Sony sells PS3's Cell to Toshiba

So much for their earlier denial, eh? An anonymous Sony official has "confirmed" to Japan's Nikkei that they will sell their advanced computer chip operations to Toshiba in an effort to re-focus on core business. The official announcement is expected later today. The sale gives Toshiba the manufacturing responsibility for the much hyped Cell processor used in Sony's PS3. Sony, of course, will continue to invest in the Cell chip. Nikkei says the deal is worth some ¥100 billion (about $858 million) and should be completed by March.

Update: it's official.

[Thanks, Alex]

[Jordan @ Oct 18th 2007 3:49AM]

lol wut?

[michas_pi @ Oct 18th 2007 4:05AM]

Well, Toshiba _did_ play a major role in the development of the Cell processor.

I wonder what IBM has to say about this...

[Tim @ Oct 18th 2007 11:00AM]

This wouldn't affect IBM one iota. WAY too many people here are confusing the sale of chip MANUFACTURING with the sale of IP OWNERSHIP.

Sony isn't selling off their ownership and investment in the Cell. IBM and Sony will still get money off every cell chip sold whether it's put in a PS3 or a toaster...it's just that now Toshiba gets revenue for manufacturing. All the morons below who think a move like this revolves around their petty format war just don't know the business world. This is a smart move for Sony. Their core competency isn't chip manufacturing, so selling this off and focusing on their core products is wise.

[michas_pi @ Oct 18th 2007 7:53PM]

Ah, now I understand.

Thank you for the explanation, Tim.

[mfed3 @ Oct 18th 2007 4:11AM]

LOL sony. i knew the rumor was true. they know its too late now to penetrate the next gen video game market with the wii and xbox 360 absolutely owning the ps3. better cut your losses and sell off the fabbing process to someone else cuz you are obviously making 0 profit on it. next will be the defeat in blu-ray as disney is found to have a timed exclusivity deal with sony. next hd dvd takes off with toshiba using cheaply produced cell processors in house and finally the tech world is at peace.

[Jesse S @ Oct 18th 2007 4:13AM]

You're an idiot.

[shuyin198x @ Oct 18th 2007 4:39AM]

Its always been a matter of taste. You could name 20 great games for the 360/wii and yet if none appeal to the person then your point weighs 0. You make it seem like sony is out for the count, before they've yet to release their big titles. Give them a chance, 400 is the price of a 16gb touch. Its not really that expensive anymore.
Its very doubtful that sony will ''pack up and leave this gen market''.
AS for hd-dvd vs blue ray, I could care less. Dvd blank media is still the cheaper route. 40 cents/ disk.

[Scooby03 @ Oct 18th 2007 6:53AM]

were you dropped on you head as a child?

[Paul @ Oct 18th 2007 8:26AM]

Also, if you look at the xbox 360 and the PS3 and compare them feature for feature you will save money with the PS3 in the long run.

xbox 360 Pro - $349.99 from gamestop
HD-DVD player - $179 from walmart
360 wireless receiver - $99 Radioshack

PS3 60 gig, blu-ray, and built in wireless - $499.99 from gamestop

Totals:
Xbox 360 - $627.99
PS3 - $499.99

So will all y'all bitching about the PS3 price shut up.

[Dale @ Oct 18th 2007 9:43AM]

@shuyin198x: Even if I named 1/4 of that amount of good games, it's still more than the PS3 has right now.

These console arguments are stupid. None of the current three systems are justifying the asking price, and besides the Wii, there are too many stupid differences between the various SKUs to make an accurate price comparison.

On topic, it's interesting to see how Cell has gone from being the second coming at Sony - touted to be the cornerstone of all future product development - to what it actually was all along: a huge drain on their resources with a disproportionate payoff.

Let's hope the post-sale Sony regains their focus and starts making the slick products of yesteryear instead of wasting money on proprietary tech.

[Frankenstein Black @ Oct 18th 2007 10:13AM]

http://www.dvdempire.com/Content/Features/hidef_wars.asp
Nuff Said!

[nih @ Oct 18th 2007 4:15AM]

I hear purchasers of the new 40GB PS3 get surprise gift shares in Sony, since they couldn't sell them to get rid of them.

[mfed3 @ Oct 18th 2007 4:16AM]

come back ant tell me that in a year. we'll see whos the idiot.

[ArcticFox @ Oct 18th 2007 4:33AM]

You ARE an idiot.

Just because Sony has sold off Cell production doesnt mean its trying to cut its losses, they get a big cash boost from the sale, they still have a finger in the pie as it were, and in the long run they will probably get cheaper chips from Toshiba which means more PS3 price drops in the future.

Goddamn fanboys.

[Totalfixation @ Oct 18th 2007 4:31AM]

ya it does seem plausible, giving recent deal with paramount. So the exclusivity of Disney and others on the blu ray camp might be up in the air. Should HD-DVD drop to a unprecedented price. it will look like blu ray is in for an even tougher battle. Sony knows that if they want to compete they will have to do the same for standalone bluray players, but then that could jeopardizes the reason behind many ps3 purchases.

