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cleveland124 on 03 August 2008
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Girl Gamer Elite said:
NJ5 said:

1- Microsoft has barely cut the price of the 360 since they launched it. Compare that with Sony's huge price drops. And let's face it, neither Microsoft nor Sony are being successful at the lose on hardware/make it up on software thing. My contention is that this is more of a problem for Sony than for Microsoft, due to the situation in the whole company.

2- Yes, they will likely turn a profit, and do you know why? Because they're focusing their strategy on not losing money this year. That means no moneyhats to third parties, and very likely no price cuts, as per their stated strategy to investors.

3- I didn't get that. "promise that they will not cut costs"? Their statement about profitability was regarding PS3 hardware specifically, not the whole company. The company as a whole will always be focused on profitability, obviously.

By the way, take a look at my edited post. You have ignored the very important difference between revenue and profit. Sony has huge revenues because they sell very expensive products, but their profit margins are very low, so they end up generating much lower profits, thus having to be more careful about spending money. That's the fundamental difference between Sony and Microsoft nowadays.

Win.

1.  Sony used cutting edge technology in Blu Ray and the cell.  It's more conceivable that they could drop the price quicker/bigger than the 360 which is essentially based off of existing PC technology.  Look at Blu Ray players, started at $1,000 and are now down to $300.  Without a detailed analysis of actual costs of each machine, which I doubt you have it's your opinion compared to mine.

3.  You said they have promised not to cut the price of the PS3 to the board member.  I don't see that in the article you posted.  I see that they don't think they are cutting the price of the PS3 this year and that profitability is #1 priority for the group.  Sony is pushing out new downloads and getting new games.  They'll sale more of these if they have more PS3 out there.  And the best time for a price cut is before the holiday season because that will push more sales during the crucial 4th quarter.  If they don't drop the price now they will gain no effect from a price drop until the 4th quarter of next year.  That's a long time to not respond to Microsoft and they risk losing more games such as Final Fantasy etc.  So a little bit of loss now helps them out long term.  Short term profitability is great but long term profitability is always better.

I know the difference between revenue and profit.  You seem to think Microsoft is willing to throw money and money at the xbox while Sony isn't at the PS3.  Okay, let me make a scenario for you.  You own a business.  It is exceedingly profitable.  You purchased or developed a segment 7 years ago.  You've spent 2-3% of your profits every year trying to build up this business and make it profitable.  You finally have a profit for a half a year and you think they should be willing to dump more money into it?  Microsoft has the money to subsidize the xbox yes, but eventually it needs to be self sufficient or management fired for continuing to waste money on this cause. 

For Sony, they are not as rich as Microsoft but they are still rich.  They had a bad quarter and this is on pace for over $1 billion in profit this year.  And ultimately for them they need to make more $ on TV and electronics.  That's going to turn this company around.  Not if they can sell more $400 PS3 instead of selling them at $350.

Win?  Unless you work intimately with Sony management and know that they are not going to drop the price exactly for the reasons NJ5 listed, I don't know how you can win an opinion.  But thanks for your great input into our discussion.