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leo-j said:
They are making money on the software, as they release more titles to the psn they make more money, and as they sel more games they make more money.


Well honestly it will take quite a while before they will make a profit on the PS3, if ever. They need to sell ALOT of blu-ray movies before they get any sort of money back from this investment. Microsoft forced their hand by releasing the 360 only 4 years after the original XBOX. This threw Sony off, and they had to sell the PS3 at $600, which was way higher than they wanted. Unfortunately, Blu-ray tech was still very early in its infancy, so they ended up with huge hardware costs.
HappySqurriel said:

I'm starting to believe that there is a lot of people who simply do not understand Nintendo's strategy or motivations when they designed the Nintendo DS and Wii ... At the same time, I think there is a massive lack of understanding why the Wii and Nintendo DS are successful from Microsoft and Sony fans because they're outsiders looking in.

When the Wii and Nintendo DS were being dreamed up Nintendo would have been aware that these platforms were radical departures from the conventional design decisions and they would be difficult to sell; it would be difficult to sell the concept to third parties (in particular if they involved similar development costs to their competition) and difficult to sell to consumers (in particular if their price was similar to their competition). On top of all of this they would have been worred about the potential of releasing another virtual boy and would have wanted to keep the research and development costs of the systems down as well, and would be unwilling to take any losses on the hardware.

By taking the Gamecube and increasing its processing power they were able to manage all of their concerns; the hardware is inexpensive to produce and develop software for, and the research and development costs on the Gamecube had already been paid so minor modifications to the hardware would not be too costly.

The Wii is so successful because it is inexpensive, a major improvement over other consoles (in terms of control) and it is DISTINCT. Creating an "underpowered" system that doesn't add much in the way of new control and seems like a carbon copy of a more popular system will be a recipe for disaster.

Sony's best approach for the future would be to try to create a product which their competition isn't creating ... With the technological know how they have in Sony they might attempt to create a low cost, light weight, high quality set of sterioscopic glasses to attempt the VR approach; or they could attempt a multi-touch screen on their next generation controller.

Sony has to play to their strenghts and I don't think that anyone's strenght is losing money ...

Sony's strength is technological know-how. They could have EASILY made the Wii, technically, but nobody at Sony had a very innovative mind. They have an engineer's mindset. Make things faster, more powerful, with cutting-edge Blu-ray technology, etc.

I agree with you. Sony will have to come up with some way to out-do Nintendo. This can only be good for the industry and consumers, and it's excitin'!