Nvidia drops clues on PS3 launch date: not spring
by Christopher Grant 
{ Feb 17th 2006 at 5:30PM }
Dean
Takahashi connects the dots between a
statement made during Nvidia's conference call yesterday and the elusive release date of the PS3. Takahashi writes,
"Graphics chip maker Nvidia reported today that it doesn't anticipate any royalties from Sony during the current
fiscal quarter which closes at the end of April," then deduces, "since Nvidia won't be collecting royalties
on the chip this quarter, that suggests that Sony isn't going to be producing machines during the months that close at
the end of April, 2006."If systems aren't being built by the end of April, it's pretty hard to imagine the PS3 being released this spring.
See also:
PS3 behind glass at Taipei Games Show
Sony exec insists PS3 date unknown
PS3 Live-killer titled PlayStation HUB, PS3 in September
Reader Comments (Page 1 of 1)
Chris @ Feb 17th 2006 5:51PM
Does anyone still believe the PS3 is coming this spring? Honestly? Has anyone believed this for the last few
months even?
Antec @ Feb 17th 2006 5:57PM
sigh.
anyone else tired of rumors about the PS3's release date?
I'll give Sony this: the silent treatment is working.
the suspense is killing me.
C. Grant @ Feb 17th 2006 5:58PM
Sony's website still advertises Spring 2006.
http://www.playstation.com/products.html
Andy K @ Feb 17th 2006 6:05PM
As an accountant i feel obligated to clarify that revenue is not recognized until the sale is made not when the unit is produced. So Nvidia will collect royalties likely on a quarterly basis based on actual sales fugures of the PS3 only once the PS3 hits the market. So, there is really no news...
SuicideNinja @ Feb 17th 2006 6:16PM
Sony is too busy cramming the Emotion Engine Squared into the PS3.
Spring would be a bad release date anyway. Early/Late fall would be a better time for their "attack".
Kylr @ Feb 17th 2006 6:21PM
Guys, think for a second. Spring does NOT end in April. Theres still almost two months! But, even if it does launch in the spring, it will probably be in Japan only
T H @ Feb 17th 2006 6:24PM
Also, from what I know... royalties usually work retroactively- they won't begin collecting until the following quarter, based on the preceding quarter. So this proves nothing.
T H @ Feb 17th 2006 6:26PM
Obviously.. the release in the US is speculated to be September/October.
Sanchinos @ Feb 17th 2006 6:27PM
As an engineer I feel obligated to clarify that payment for goods shipped and services done are demanded 30 days from date of delivery; thus, Nvidia will likely follow industry standard and collect royalties on a 30-day basis based on actual chips shipped to Sony.
Nvidia's revenues won't rely on number of consoles sold to the end user DIRECTLY, rather it will depends on the number of consoles Sony decides to make.
SONY'S revenue will be based on actual sales figures of the PS3 once it hits the market. Nvidia's revenue will be based on actual sales figures of its chip once the PS3 begins the manufacturing process.
Eric @ Feb 17th 2006 6:32PM
Andy K -
I think you're very close to the answer, but possibly just a little off.
The "customer" for the RSX is most likely not you or I, but Sony. Nvidia will likely produce the RSX chips/cards and sell them to Sony when Sony is ready for production of the final unit. The link does say "...that Nvidia's RSX graphics chip for the PS 3 is done and the company has production silicon for it."
No company would have stock of a supply such as silicon if they weren't nearing production. Assuming Nvidia an not Sony will actually produce the RSX, I'm guessing Nvidia is planning to begin production soon with the expectation that they'll ship/sell the produced units to Sony after the quarter.
Andy K @ Feb 17th 2006 6:37PM
Sanchinos is wrong...never trust an engineer with finances. Thats why engineers wear white lab coats and us accountants wear green visors and have green thumbs from counting all our damn money...revenue recognition is one of the first principles you will learn if you study business or accounting. Royalties are based on Sony's sales figures and not productions hence they are called royalties to Nvidia instead of sales...royalties are paid on actual sales figures of units usually on a quarterly basis. so for the quarter of april-june sony would hypothetically have sales of PS3 units. after the quarter close june at the end of june Sony would know total PS3 sales and said the figure to Nvidia who would then send an invoice to Sony for royalties...again, thats why im a cpa and youre an engineer...
eric @ Feb 17th 2006 7:19PM
Is it me? Wouldn't Sony have purchased the components by now? If nVidia isn't being paid until after April, just when is Sony purchasing their product and how long would they normally have to pay?
