Plaupius said:
The beauty of it is that we don't have to know the real figures from Sony to do this kind of calculations. You said yourself that Sony will drop the price when it works for them, and using these calculations I've shown that it is very unlikely that a price cut would work for them in the current economical situation.
Since we know for sure that Sony is not profiting greatly from the PS3, the actual margin they have on it is irrelevant.
Ofcourse the margin's matter. If Sony is only losing 3 $ on the PS3 right now...they will easily make up the difference in accessories and future purchases.
But that is precicely my point: the margin does not matter in this situation for this kind of calculations. The price drop will translate directly into less profits. And your claim that those lost profits can be regained through accessories and game sales is what my scenarios were all about. If we change the amount of PS3s sold before and after the price cut, and how big of an effect the price cut will have on the sales, we arrive at different figures, but we'd have to change the numbers quite a bit to end up with a result that would really favor a price cut anytime soon.
Any price drop will directly translate into less profits. Only if they were actually profiting from the HW by a great deal, then a price cut could actually increase the total profits from the HW if the increase in demand were enough the offset the loss of revenue from the lower price. As it is now, that is not the case.
Sure it will translate into less profits, what's your point? Less profit now, gives more profit eventually. As long as Sony can meet their bottom line for this fiscal year, they are fine operating under the assumption of greater profits into the future.
I am questioning this very assumption. In fact, looking at the past two generations, it would seem that this assumption is wrong. Sony has sold a massive amount of consoles, but profited quite pathetically IMO. Sure, they have been dominant in the console and game sales, but that has been at the expense of profits.
The reason existing owners are not included in my calculations is that Sony has your money regardless of the price cut. When you are estimating if the price cut would be a good move for Sony, you have to calculate the immediate economical effects it would have. And in case you haven't noticed, Sony is not in a situation where they can keep on incurring losses because "they have a constant flux of cash coming in". That constant flux has seriously dried up. Sony really, REALLY needs profits NOW, not three years from now.
They will be getting/are getting those profits now, just not to some Nintendo Wii level. Having a price cut will happen when they can still make profit on the year or break even and/when sales dip below acceptable levels, period. No company is in a position to keep incurring losses right now, the point is the overall Sony video game operation will be able to balance out losses from the PS3 through a variety of measures and will simply drop the price when it makes sense for them to do so.
These companies aren't calculating immediate economic effects as much as pre-planning for future years. Which is why they will decide when it makes the most sense for them to drop the price.
True, companies do long term planning a lot. But you are mistaken to believe that they are not calculating the immediate economical effects and placing much weight on them, especially now. The reality of the situation Sony is in now is very different than in the past generations, and the whole global economy is very different. I dare claim that all companies are now placing most weight on the immadiate economical effects, as that is what will keep them alive to actually carry out the long term plans.
I agree with you that Sony will drop the price when it works for them. It just is not going to work for them for a long time IMO. So, if they would drop the price now, that would seriously sound my alarms.
I don't expect them to drop the price now because I don't see the demand for the PS3 drying up to below acceptable levels until at least around Christmas time. I think they will pump out quality software over the summer and rely on their bigger titles to increase console sales and give them bumps (Similar to KZ2 / Final Fantasy bumps that we've seen).
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