Sigma Designs reference design

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In a recent debate elsewhere about the cost of producing player, Keith Jack of Sigma Designs had this to say about his company's reference design:

Originally Posted by kjack

Anyway, for our reference design, we figure a BOM cost of $75 + SoC + drive + royalties, regardless of format.

So, I produced the following price model, assuming a manufacturer and retailer willing to accept a rather low margin:

Drive - $100
SoC - $40
Royalties - $30
Misc - $75
Manufacturing and distribution: $20
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Cost: $265

Wholesale (+ 15%): $305
Retail (+ 20%): $366

There is no reason to believe Microsoft/Broadcomm can come down from this any extraordinary amount. So, even being low for the drive, royalties AND the manufacturing and distribution (procurment, assembly and shipping), you can see that a $299 retail target is out of the question currently, let alone a $299 SRP.

Until blue lasers are commodity, that drive price will remain the critical component.

With this, I expect the MS/Broadcom Chinese players to be introduced at $399 SRP.

Gary

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Oh, Keith added this:

Originally Posted by kjack

BTW, I'll be in China and Taiwan for two weeks shortly...

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BOM = Bill of materials. The cost of all the parts.

[Maximus]

Microsoft may forgo their royalty payments for the time being to attract companies into making players, so that would cut a few dollars from the bottom line, and Toshiba skimped on the drive once, so a Chinese company are likely to do this as well, again to lower the bottom line. After that you can take off another $30 (royalties + cheaper drive) leaving a 3-4% mark-up for the manufacturer, these guys care about volume more than they do about anything else. BB will take a 15-20% mark-up, my prediction is $349 MSRP and $329 selling price.

[Iceman_II]

I am having a WICKED hard time believing that this is correct, especially considering the BOM for an HD-A1

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You should be sceptical. I really lowed balled the drive and the cost of procurring, assembling and shipping the product. I was giving HD DVD all the breaks here.

The royalties can't get away from many patents and codecs, no matter what MS and Toshiba want to do. I already put the royalties low assuming MS and Toshiba would forego their share. Commonly $40 - $50 is used as the IP costs. Remember, $20 or so is DVD IP costs.

The key is the $299 SRP is impossible. And the fanbois are talking like that is the critical price point.

Gary

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The interesting thing is, by the fall Sony may be in the position to OEM it's PS/3 drive to interested parties (and a tray variant). The cost reductions realized through such an intensive manufacturing push could very well push the BD drive down to the $100 level I mentioned above.

Huge volume of advanced tech will get cheaper than small volumes of the less advanced.

Gary

[Rio]

Just blue LD costs around $70 even "successed mass production" by Sharp, how the drive could be priced only $100!? My suspicious of the cost of next gen drive (except PS3's one) is at least $200, could be $300.

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Originally Posted by Rio

Just blue LD costs around $70 even "successed mass production" by Sharp, how the drive could be priced only $100!? My suspicious of the cost of next gen drive (except PS3's one) is at least $200, could be $300.

Assuming $20 more in the OPU, right now cost could be somewhere around $125. ($95 + $30 for other parts). Beyond the OPU, the drives are rather conventional.

Do you have a link for the LD price?

Gary