THL @ Feb 17th 2006 7:23PM
General Discussion:
Regardless of the exact launch date, it just seems like Sony is trying to string along fence-sitters who might decide to buy a 360 if they knew the PS3 wasn't going to come out until Summer or Fall.
Andy K:
Really? A lot of accountants (and other assorted business majors) I know couldn't cut it in the Engineering program. THAT is the reason you are accountants (or philosophers, waiters, and their equivalent bretheren), and we are engineers.
[I'm just pulling your leg a bit... but I did find the tone of your post a little smug and self-aggrandizing. You're (supposedly) a CPA, not a brain surgeon.]
Eric @ Feb 17th 2006 7:47PM
eric - Sony wouldn't take shipments from any of their suppliers until they are ready for full production themselves. From the sound of the original article, nvidia has silicon ready for production. The idea is to mimimize the time any component of a system is in stock storage. Sony won't take any components until they're ready for production. Storing components in the quantity we're talking about is a big expense.
David @ Feb 17th 2006 7:51PM
I know this has nothing to do with this story but joystiq, would you please make the new fav icon a bit more sharp, it seems blurry....
andy k @ Feb 17th 2006 8:02PM
THL: youre right, i wouldnt cut it as an engineer. i would have flunked out first semester freshman year. I love engineers, the base pay rate for first level engineers is probably 100K more than a staff accountant. im not trying to take anything away from them, but i let you guys develope awesome shit and im the one who figures out how to capitalize on it.
Eric is right, its called just in time manufacturing. Sony is big and powerful enough to tell nvidia who what where when they want the product. and even if its in the sony factory, it could still be nvidias inventory due to business agreements to keep it off of Sony's liabilities until it is time to produce. Car manufatorers have perfected this.
anywho, good conversation...lets see some more business topics on here, its quite interesting
Bruce Wayne III @ Feb 17th 2006 8:23PM
Sony is going to manufacture the RSX at their own facilities. NVidia "just" did design and development for and with Sony engineers.
Sony could even have produced thousands of RSX without us knowing.
This is only NVidia news and a financial comment.
Tony @ Feb 17th 2006 8:39PM
Fact is, unless you negotiated the deal between NVidia and Sony, you have no idea what the terms are. They royalty payments could be based on console sales, or on chip deliveries to Sony. The payment terms could vary. There might be an "earning out" phase where NVidia have been paid a lump sum advance and don't receive additional royalties until some number of chips have been shipped. All sorts of variations are possible.
This is a unique deal, and will quite likely have unique business terms. Therefore, trying to speculate about what this news means for the release date of the PS3 is somewhat pointless.
LaughingTarget @ Feb 17th 2006 8:48PM
We also have to consider Sony's cash on hand and credit rating. If Nvidia is pulling $150 per chip (wild ass guess), then Sony is likely going to have to fork over $300 million for its initial run (assuming 2 million units produced as suggested before).
Sony doesn't have $300 million to just toss around right now. They are barely breaking even and a good chunk of their income is sitting in accounts receivable, as it is with most companies.
Furthermore, Sony is a credit risk right now. It is doubtful any bank is going to loan Sony more than $300 million (IBM is going to demand their cut, so is the RAM manufacturer, motherboard manufacturer, etc) to cover these expenses.
Can Nvidia demand the $300 million in 30 days? Ya. Will they get it? Not likely. It will go on the books as an accounts receivable asset until the payment is rendered, then it is moved to the income statement and reported as a profit or loss. Enron and WorldCom got into a load of trouble (among other things) by reporting future sales as income, so Nvidia isn't likely going to pull that stunt.
