| Kantor said: Well, they wouldn't ONLY be selling PSP Go's. They would also be selling regular PS2s and PSPs. Let's ignore them for a moment, though. Say they slash the price by $100. By the time they get around to that, it would be a $90 loss or so (perhaps less, but let's stick with that). Let's say they sell 7 million PS3s from then until April. 7*90 = 630. $630 million lost. Perhaps they sell 2 million PSP Gos. $180 million back. $450 million left. Let's say they get $30 from a first party game sale. They would need 15 million first party games sold to perhaps 4 million new PS3 owners. That's a bit ridiculous. If they get $20 from third party game sales, that makes things easier. So I would say a price cut would still be a good move- some of the losses would be offset by the GO, some by extra software sales (and extra accessory sales). |
Kantor has the right mindset. However his estimate is fairly conservative. With the 120GB PS3 slim coming out next quarter, which will feature multiple cost cutting revisions such as the 45nm Cell, a matte finish, and reduced size of the shell and most likely the motherboard, the cost of manufacturing a PS3 shouldn't be more than $375 if even that. At that point, if Sony were to sell 7 million units they would be making a loss of about 525 million. Then we need to take into consideration the hundreds of millions that Sony is making off the PSP Go, the PSP-3000, and the PS2 and that should come out to at least $250 million and that's again being extremely conservative. The PSP Go also offers the benefit of Sony reaping more software profits from digital distribution rather than ratail as well as the fact that it uses propietary assessories. Then we need to take into account all the additional PS3 games and assessories that will be purchases due to the increased marketbase. Then there is the PSN and Home profits. Finally, even on top of all this Sony still isn't expecting their Computer Entertainment division to be profitible.
No matter how you spin it. Sony has already more than prepared themselves for the $100 price cut coming to PS3. They've done the math. They no how much they will lose and have already made that ammount public with their fiscal forcast.
