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Forums - Sales Discussion - Sony's Q1 Shipment Numbers In

shams on 29 July 2008
Noobie said:
shams said:

My comments:

Pro:

 + they made a profit in this qrt!
 + no drop in forecast for hardware or softrware for the FY
 + PSP looking very profitable for them

Neg:

 - they didn't make much profit -- atleast they made a profit when most were not expecting it
 - overall profit for Sony dropped significantly irrelevant
 - they had three "mega" titles impact last qrt (GTA, MGS & GT) - won't happen again soon
 - any benefit from PS3 or PSP seems to be offset by less sales in PS2 wrong logic
 - general weakness in US is impacting all sections of Sony irrelevant

Still can't believe they shipped less PS2 software than PS3. Then again - around 9m-10m of PS3 was MGS + GTA.

...

To put the $50m profit into focus: Sony would have made $50m-$80m "profit" from MGS + GTA software alone.

Next qrt is going to be pretty challenging, before the big Xmas qrt.

There are couple of other points i will like to make..

1. i remember PS3 boss saying that they r going to get smaller 45nm Cell and 65nm Graphic chip in 3rd quarter ... so i think they r going to further reduce the cost of the PS3 hardware and i think it will be profitable pretty soon if they don't drop the price. so maybe now PS3 doesn't need PS2 hardware support to bear its losses... if in this quarter they have shown that the gaming division can earn a profit with higher PS3 sales then PS2 sales then i think future is bright..


2. the major concern is having blockbuster games one after the other... MGS has shown that a good exclusive can boast hardware also... so i think they need exclusives and top ones.

3. Your logic of $50 - $80m profit from software alone is also a little flawed as Sony pays for advertisements and must have paid for the bundles deal also.. similarly they have these free onlline service which most of the games use.. and they pay it themselves... So i believe we have to take the profit or loss of the entire division instead of picking one item from it... as they cost is distributed and so is profit over multiple sub divisions..

But i do agree next quarter is going to show that if there gaming division is strong enough to reduce price and safe from red ink or not... and its going to be really slow ... but its good to see Sony is performing reasonable cuz competition is always good

My response:

i. overall profit for Sony dropped significantly irrelevant

 --> Not at all. Its the "big" financial story being shown around the web at the moment, for people interested in Sony - rather than just the games division. Their overall profitability also determines how much they can afford to drop PS3 prices prematurely. So saying "irrelevant" I think is short sighted.

ii. any benefit from PS3 or PSP seems to be offset by less sales in PS2 wrong logic

 --> Why is this wrong? Significantly better software & hardware sales for PS3/PSP - yet no huge increase in overall profits. This is going to drag them down for the next few qrts, until PS2 figures really level out (or boost again). They will almost certainly post good results for Xmas qrt this year, but will the profit be that much better than last year? We will see.

iii. general weakness in US is impacting all sections of Sony irrelevant

 --> See 'i'. Its also being reported as related to the same issue/story.

1. We'll see. Compared to PS2 software & hardware sales from last year (and its software that will really sting), its going to be hard to "make up the numbers" - let alone turn MORE of a profit.

2. Agreed - but there aren't many "MGS" titles out there.

3. Agreed, but I just wanted to demonstrate how "little" 50m profit for the entire division is. Sony basically charge $8-$10US (approx) production fee per software unit (may have been a lot less for MGS?). Multiply that by 10m units... and you get the idea.

...

As much as it may surprise a lot of you, nothing would please me more than seeing Sony pick up its game and provide Ninty with some serious competition. I'm getting a little worried they are "happy" to be focusing on selling/profiting on multi-purpose hardware (i.e. PSP), and almost ceding the games portion. At least they haven't ceded the PS3 - just hope it doesn't end up in the same place as the PSP (unlikely, as the PS3 + 360 combined make for a compelling software development case).



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LOL MATURE on 29 July 2008
quaiky said:
NJ5 said:
DTG said:

 

Are you blind??

It IS being undertracked by 269k, you quoted it yourself for **** sake!

No, the difference is what would be on retailers' shelves, shipment trucks/ships, etc. If anything, the PS3 seems overtracked because the difference used to be bigger (near 1 million). The PS3 could be overtracked by a few hundred thousand units.

 

 

slightly overtracked maybe, but not a few 100k, they are clearing the channels of 40gb and 80gb models seem to sell out so the difference of 400k (if you calculate it with right date) seems to be not that unreasonable, seems logical to me that they decrease shipments of the 40gb model 1-2 months before removing it from market to sell most 40gb models out before they get replaced.

anyway if vgcharts numbers are right we will probably see some shortages till the new models arive.