So, this report doesn't mean a whole lot about when the release is going to be. Sony is not able to afford the PS3 before the sale of the unit. Also, since Sony is likely going to sell for a loss of each unit, they are most likely going to have an extended credit agreement with their part suppliers to start paying them back off after the game royalties and first party title profits start rolling in.
Nvidia may not start seeing their cut until 2007, but that doesn't mean the PS3 is going to be released in 2007. There is a reason Sony isn't doing this thing in-house like they did the PS2. It is because they cannot afford it. IBM, Nvidia, etc are banking on Sony's long term success. Basically, they are loaning Sony money to cover the initial investment and get paid off in the long run.
Finally, as an aside, it isn't bright to write off accountants. Sure, you cannot run a business without the engineers to make products, but without accountants, the engineer will never figure out how much to sell their product for to keep profitable and keep themselves in a job. Besides, the CEO is not an engineer, likely a financier or accountant...especially aftr SOX passed legislation, and he is the head boss of the whole shebang, and it is a bad idea to tell the boss his profession is worthless. It is a synergistic relationship.
bv @ Feb 17th 2006 8:52PM
wow you guys are making a big deal out of nothing. more useless ps3 banter. just wait till E3.
guy @ Feb 17th 2006 9:27PM
i still dont get why sony gets bashed so much by not releasing any new information while Nintendo doesn't.
Fuzz @ Feb 17th 2006 9:30PM
Mmmkay, first off, Nvidia doesn't make chips. Neither does Sony. Sony licenced the design from Nvidia, and will pay royalties on the intelectual property. The chip is probably being manufactured by TSMC, as I believe they are currently making chips for Nvidia, and it would make sense for Sony to use them.
As for the article, it realy doesn't offer clues on anything. There is no set number of days for payment, as has been mentioned. It could be 30, 60, 90, or 48.5. And I would think there is some special deal anyway, due to the fairly unique situation. I agree that it will probably be paid after consoles are sold.
Oh, and since we are aparently keeping track and stroking our ego's, I'm a geographer. So what do I know. :P
Kamalot @ Feb 17th 2006 10:09PM
The PS3 is turning into a big joke.
m3mnoch @ Feb 17th 2006 10:18PM
i'm sorry. i think i missed the point of the whole 'no news' thing.
nvidia won't recognize royalties this quarter. that means no ps3s will be sold this quarter.
the whole 'nvidia gets paid at manufacturing or based on retail' issue is a completely and utterly moot point. either way, ps3's aren't on store shelves.
m3mnoch.
m3mnoch @ Feb 17th 2006 10:27PM
oh, and alan, AMEN to more 'business of games' content.
woot.
m3mnoch.
Enigma @ Feb 17th 2006 10:30PM
"i still dont get why sony gets bashed so much by not releasing any new information while Nintendo doesn't."
Because if you hang out here a lot, it is notoriously known to have a lot of Nintendo fanboys. Not to mention nintendo news (no matter how senseless) gets reported at a 3-1 clip. And never have I seen in the past few months anything negative or sarcastic towards anything Nintendo. But MSFT and Sony ... look out.
(I just overlook it all just to read some news, and weed through the useless Nintendo "news")
What ever happened to being a gaming fanboy? System fanboys are so 6th grade!
Dave @ Feb 17th 2006 11:09PM
I've always assumed they meant spring in the other hemisphere. It would go along with all the September projections, and it's still Spring 2006.
kizza @ Feb 17th 2006 11:45PM
Sony do this every time. They stay mum for ages, then bang, all of a sudden the console is out there to the unsuspecting public. It's an age old console release trick, that you treat it like poker. Sony have the best poker face in the biz & everyone is trying to peek, guess or make up what their hand is.
Sony WIll release in spring, I can guarantee that, but I also guarantee that after the 360 simultanious releas4e disaster, that spring will be for japanese gamers only. US release will be 2-3mths after jap launch & europe/australia will be november 2006.
Lets also mention 360's worldwide launch that shat on countries like australia & nz, by not counting them as part of the world. Oh well, at least sony actually mentioned us & how important our market is to them & have promised the PS3 will see a release on the same day as europe launch. MS have the biggest following in australia & they are releasing the 360 4-5mths after the european launch. That considered with the fact we both share the pal format & it would be easy to launch simultaniously here is in-excusable from MS.
