Hey guys,

Judging by Sonys latest financial report, the Playstation (+ Vaio) division made a $900 million USD loss. The PS2 and PSP are already profitable, so is the Vaio (Check last quarter financial report). I don't know if there are various different products in this division, but I am sure, none of them is as big as the PS3. So the losses of the PS3 for that past year must have been about 1 billion USD. Crazy isn't it?

On the other hand, Sony said they wanted to increase PS3 shipments by 2 million. This might be hard to achieve without a pricecut. The Slim with the $100 price cut released last year and posted some awesome numbers. You can't beat these numbers just with the software alone. IMO they need to cut the price further to do so. The second holiday season with the same pricetag will be worse than the first one after a pricecut. Common sense right?

The next arguably coming pricecut has only one single purpose: Gain market share. Coming from a 1 billion USD loss for the PS3, they have the choice: Keep the price and finally start to make any money with the PS3 since 2005 (R&D for the PS3 started way before release in 2005 and hasn't been profitable since then) or to cut the price further to gain more market share. I think Sony made a choice. They gave up to make a profit for the PS3 and are only focused on the market share these days.

The losses from the PS3 directly were 540.95 million USD according to comments made by Sony, you can find the details here: http://www.vgchartz.com/forum/thread.php?id=109103

I agree, they have chosen market share over profit in the short term but I think in the long term it was something they had to do and profit will soon come (as stated in the above link). They'll continue to choose market share this year though which would worry me if I was a share holder... When will profit be the number one priority Sony?

Actually after Slim launch the division has made 177 million USD profit. Most of the fiscal year losses were made Q2 quarter (~ -650million). I really wonder what was the cause for those big losses suddenly... As for 15 million projection maybe they just expect Move and GT5 along other games to move those extra 2 million HW sales. They will be up yoy that 2 million before holidays so they expect that PS3 will sell similarly as it did last holiday. Also remember last year 15 million PSP projection. They adjusted it later to 10 million when they noticed that PSP couldn't make it so those projections don't always mean price cut.

As a gamer I don't see anything wrong with this approach...but then I am not a stock holder of Sonys. lol

Looks like the 10 year plan was not a choice but the only option for these guys.

Seems that way.

They want to keep the PlayStation brand as big as they can. This way they can maximise Blu-ray popularity and make sure they can maximise on profits with PS4 too.

That's my thoughts anyway...

Isn't it better just to make the profit through software? It's not like they're making heap's on the hardware anytime soon.

this is weird

I mean, the are here for money ... I think it will would be time to drop the ball and try to make some money since they have made a lot of market share progress recently.

If those sales are REALLY expected from Sony, then it means they expect this generation to continue even further that would allow them to make money later. This, for me, is unexpected since I expected Xbox720 to be announced at E3 2011 ... so rather sooner than later.

I could imagine that a big part of the costs is due to the development of the Slimmer PS3.

Well as a stockholder I'm not too happy... but I understand the business strategy.
Luckily, my Nintendo and Microsoft stock are performing well... now just give me more dividends... and I'll be happy.

Really?

How about they are finally making money on the PS3 and can actually afford to cut prices. They have reduced the cost of making the PS3 and are starting to actually sell software.

For those who thought Sony was going to watch MS walk over them later this year, think again.