link please to a statement or a thread on this as i can't find one.

Thanx

**Cera** · 05-19-2006

Originally Posted by davin_g

you are correct mr. smith...this is simple economics 101....remember if you have two different units you will thus need two different manufacturing lines to run them....granted these machines use almost identical features but non the less sony must set up two seperate production lines for each model....one with 20gb hard drive (minus hdmi and wifi) and one for the 60gb model (with all the bells and whistles). if you have one uniform production line than cost of production go down for many reasons....

1. economy of scale...production is cheaper the more you produce (reasons because you buy 5 million 60 gb hard drives they cost you less for each one because they discount them for the amount....as opposed to buying only 3 million) you run into this every day at the store...the more cans of corn you buy the cheaper each additional can becomes... $1.99 for one or 2/$3....you know. there are other parts to economy of scale but that is just one focus. another part is like saying 2 workers can produce 8 ps3's....but 3 workers can produce 16 and 4 can produce 30...you don't just get a direct correlation from adding one worker means one or two ps3s..it may mean tripling or more....point is allocating machines or people to other tasks mean you are losing production and effieciency...

2. marketing, advertising, and strategic shipping....meaning sony has to decide how to best allocate these ps3....that is alot of work..they can't afford for 20gb to be sitting on the shelves in japan and visa versa in the Uk.....this is very difficult to forcast but with two sku than they have to decide who gets which ones and how much of each...that is very hard to determine...ask microsoft. if they have only one product most of the work is cut out...just ship them where they sell....

3. as the workers and factories build these ps3 they come across problems and dilemas...it is much easier to be an expert at producing one machine than two....twice the products twice the potential problems...and as workers become experienced at the production of the product they become more efficient and effective...thus producing faster and cheaper....this is slowed by the fact that there are two machines they are producing.

4. retooling machines and lines cost money and more importantly take time...say sony has 6 production facitlities...4 producing 60gb premiums and 2 producing 20gb base ps3. well, say the demand for the 60gb is more than they can produce while the 20 gb is not selling out...what do they do....convert one 20gb factory to 60gb...this takes time away from producing precious product to ship the new parts and change up the assembly process...and train new workers...costs are higher than if everyone was just building one machine...no retooling.

why is sony then making two skus...i believe they see that not everyone needs the hdmi and hd output. there are those out there that just want the newest gaming console and not all the extra...and not to say that one region isn't as well off but comeon...the ps3 is global...and not every region's avg income is equal and inside each region it isn't either...sony sees a way to market to both sectors...do i like this...not so much...i fear having the smaller hard drive and no hdmi may cause devs to cut back knowing not everyone can experience the game equally so maybe they develope with only the core version in mind...limiting the experience of the premium...i don't know but that worries me...but as far as having 2 versions it will only mean shortages at launch but otherwise no sweat to me..i am sure markets like southeast asia and russia will sell way more 20gb than premiums and in the us and uk the other way around...but clearly sony could cut costs of production by having one model. that is simply the laws of economics...but the obviously feel that the benefit of two skus outweigh these costs of producing two units and thus have gone ahead. no doubt they researched it alot.

See, this is what happens when people do basic classes in high school and then go on to assume they know everything about a subject.

First of all, this is business, not economics

There are similarities between the two, but huge differences as well. Get that bit right first.

And secondly, please don't make the big mistake of assuming that all of what is produced will sell- that's garbage. If you talk about "economics 101", then you'd also know that there's something called a market price that people are willing to go for. The 60GB is far from that price, and like I said- lower sales drive costs up, not down.

Thirdly, two separate production lines? Highly doubtful. Sony hasn't released any production details; and judging from the hardware differences, it's highly unlikely they would need two separate production lines, one dedicated to each unit. It seems more like there would be one production line to create the basic model and then another one to carry on and add what the 60GB version needs.

Maybe you don't know how production works, but each component is produced or bought separately, and then they are pieced together. Piecing those two together does not need two dedicated production lines. Have you ever seen a car factory? They work like that- that's also why on some cars like the basic Toyotas, you see obvious button spaces but no buttons- using the same production line saves money.

It's great that you're trying to apply what you've learnt, but really, theory a lot of the times is a far cry from reality. Especially the theory that is taught in basic classes- they over-simplify and make too many assumptions.