 

Some other things to consider.

A. Clearing out 40 gigs

B. Slowest months of the year

C. SYSTEM SELLERS! The system has been being moved this quarter from GTA4 GTP5 and MGS4. It's not hard to believe that the Ps3 isn't as well stocked as last quarter

Which was

Right after the holidays and during busy months.

I however do believe it is slightly overtracked. ~250k maybe. (700k in the channel)

Side note: Also the 80 gigs will most likely have the new chipset too. More of a reason to clear channels.



BKK2 on 29 July 2008
Noobie said:
shams said:

My comments:

Pro:

 + they made a profit in this qrt!
 + no drop in forecast for hardware or softrware for the FY
 + PSP looking very profitable for them

Neg:

 - they didn't make much profit -- atleast they made a profit when most were not expecting it
 - overall profit for Sony dropped significantly irrelevant
 - they had three "mega" titles impact last qrt (GTA, MGS & GT) - won't happen again soon
 - any benefit from PS3 or PSP seems to be offset by less sales in PS2 wrong logic
 - general weakness in US is impacting all sections of Sony irrelevant

Still can't believe they shipped less PS2 software than PS3. Then again - around 9m-10m of PS3 was MGS + GTA.

...

To put the $50m profit into focus: Sony would have made $50m-$80m "profit" from MGS + GTA software alone.

Next qrt is going to be pretty challenging, before the big Xmas qrt.

There are couple of other points i will like to make..

1. i remember PS3 boss saying that they r going to get smaller 45nm Cell and 65nm Graphic chip in 3rd quarter ... so i think they r going to further reduce the cost of the PS3 hardware and i think it will be profitable pretty soon if they don't drop the price. so maybe now PS3 doesn't need PS2 hardware support to bear its losses... if in this quarter they have shown that the gaming division can earn a profit with higher PS3 sales then PS2 sales then i think future is bright..

 

It's just the RSX getting reduced to 65nm this fall, Cell probably won't drop to 45nm until next year.

Sony Computer Entertainment CEO Kaz Hirai has confirmed that PS3 Cell processors manufactured since last holiday use the more efficient 65nm technology, while smaller RSX chips are due in the fall.

Hirai said during a Thursday PlayStation business briefing that Sony has been cutting PS3 manufacturing costs by reducing the number of components and decreasing the size of chips.

"The Cell and RSX used in PS3s at launch were manufactured using a 90nm process technology. And now all PS3 Cells have shifted to 65nm process technology since last holiday season," he said.

The smaller chip technology runs more efficiently and costs less to produce.

While the improved Cell is in circulation, the RSX graphics chip, created in tandem with Nvidia, still uses 90nm technology.

But a more efficient RSX will be in PS3s shortly, Hirai says. "As for RSX, 65nm process technology has begun this year already, and will be ready for installment in autumn."

Link

They are making rapid progress on reducing the manufacturing cost though. Since the original 40Gb launched (CECHG) it's already gone through two revisions (CECHH & CECHJ). There have since been two new models registered, CECHK (which I suspect is simply CECHJ with a 80Gb HDD), and most recently CECHL. It's possible that CECHL will be the 65nm RSX model, but the current is still 3A (when 40Gb with 65nm Cell released the current had dropped 3.2A on the 60Gb to 3A), so it may just be a more efficient revision of CECHK before 65nm RSX comes in maybe CECHM. The third generation heatsink for 65nm Cell + 65nm RSX was shown a few months ago.

Furukawa Electric Co Ltd exhibited a new heat sink for the PlayStation 3 (PS3), a game console developed by Sony Computer Entertainment Inc (SCE), at Techno-Frontier 2008. The exhibition took place from April 16 to 18, 2008, at Makuhari Messe in Chiba Prefecture, Japan.
The company defines the first heat sink mounted in the PS3, which was released in November 2006, as the first-generation product. And it already begun commercial production of the third-generation heat sink for the PS3. The third-generation product is characterized by its small size, light weight and low cost.

The heat sink developed by Furukawa Electric is used to cool the microprocessor "Cell" and graphics LSI "RSX." When Nikkei Electronics Teardown Squad disassembled the PS3 in November 2006, this heat sink, together with a large cooling fan whose diameter is more than 13cm, drew its attention (See related article).


The PS3, at first, is equipped with the Cell produced in 90nm process technology. But it was replaced with the Cell produced in 65nm process technology to reduce the cost and power consumption. Along with this change, Furukawa Electric reduced the size, weight and cost of the heat sink by, for example, decreasing the number of its components each time its generation changed.