[Deluxe @ Oct 18th 2007 4:50AM]

Hey, mfed3, you see the 'reply' button?


Idiot.

[Jon @ Oct 18th 2007 5:30AM]

To mfed3, you are an idiot.

Future Jon

[suv4x4 @ Oct 18th 2007 7:48AM]

"Just because Sony has sold off Cell production doesnt mean its trying to cut its losses, they get a big cash boost from the sale, they still have a finger in the pie as it were, and in the long run they will probably get cheaper chips from Toshiba which means more PS3 price drops in the future."

The PS3 may grow into a good business for Sony (eventually), it already did its part pushing Blu Ray, which is a big deal on its own.

That said, face the facts, Sony *is* having cash problems recently and this *is* a loss reduce operation.

They are selling the entire cell business to Toshiba for around 900 million dollars. Do you know how much they invested in that business? Twice that.

And don't fool yourself, now that Toshiba owns the cell technology and manufacturing units, Sony will have to pay *more* for the Cell processors in their future PS3-s.

Any sign points to the fact Sony needed cash now, and they didn't know what to do with the Cell factories and tech they had.

Which is kind of sad, but I'd probably do the same in their situation.

[Reader @ Oct 18th 2007 4:42AM]

As idiotic as mfed3 does sound I have to agree with Blu-Ray dieing out, simply because of Sony's history with formats. I actually hope Sony does, as they are in fact the antichrist of companies.

[Jagannath A @ Oct 18th 2007 4:58AM]

"......simply because of Sony's history with formats...."

wow there is no dearth of expert opinions in Engadget Reader Comments :D

[Mark @ Oct 18th 2007 4:58AM]

I do take this to mean that Sony is not in financial health. It's not just the Cell manuafcutring they're selling, but the whole Advanced Chip Operations. Sure they will still have some market control and royalty earnings from Cell as they still own the patents.

Cell however, hasn't been a money maker, and this move looks like a quick way to cushion those losses before the end of their fiscal year, lest their share price falls.

Next Holiday Season will be saying alot about how much market the PS3 will penetrate, maybe the 40Gb can help but a couple more good games will help much better. Uncharted and Resistance are the only exclusives worth looking at ATM IMO.

As for Blu Ray vs HD DVD (that's of topic I know)... My guess is that falling prices will bring hybrid players and hybrid disks to everyone and no clear winner will be visible. HDDVD is a better COMMERCIAL STANDARD, although BluRay is better technology, especially for (but not limited to) backup storage.

[Jon @ Oct 18th 2007 5:33AM]

This is just part of their CEO's desire to return Sony to its core consumer electronics business. Sony has branched out too much and they were never known for their fabbing business anyway, so it makes sense to sell of their chip operation to someone who has more expertise in them. Personally I think it is a good thing as for the past year Sony's consumer business has been producing wonderful things.

[Twitchy @ Oct 18th 2007 6:54AM]

I see it like that too - glad that they've realised that quality consumer products (read: gadgets) is where their stron suite is, and they should never have left.

On a related note, dam $858 bil!? Man the SOB who brokered that deal must be laughing all the way to the bank.

[pigfister @ Oct 18th 2007 5:57AM]

Sony are selling a hobbled donkey, and are paying the price and having to sell up because of a push for a locked down propertarian format that is blu-ray, that nobody actually cares about!

Then they remove their core selling point a complete backtrack, the B/C chip so no more ps2 games can run on the ps3. Now they are using sweatshop labour in the form of foxconn to manufacture the cheap ps3's. way to go sony!!!

http://www.betanews.com/article/HD_DVD_and_Bluray_Toward_an_Endgame/1190836560

quote from link >>> "September 26, 2007, 3:56 PM

In a recent survey of HDTV owners by NPD Group, a full 73% were satisfied with the picture quality provided by upconverted DVDs for them to become too interested in a high-definition disc player of either format. Other figures are equally shocking, suggesting that the high-def format war may already be over. BetaNews spoke at length with the NPD report's lead analyst, Ross Rubin."

[Fank @ Oct 18th 2007 5:59AM]

If it makes anyone feel better, you may call me an idiot too. But only if it makes you feel better. Go ahead.

[Luigi193 @ Oct 18th 2007 7:59AM]

Your an idiot,
no your an idiot,
no your an idiot...
STUPID FANBOY!!!
STUPID OTHER FANBOY!!!!
*Girly Cat fight*
Lather, Rinse Repeat
*A Typical Internet Blog Comment *

[teej @ Oct 18th 2007 9:36AM]

you're**** an idiot...seriously.

[Deezul @ Oct 18th 2007 8:48AM]

Why, whenever a 360 and PS3 are compared, is wireless ALWAYS brought up. I am glad I didn't PAY EXTRA to MS for wireless that I won't use. Excuse me for building a house with a wired network. I HATE that my Wii ONLY uses wireless and Nintendo was too cheap to through a $5 wired connection in.

