PS3 Worldwide Launch: 10 Million Units..I Don't Think So

[Jeremy Charette]

Today Sony gaming chief Ken Kutaragi said that 10 million PS3s would be available for a worldwide launch in November. Let's think about that for a minute. Reports put initial production of the mainboards for the system sometime around June or July. Kutaragi stated that 10,000 dev systems would be delivered in June. That means full scale production probably won't begin until July. That leaves Sony 4 months for production. To meet that target, they'll need to produce over 80,000 systems per day. I don't care if you're making nuts and bolts, 80,000 of anything per day is a huge number. Nevermind a terribly complex computing system such as the PS3, which likely has over 1500 individual parts. To put it into a perspective, that's roughly one PS3 built per second.

http://www.digitalmediathoughts.com/images/mission.jpg

I wish them luck, but it won't happen. The PS3 launch in North America will be delayed until Q1/Q2 2007, or Sony will have the same shortage problems that Microsoft did with the Xbox 360 launch.

[Lee Yuan Sheng]

I know you don't like Sony (neither do I, my Sony boycott is still in effect) but where did you pluck such a ridiculous number? The numbers I've seen are 1 million in November, 3 million by end 2006, to 6 million by March 2007.

[Phoenix]

Well, however long it takes to reach 10 million units, Microsoft's going to reach that goal first.

There's always the possibility that Sony will reach those numbers before MS, but my money is on MS.

[Jeremy Charette]

Initial reports I read said the goal was 10 million at launch, but many of those numbers have been revised to the goals Lee mentioned above. That said, 1 million units available at launch? That's a global shortage just waiting to happen. Microsoft launched with 50% more consoles than that, and consumers are just now seeing the shortage end four months later. Keep in mind that Sony has sold 200 million PS2s worldwide, so expect demand for the PS3 to be an order of magnitude higher than the Xbox 360.

Even at a rate of 1 million units per month, we're still talking 33,000 PS3s per day. Even Microsoft, with three manufacturing partners, can't match that pace. I have serious doubts that Sony will be able to do the same.

[Felix Torres]

Even at a rate of 1 million units per month, we're still talking 33,000 PS3s per day. Even Microsoft, with three manufacturing partners, can't match that pace. I have serious doubts that Sony will be able to do the same.

The SONY press conference had the lower set of numbers, which add up to six million by March 07. Anything beyond that is irrational fan-boyism from the PS2 kids; not credible.

MS itself is on target for 4.5 million by June 06 and another 10 million or so by next spring: MS has the ability to crank out 120,000 360s per week per factory (current issue of OXM) and in january 06 added a third factory. So MS has the ability to make as much as 1.4 Million 360s a month, which means they could have as much as 18 million 360s in the pipeline by the end of 06. Assuming normal sale rates, and a proper supply of games, they should be able to meet their sales goals and maintain about as much as a two month supply in the pipeline without running full-tilt.

Now, with SONY running late and the market wide open, MS might choose to get a fourth factory in place by, say, June and cut prices and just plain flood the market with 20+ million 360s by the end of the year. But that's not likely cause Japan isn't going to buy an american console no matter what, so those extra 4 million units would just clog the pipeline.

So, yes, SONY can build the PS3 at rates of a million per month without much trouble. But they can't get much more than three million in the pipeline by Dec 31st because to get to even 6 million at launch they would have to start building in June, before the HDMI 1.3 parts are available in volume and if they could build a million a month in June they wouldn't be launching in November.

[Jason Dunn]

But that's not likely cause Japan isn't going to buy an american console no matter what, so those extra 4 million units would just clog the pipeline.

That's the dirty little secret that no one wants to talk about isn't it? Japan and its culture (in general terms) is highly ethnocentric when it comes to technology, and it's not simply a matter of Microsoft having the better technology. People in Japan buy what's made in Japan. One only needs to look at the imperialism of Japan prior to 1946 to see how the Japanese viewed themselves in relation to other cultures. That military imperialism has been channeled into technological and economic conquests, but it's still there (witness the Japanese conquest of American businesses in the late '80s). A fascinating book on this subject is Asian Mind Game (http://www.amazon.com/gp/product/0892563524/sr=8-1/qid=1142524505/ref=pd_bbs_1/104-1795122-7609568?%5Fencoding=UTF8) by Chin-ning Chu. It was a real eye-opener, and I'd recommend it to anyone that wants to understand how Japanese, Korean, and Chinese cultures think of and respond to business.

Please don't anyone misunderstand me - I'm a huge fan of Japanese culture and design concepts, and this isn't a slam against Japan at all (I'm very excited about visiting there in 2008) but to pretend that it's as easy to sell the Xbox 360 in the USA or Canada as it is to sell it in Japan is naive in the extreme.

[Jeremy Charette]

I work in the electronics industry, and I can tell you what Sony and Microsoft's biggest problem is: for the first third of a product lifecycle, demand is inversely proportional to capacity. Right when you need the most product, you can't produce enough. By the time you can crank enough out, demand is already declining. There's no way Sony will be able to meet worldwide demand for the PS3 launch in November, just as Microsoft failed to meet demand for the Xbox 360.

[mcsouth]

Manufacturing capacity is one thing, having the supply infrastructure to keep your plant full of the parts it needs is another. My understanding is that part of the supply problems with the Xbox 360 was yield rates on the PPC processor used in the unit. Considering that the processor in PS3 (the Cell) is an extremely complex part in its own right, what are the odds that IBM will be able to get sufficient yields rates to keep the plants Sony builds the PS3's in operating at the kind of capacity needed to produce those million units a month?

[Jeremy Charette]

Everyone looks at the CPU and GPU as the limiting factor in console production, but shortages as simple as screws, capacitors, or resistors can be just as devistating. For the 360, it turned out not just to be the CPU, but also the GDRAM chips from Infineon. Like McSouth said, it's not capacity that matters, but throughput. Sony better have a perfect handle on supply chain management or customers will be sorely disappointed.

[cmorris]

Keep in mind that Sony has sold 200 million PS2s worldwide, so expect demand for the PS3 to be an order of magnitude higher than the Xbox 360.


I don't believe this is true... I think they just hit the 100 million mark. 200 million is the "blue sky" projections that they have bandied for PS3.

Regardless that is a much bigger number than the 22 million or so Xbox 1's that were sold, but I don't think that's any guarantee for this generation.

[cmorris]

That's the dirty little secret that no one wants to talk about isn't it? Japan and its culture (in general terms) is highly ethnocentric when it comes to technology, and it's not simply a matter of Microsoft having the better technology.

What about the iPod? I thought it was doing very well in Japan.

I think your point is probably valid for some % of users in Japan, but I think the larger issue is their taste in games. I remember seeing somewhere on the 'net lately that "Top 100 Games of All-Time" as voted on by Japanese public. Many of them wouldn't even be recognized outside of Japan.

[Jason Dunn]

What about the iPod? I thought it was doing very well in Japan.

I thought Sony was still in the lead, but it looks like the iPod is making huge strides over there:

http://www.businessweek.com/globalbiz/content/feb2006/gb20060223_774050.htm

I guess even the Japanese can't resist the siren call of the iPod, even if it's made some some crazy Gaijin (http://en.wikipedia.org/wiki/Gaijin) in a black turtleneck... ;-)