Especially, the shift from the second generation to the third was drastic. In the first and second-generation products, a large heat sink cooled both the Cell and RSX. But they are cooled by separate heat sinks in the third-generation product.


Furthermore, copper heat pipes, which were used in the first- and second-generation heat sinks, are no longer used in the third-generation product. Five and two copper pipes were used in the first- and second-generation products, respectively. Furukawa Electric realized enough heat-radiation performance without using a heat pipe, the company said.


The first-, second- and third-generation products support power consumptions of about 200, 160 and 130-140W, respectively, for both the Cell and RSX.


The kinds of components are more than 20 for the first generation and about 10 for the second. But the third-generation product has only three kinds of components, a fin and pin made by aluminum and a thick aluminum plate used as a substrate. As a result, the weights of the first-, second- and third-generation products are about 700, 500 and 350g, respectively.

Link

So even without 65nm RSX they'll have made at least like three (possibly four) revisions to the second-generation (65nm Cell + 90nm RSX) mobo. Changing the 40Gb HDD to 80 GB was probably cost neutral, although 80Gb may actually be cheaper than what the 40Gb was.

Third generation 65nm RSX PS3 coming in FY08 Q3 is one of the reasons I'm thinking PS3 has a good chance of being profitable in that quarter.

 



alpha_dk on 29 July 2008

BKK2 said:

Okay, so *if* I am reading this chart correctly, then Sales - profit is approximately the cost to run the division.

If that's true, (please tell me if I am mistaken), then:

2007:
196.6 - (-29.2) = 225.8

2008:
229.6 - 5.4 = 224.2

So, it sounds like any savings from manufacturing are being rolled into increased something; game development probably?  Has anyone seen Sony hiring a bunch of games programmers lately?  Where else might the money be going? more R+D for PSP2 maybe?  Although I would think the same people they already have would be able to do that...



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NJ5 on 29 July 2008

@alpha_dk: Savings from manufacturing are probably cancelled out by increased PS3 production. At least partly.

Interesting calculation btw, hadn't run the numbers that way.

 



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Aprisaiden on 29 July 2008

@BKK2 - While Kaz Hirai hasn't addressed when PS3 will use the 45nm CELL IBM has been working on it for a while now.

-- An article from Feb. 2008 about 45nm CELL.
http://arstechnica.com/news.ars/post/20080207-ibm-shrinks-cell-to-45nm-cheaper-ps3s-will-follow.html

-- Another arictle from Feburary noteing that the 45nm CELL will be used in PS3's late 2008 - early 2009.
http://www.fabtech.org/content/view/2469/



Aprisaiden on 29 July 2008
alpha_dk said:

BKK2 said:

Okay, so *if* I am reading this chart correctly, then Sales - profit is approximately the cost to run the division.

If that's true, (please tell me if I am mistaken), then:

2007:
196.6 - (-29.2) = 225.8

2008:
229.6 - 5.4 = 224.2

So, it sounds like any savings from manufacturing are being rolled into increased something; game development probably?  Has anyone seen Sony hiring a bunch of games programmers lately?  Where else might the money be going? more R+D for PSP2 maybe?  Although I would think the same people they already have would be able to do that...

Nice find. However id say +860k PS3 and +1.59 mill PSP's is due to the increase in expanese... (ofcourse its somewhat offset by the - 1.15 mill PS2's )

Anyway if SONY knew it would be profitable this quarter i hope they were smart and spent a ton of money on game devlopment and R&D in order to offset any reductions in software sales in Q2 due to no MGS / GTA.



Zuhyc on 29 July 2008

How can overall software go down when the PS3 software had a bigger increase than the decrease of PS2 software? And even the PSP software is rising a bit.

PSP: 11.8 million (up 2 million
PS3: 22.8 million (up 18.1 million)
PS2: 19.3 million (down 11.8 million)



DMeisterJ on 29 July 2008

The reason with the software going up so much on the PS3 at a higher price and not making too much money is the fact that they've sold more PS3s also, at a loss, thus bringing profit down. But the loss that they take on each PS3 is looking like it can be offset by the selling of more software on the PS3 at a higher price. So once the PS2 goes down the crapper, it looks like the gaming division will still be able to be profitable.



gorgepir on 29 July 2008

I seriously doubt Sony only having 500k PS3 in the channel. That would make PS3 to be out of stock a lot of places. It should be more around 1m. It seems that VG does overtrack PS3 a bit.
VGChartz really should advertise this prove NPD is wrong when it criticizes VGChartz.