[Dale @ Oct 18th 2007 9:48AM]

Wireless is brought up because most people are adding wireless networks to their homes, and cables are too much faffing about for many people. Granted, you don't use the feature, but if the DS can ship with wireless and the entire system is $130, why the hell is a wireless adaptor for the Xbox 360 an extra $100?

[JasonLynx @ Oct 18th 2007 10:25AM]

Because playing Halo over a wireless network with 16 people uses more bandwidth than playing pokemon with a kid next to you.

[timatl @ Oct 18th 2007 11:32AM]

Dale, I must admit. You have a very valid point. To add wireless to the 360 shouldn't be more than $20

[Dale @ Oct 18th 2007 11:41AM]

@JasonLynx: The Xbox 360's wireless adapter does not enable the machine to handle higher bandwidth applications than the Nintendo DS's. It's processor and power supply, however, do. Both of these components are standard issue with the system.

[Fudgems @ Oct 18th 2007 9:33AM]

From what understand, Sony is losing badly because their marketing strategy seemed to not have been thought over well. Sony did pack all their things into one system and made it more expensive than anyone would like to see on a sales tag. Microsoft was smart and kept the tags low but made the additions a little higher. They are now making big money. It's all about the consumer and the consumer wants low tags and great gaming. Microsoft also has all the great titles. Sony on the other hand has nothing so far that ever made me even think about buying a PS3. I would like to see Sony out for good. They just seem like a cockroach at this point :/

[Mayor McCheese @ Oct 18th 2007 10:00AM]

This had to be done on Sony's part in order to keep things productive. Sony is bleeding losses where as Nintendo & Microsoft are reeping the profits. Add to this Sony's recall of notebook batteries at an est. in the millions and the future is getting dim for Sony.

[PH @ Oct 18th 2007 10:55AM]

Mayor McCheese I don't believe Microsoft is reeping profits, I believe overall they have lost hundreds of millions in their gaming division mainly due to RRoD. Nintendo on the other hand is reeping the profits. Right now Sony only has a handful of games worth mentioning, but we should see how they perform once their core games like Metal Gear Solid 4 comes out.

[sycks @ Oct 18th 2007 11:08AM]

Man I love reading the comments on Engadget. The amount of knowledge obtain for any post with more than 20 comments usually amounts to a net of Zero. From the people who have no idea what they are talking about, to the arm chair analysts, and less not forget the god awful fanboys.

Some quick notes:

1) The Cell is made by Toshiba-IBM-Sony. They all have a stake in the tech and own the patents on it.
2) Blu-Ray, though majorly backed by Sony, is NOT a Sony proprietary format.
3) For a system that started out at $500-$600 and amidst strong competition it is selling at the same pace as the x360 did in its first 11 months.
4) The Console war is good for everyone's pocket.
5) The Hi-Def format war is stupid.
6) As for feature/price comparison even if X has more features than Y they only matter if the consumer is going to use them.

[Nick @ Oct 18th 2007 11:24AM]

Well, the only thing saving the PS3 is the intense japanese loyalty to the system and the japanese disdain for the xbox 360.

In America it is almost the reverse of that, though not to the same extreme. Here, the 360 is clearly winning and the ps3 is dead in the water...

[sycks @ Oct 18th 2007 11:50AM]

"Well, the only thing saving the PS3 is the intense japanese loyalty to the system and the japanese disdain for the xbox 360.

In America it is almost the reverse of that, though not to the same extreme. Here, the 360 is clearly winning and the ps3 is dead in the water..."

The 360 clearly winning, by all means yes. The PS3 dead in the water I don't think so. Mainly because a system that hasn't even celebrated its first birthday in an industry thats does not spawn new products every 1-2 years, claiming its "dead" this early is just silly but an accurate representation of the ADD most Americans have, diagnosed or not. Sales are sluggish sure, so is the library of games for now...

Most people seem to forget that when the 360 came out Microsoft stopped supporting the original Xbox and only 3rd-party cross-platform games were left. During its first year even with the supply constraints there was no reason to waste money on an Xbox unless you were going to use XBMC. Add to that the only competition was the ps2 and Gamecube and its easy to see that people were definitely ready for the next generation of hardware. That was the foundation for the large lead the 360 has over the PS3, that and price. $600 is too much for a console no matter what (wiki: Neo-Geo).

The Console War will not be over tomorrow nor will it be over next year. Things like selling your Chip factory to someone who can probably run it better and cheaper than you has more to do with increasing the longevity of your product than getting out of the game entirely.

[ogvor @ Oct 18th 2007 3:45PM]

Sony sells the Cell, the piece of the PS3 that supposedly makes it super amazing, to Toshiba, who is making the HDDVD format, which competes against Sony's Blu Ray format, which is also what supposedly makes the PS3 super amazing... so they can ... uhh.. I dont get it.

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