**$13DG3** · 05-19-2006

sony has not said that for definate yet. I have emailed sony myself about it but they didnt even reply when i emailed em about 5 times

**davin_g** · 05-19-2006

first off i have a degree in economics...i over-simplified it for most common people to understand...and economies of scale is NOT THEORY that is why it is called LAW. and as far as production costs go...again...consumer doesn't affect cost...cost are assumed before and during building the product...minus shipping, advertising, and any costs from law suites are recalls on defective products...me and you (the consumer) can not effect the costs associated with building the ps3. if we only buy the 20gb than sony will build only 20gb..and so on...i did state that there probably is little cost difference between the two because they share common features...and of course production lines don't differ that much but the point being is that they do....you have to import in the right components, reprogram the machines and hardware and train more employees if you want more 60gb ps3s. that is a fact. a fact that it costs time and money to do. the question is does it costs more to build two different machines simmulataneously for sony...the answer is yes....could they lower costs and possibly the retail by producing only one unit...lower costs yes, lower retail doubtful, but that fact that you believe it is cheaper to build two different products than to build one is crazy. all the resources that go into building and selling another unit (advertising, coordinating shippments, costs of buying different parts, and designing and setting up another production line) take away from the other unit. if all the resources i.e. time, money, knowledge went into building one unit it would cost less. like i said...buying 6 million 60 gb hard drives and 6 million hdmi ports and so on would be cheaper per unit than 3 million....thus they lower the costs....and focusing all aspects of production and advertising and marketing on one unit would be more efficient and effective as well...lowering more costs....

i am not saying sony is better off or consumers are better off with one ps3 but rather it would be cheaper to build...yes they might not sell as many...but that doesn't effect cost....that effects profit.....and who knows...maybe the gross profit sony makes off the 60gb ps3 is more than what they make off the 20gb. maybe selling 40 million 60gb ps3's will make them more money than 60 million 20gb ps3's...we don't know...but that wasn't the question...and the answer remains yes....it is more cost effective to build one machine....but sony obviously believes that they stand to make more money by having two skus....that doesn't make production cheaper but certainly means they stand to make more profit.

**davin_g** · 05-19-2006

oh and yes...they all will sell at first...i have seen the pre-orders and considering a world wide launch and only 2 million units....360 sold out in hours...ps3 will be sold out for months...this isn't your typical good....the thing with the ps3 is at launch they will sell as many units as they can produce...if you think that they can't than try to walk up to a store 3 days after launch and purchase one....

not going to happen.

**Cera** · 05-19-2006

Originally Posted by davin_g

first off i have a degree in economics...i over-simplified it for most common people to understand...and economies of scale is NOT THEORY that is why it is called LAW. and as far as production costs go...again...consumer doesn't affect cost...cost are assumed before and during building the product...minus shipping, advertising, and any costs from law suites are recalls on defective products...me and you (the consumer) can not effect the costs associated with building the ps3. if we only buy the 20gb than sony will build only 20gb..and so on...i did state that there probably is little cost difference between the two because they share common features...and of course production lines don't differ that much but the point being is that they do....you have to import in the right components, reprogram the machines and hardware and train more employees if you want more 60gb ps3s. that is a fact. a fact that it costs time and money to do. the question is does it costs more to build two different machines simmulataneously for sony...the answer is yes....could they lower costs and possibly the retail by producing only one unit...lower costs yes, lower retail doubtful, but that fact that you believe it is cheaper to build two different products than to build one is crazy. all the resources that go into building and selling another unit (advertising, coordinating shippments, costs of buying different parts, and designing and setting up another production line) take away from the other unit. if all the resources i.e. time, money, knowledge went into building one unit it would cost less. like i said...buying 6 million 60 gb hard drives and 6 million hdmi ports and so on would be cheaper per unit than 3 million....thus they lower the costs....and focusing all aspects of production and advertising and marketing on one unit would be more efficient and effective as well...lowering more costs....

i am not saying sony is better off or consumers are better off with one ps3 but rather it would be cheaper to build...yes they might not sell as many...but that doesn't effect cost....that effects profit.....and who knows...maybe the gross profit sony makes off the 60gb ps3 is more than what they make off the 20gb. maybe selling 40 million 60gb ps3's will make them more money than 60 million 20gb ps3's...we don't know...but that wasn't the question...and the answer remains yes....it is more cost effective to build one machine....but sony obviously believes that they stand to make more money by having two skus....that doesn't make production cheaper but certainly means they stand to make more profit.

Hm, if you have a degree in economics as you say, then why did you make the mistake of saying that it's "economics 101". Anyone who claims to have a degree would know the difference between business and economics. This is something that is not economics.

