Why reports of the decline of the PS3 have been grossly exaggerated.

[Squilliam]

NJ5 said:

shanbcn said:

NJ5 said:

shanbcn said:
Do PS3 need a price cut? Hell yes! And its already almost confirmed to come in march. 360 was way cheaper then PS3 in EU before but now its dirt cheap. And last couple of weeks have shown Sony that they can't afford to have bigger difference in price between PS3 and 360. Anyway 360 still will be cheaper but the difference will be smaller.

Almost confirmed?

Earlier this year, when Sony kept telling their investors they were focusing on profitability in the games division, some people kept saying a Christmas price cut was guaranteed. I doubted it back then, and I doubt it now too.

 

 

Back then 360 didn't outsell PS3 in Spain and Italy.

That still doesn't convince me that they're willing to throw hundreds of millions (or billions) at the gaming division when Sony as a whole is in hard times.

 

Next year compared to last year:

The RSX would have been shrunk to 65nm and that means lower cost on the chip itself as well as cheaper motherboard, powersupply and heatsink componentry.

The industry which produces silicon chips is having a tougher time keeping things running at capacity so that means cheaper silicon components in general. TSMC recently stated that they were having 4 day weeks and doing other cost cutting measures as an example.

Commodity and transportation costs will be lower as fuel prices drop, so should plastic prices for the chassis and metal prices for the heatsinks and general components such as capacitors.

The sales of the PS3 will drop compared to the start of last year, theres no question of this. If Christmas is down, Q1 will be down even further.

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I don't expect the SCE division to make a huge profit, they could very easily target the break even point so they provide neither a net loss or a net profit for Sony as a whole. The losses from last year and the year previous are already written off. Theres no rule which states that they must start making a profit to offset previous losses next year. So therefore the losses incurred by the massive development times are pretty much a moot point at this juncture.

A pricecut in Q1 of $50 will probably keep the gap between 8-12 million by the end of 2009 depending on the response and Microsofts actions. A price cut first in Q3/Q4 will leave them probably between 12-20 million behind the Xbox 360 and dead in the water. Im ignoring the possibility of a 2nd price cut as well. But remember every PS3 sold is potentially a few copies of a first party game sold as well, and they need those sales as they don't have a revenue stream like Live to fall back on.