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Squilliam on 29 May 2009
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WereKitten said:
Squilliam said:
WereKitten said:

Losing about $40 per console on the $399 models, and thus profiting a few tens dollars per console on the $499 models. Overall they are crossing into profitability, considering that launch PS3 did lose them more than $200 each. The software and accessories bring it all definitely in the black.

And again, how would cutting the PS3 life short help them financially? What has been spent in R&D in the past is not going to come back. They would be only losing revenue at this point.

Now if you said that they might want to not take as bold a step with the PS4, that might make more sense. But it's the lifespan of the PS3 we're talking of, and it's in the interest of Sony and its investors if it's as long as possible.

Except they are now predicting even more losses for this current financial year. So by March 31 2010 the PS3 would have had 4 successive years losing money. Then by 2012 a new generation of consoles will probably be out, with 1-2 players already on the market. Then at that time they are going to have to create a console which they can profitably sell to capture the market again. Its not fun times unfortunately for Sony.

It's not fun times for Sony, indeed. But it's not fun times all around for japanese electronic producers with the global recession and appreciated yen: Hitachi posted losses for 8.1B dollars.

Why exactly is the PS3 that is losing money right now if Sony projects losses for the current financial year? Certainly the R&D for the PSP Go, the music and software store, the slim model and most probably the PS4 is accounted for in past and projected financial reports.

Are you denying that each PS3 costing $440 and sold at $399 today brings profit to Sony in a matter of months?

No, theres no denial here. Its a whole gamut of issues for SCE with the slim+price cut model attempting to solve their systematic problem of a large 1st party development and low userbase to sell games to with some of the highest development cost in the industry. (Sony spends more on average than pretty much everyone).  If the only major costs was $40 on every PS3 they would probably be making a profit with the amount of software sold, so it indicates that their problems are much bigger than just the relative profitability of the PS3 hardware.

R+D for the PS3 slim would be paid for by cheaper hardware costs, ditto for the PSP Go. Im not sure how much the music store/software store would cost to create im sorry.

The issue really as Happy Squirrel said earlier in the thread is that the PS3 may end up a middle child. Not as cheap as the Xbox 360, not as desirable as the Wii and not as advanced as a next generation console. Furthermore they run a potential risk that a next generation console will hit a home run and start to erode their own userbase before they have a chance to respond which lowers their chances to launch successfully for the next generation and it lowers their brand equity by stealing their PS3 userbase right from under them.



Tease.