And erm "law"? Please... you sound more and more like an amateure as you type o.O It's not something that is guaranteed. If you know what "economies of scale" is then you'd also know what "diseconomies of scale" is and given Sony's current position, things could go either way in the long term. Considering the reactions after the 60GB price announcement, it's extremely odd that you think producing something that most people are unable or unwilling to afford will lead to economies of scale. That's going to take them a long long time to get their money back.

I have no idea how you think comsumers don't affect production costs because they do. They might not influence it directly, but they help lower it when they buy more of a product. When no one buys a product, a company does not make revenue or does not need to produce as much, hence leading to more production costs.

You sound pretty confusing and from what little I can gather of your arguments, you seem to be implying that it's a mistake for Sony to produce the 60GB models because they apparently have to hire and train more people to be able to put in the extra components?

And yeah- if you are ignorant about a particular subject, please don't try to add weight to your arguments by putting words in other people's mouths. I never said that it is cheaper for Sony to produce both models than if they were to produce only one. That's a ridiculous notion to force on someone.

**davin_g** · 05-19-2006

well....that is the question being asked....would it be cheaper to produce only the 60gb version.....look at the title post of this thread...yes it would be cheaper...that is all that i was saying....and diseconomies of scale are a rare case...or are you talking about the law of diminishing return. anyways, the point wasn't whether it was a smart case or a mistake for sony...the point was wether it would be cheaper to produce one product thus lowering the retail....and while the costs of production would go down i highly doubt that they would decrease enough to lower retail considering the losses they are taking on the console.

and yes anyone that has spent years studying economics would understand that economies of scale is law...it is proven in practice by almost every company. you can't seperate economics from business...you will fail. understanding economics is the basis for a successful business. you can have a great idea and a great product but how many times does it fail because it isn't implemented right....and why does it not get implemented correctly more often than not...because they didn't understand the economics behind their project.

anyways, i am not saying sony shouldn't build a 60gb ps3...i prefer that and no 20gb. point is it would be cheaper for sony to build 60gb ps3s if they didn't have to build 20gb ps3 as well...and thus we COULD see a lower retail. that is what i said all along. all the rest was describing why it is cheaper to build one model.

in the end the consumer will choose what sony builds. 20 or 60 gb ps3's...yes, and if no one buys a 60 gb ps3 than of course it will become expensive to build, and the same is true of the 20gb version...in fact i find that to be the more likely scenerio...just like with the 360....cores sit around and the premiums sell...thus it becomes cheaper to just build all premiums and no cores because the money saved on buying all the components for the premium lowers its costs and then it becomes cheaper to build.

and i don't know where you get that people are unwilling to buy the 60gb ps3...almost everywhere i have read everyone prefers it to the core. i have seen very few people say they aren't getting a ps3 because of the price. if they thought it was going to be 300 dollars than they were fooling themselves...with the technology and performance that this machine is able to produce it is well worth it....600 dollars isn't that much.....over the life of the console that is less than 100 dollars a year...i can't think of anything i do or in my life that i use as much or get as much enjoyment out of for that kind of bang for the buck. ps3 will sell out at launch and i believe that the 20gb will only end up being offered to small markets imo. sony knows what they are doing...i just wish they wouldn't have done it...i feel the devs will cut out stuff knowing that they only have to satisfy the 20gb consoles ability.

**davin_g** · 05-19-2006

and as a moderator taking cheap shots at people and saying they are amateur is very childish...i wonder why people don't try to have intelligent conversations here and now i see the moderators put people down just as much as the trolls or whatever you call them. i guess there is no need to say anymore. my point was that the topic asked a question...i answered it factually and you are trying to put people down because you disargree?? i don't even know, point is producing only the 60gb would keep costs down....doesn't mean it would make sony more profitable and that is why sony is producing 2 skus. but it would have kept costs down and would probably allowed them to lower retail but not enough to make that much of a difference anyways. so they built two which are entirely different and only cost $100 different...that just doesn't make since to me.

**The_Only** · 09-08-2010

Geoff Keighley has confirmed that the latest episode of GameTrailers TV will play host to the first details pertaining to Dead Space 2’s multiplayer component.

Few details have been released on the sequel’s multiplayer since the game's announcement, though recent rumors have indicated it’ll include a death-match style mode that pits deadly Necromorphs against heavily armed soldiers.

The next episode of GTTV airs this Friday, so keep your eyes peeled for more information over the next few days.

Dead Space 2 is scheduled for release on January 28, 2011.