"The PS3 is turning into a big joke"
Maybe to you & 5million other nintendo fanboys, but to me & 80-100million game lovers, sony are doing all the right things..... One of those things is declaring & providing support to old hardware, as they showed with the ps1 to 2 transition. Look how quickly MS dropped support for the original xbox. As an xbox owner, I think their lack of commitment to old hardware & fans of that old hardware is unforgivable. I certainly won't be supporting them by buying a 360.
Sony have my next gen money & if nintendo pull their proverbial finger out, I might adopt a revolution further down the track when the price drops even more.
There are fanboys & there are fans. I am simply a gaming fan that wants the best bang for my bucks. In other words I want games machines that ofer me the best, most diverse range of quality titles. Sony at this stage has offered me that for the last 2 consoles, & coupled those features with some very innovative games & peripherals. I am a fan of the games that best suit my requirements & tastes, I also realsie my favouratism for sony's hardware, so I stick to blobs on them & like to see any new news that relates to the ps3. 90% of sony blogs (I've found) attract moronic, irrational fangirls of the other hardware. Sony bloggs seem to have the highest numbers of posts at all times. So this is obviously for a reason & sony makes everyone envious for news on their new hardware. All this says to me is that sony are doing their job, & are much smarter than fangirls will try to make out. I mean after all, sony are the ones with the business that makes bookoo cash & employs hundreds of thousands of people around the world, not to mention made developers, publishers & peripheral companys lots of money, whilst the fangirls wait for their next welfare cheque, to pay for their isp account, so they can come on here & bash "The Evil Sony", "that ruined our beloved industry".
I can't wait to get my PS3 home on launch day & start playing one of my 3 launch game purchases. I was similarly happy when I got my ps1 home & fired it up, & also my PS2 at the midnight launch, coming home to play one of my favourite extreme sports/racers ever in SSX.
I just hope Prey, I-8, Unreal 2007, fight night Tekken next, Ridge racer 6 are all launch games, as I've seen nearly all of them running on PS3 dev kits & they all look gobsmackingly good & worthy enough of my money.
Darth Pixel @ Feb 17th 2006 11:48PM
I must join Andy K in confirming royalty payments are made on a per-unit-shipped basis. Never at the time of manufacture. Never at the time of assembly.
It does not mean manufacturing costs are not paid. They definitely are.
Frankly, I do not know if PlayStation 3 will ship this Spring. (Spring ends on the 20th of June, nearly 2 months after the end of April. Not sure if it's worth stating.)
However, I can tell you IBM has been manufacturing parts for Sony since early December...in volume...
NVIDIA has sealed the RSX in September of last year.
These parts have been taped out. They are not going to get any faster or any better than they already are. It is not in the best interest of Sony to let these parts dry for another 6 months.
So, a Spring release still makes sense and is definitely possible.
Finally, even though we are all so eager to learn more about Sony's plans, Sony has no obligation to reveal anything until they are ready to launch.
Why would they give Microsoft and Nintendo a map, a compass and a couple of months to prepare a counter attack?
It does not make sense. Particularly when you realize Microsoft and their supporters are among those who complain and rant the most.
Thomas @ Feb 18th 2006 12:46AM
No one else is attacking Nintendo about release dates because they never said spring. In fact, they hinted at fall 2006 since the very beginning. Its likely we won't even get all the rev news at E3 because of how far it will be from their actual launch. However, Sony's spring time is coming up a lot faster than the expected fall Nintendo launch.
Ipsum @ Feb 18th 2006 1:45AM
I love how everyone is trying to analyze Sony's "strategy". Age old console tricks? Poker faces? Whatever.
When you've got the president of Sony saying this thing isn't a gaming console, and then you've got people from the same company saying it indeed is, you know they don't got their shit together.
rog27 @ Feb 18th 2006 2:56AM
The amazing lack of knowledge here is something to behold. Let's get our facts straight here if we are going to argue:
-NVidia took part in the RSX Design...they do not and will not manufacture the RSX. Sony will be fabbing the RSX in their own facilities, as well as sub-contracting to likes of TSMC, etc. soon after the PS3's initial launch. Sony likes to ramp up production and work the kinks out of the fabbing process themselves to keep tight control over costs, yields, quality, and lead-times. Then, when the manufacturing process is (near) perfected, they subcontract to increase overall throughput and lower overall manufacturing costs.
-NVidia will earn royalties on the grounds defined by contractual agreement between Sony and NVidia, which is currently not public information. Thus, we should not speculate. However, because of the nature of the relationship is that of royalties, payment is received not after manufacture of chip itself, but rather after sell-through of completed manufactured unit. Sony is a huge, multi-organizational global corporation with many separate accounting unit entities (companies) subsiding within it. If Sony's fabbing unit manufactures the chips, stockpiles them, but doesn't make the intercompany sale to SCE until Sony is ready to start assembling PS3s, then NVidia theoretically won't see a royalty payment until the time of the intercompany sale, which might occur in May and June. Two months for assembly and ship time is sufficient for a single territory launch. And spring doesn't officially end until June 21. Just a thought.
[sarcasm]Hey do I get bonus points because I've been an accountant, developer, Business Process Reengineering consultant, and compliance officer within the last 5 years? And I'm currently studying for my Master in Interaction Design and Information Architecture. I guess my insight must be 5 times as valuable.[/sarcasm]
;)
Lone Starr @ Feb 18th 2006 3:04AM
Even if the PS3 is delayed, is that such a bad thing?
It will come out soon, better that they take the time now than have issues like Microsoft faced with the 360's launch.
JusJus @ Feb 18th 2006 9:06AM
You are a moron if you think that just because they delay the launch there won't be shortages or defective systems. Sony will have to deal with all the problems MS did just a year later, at which time MS will have come out with more than one killer ap for the 360. Buhbye sony
Ipsum @ Feb 18th 2006 12:35PM
Pipe down people, nobody's leaving the console race. There's enough fanboys (and money) for everybody.
Brad @ Feb 18th 2006 10:19PM
Wow, that sucks for sony. The Xbox 360 has an ass-load of great games coming in March.
Lisa_R @ Feb 19th 2006 12:58PM
It seeems that Sony is playing the role that some great leaders in history have played. When these leaders were to do a speech, they would come in much later than anticipated. That would get the audience all rowled up, and anxious. Then they come in with all the bells and whistles. The silent treatment worked well in the past. Sony seems to be doing the same. We all want a piece of the action and glory, and they are making us wait. My hats off to Sony.
m3mnoch @ Feb 19th 2006 5:32PM
okay. i'll ask again. can someone explain to me why the debate is royalty payment at retail vs. manufacturing?
you book revenue in the same quarter it's sold. you don't 'make the sale' then book it next quarter.
that means:
1) going with the royalty on retail thought, if sony sells a single ps3 this quarter, nvidia would have the royalty payment on their books.
or
2) going by manufacturing, if sony sells a single ps3 this quarter, that means they've already paid royalties to nvidia at the time of manufacturing and nvidia would have the royalty payment on their books.
nvidia says there is nothing in the pipeline for this quarter, that means there is going to be no ps3 to be had anywhere in the world until at least AFTER APRIL.
m3mnoch.
kizza's brother wazza @ Feb 19th 2006 9:14PM
It's all crap, it will release when it's ready. Nvidia have signed binding legal contracts with sony that say they have to keep mum about it all, unless sony says otherwise.
Sringtime as I said, in japan. Sony have no need to spew their guts out with details that will hurt current gen sales. Non mainstreamers like myself that know about the impending release of ps3 are already ceasing current gen spending habits & gearing up for next gen purchases, so why would they shout out to the average joe to do the same. Some people have only had current gen hardware for 1yr & under remember.
Just like sony has done before (but everyone seems to have forgotten), they release some info to get us excited, then they go all shy & quiet, then bang, console is revisited at GDC, then 1-2mths later they release in japan. Don't be surprised to see this happen again.
This is how ps2 released & will coincide with the sony announced spring release.