| Procrastinato said: Squilliam, you sound like you don't agree that the basic premise of making money from the console market is: sell the base hardware at cost (or close to), sell software and accessories for profit. If you didn't agree with this point, that might explain why you think the PSP is not doing well, despite the colossal number of publishers announcing big titles for it over the past 6 months. You might not understand why having big exclusives coming down the pipe is a big deal. Remember I'm not comparing Sony to MS and Nintendo. I'm stating that they are not doing badly, from an absolute perspective. Disagreeing with the make-money-from-software-and-accessories viewpoint would be an.. uncommon stance, but you might be able to explain your PoV to us, and help us understand your stance better? I mentioned MS as being in worse shape, since their profits were quite low in the last quarter -- the holiday quarter even, despite selling colossal numbers of X360s and software over the holidays. That says, to me, that the next few quarters are not likely to look "peachy" for MS, since they are, apparently, either losing money on hardware hand-over-fist, or more likely, they are doing some serious R&D investment, that will hurt their bottom line in the short-term. Its not gloom and doom for MS gaming -- we're talking short term here. They aren't going to have the software profits to look good this coming quarter (or two), and I think we're likely to see that as a lot of red on the report, thanks to whatever it was that hurt their holiday profits last quarter probably continuing to exist. If its selling hardware at a loss that's hurting them, then perhaps we won't see them dip as much... but is that good for the gaming division, as a profitable unit, when the PS3 perhaps has a cut coming soon, and MS matching the cut would then be... perilous, in the eyes of the common stockholder? I hope its not hardware that's costing them, and if its not, we should see a lot of red for the next couple quarters, as I stated. At least, I hope its short term. It should be, right? Kinda sounds like I hurt your feelings when I stated my opinion about MS. Sorry bud, that's just how I see it. I'm not an investment pro or anything, so probably my statement is somehow misinformed or just plain wrong. You should enlighten me if you can, though -- I like to learn as much as the next guy.
EDIT: I feel like I just went through some sort of time loop there... haven't the FY 2009 Q4 reports already come out, and, indeed, Sony's Computer Entertainment division was in the black for Q4 (not by much, but black nonetheless), while MS's E&D dipped into the red, with a big dropoff from the holidays? Just as I stated, then... I'm gonna have to call repeat for this quarter, except with more black for Sony, and more red for MS. MS is spending money on something big. Natal? What else could eat up all those X360 software and Live profits? A new console? If so, MS has basically thrown in the towel for this gen, to the Wii, and will not recover their investment easily, or at all. |
The PSPs sales are down considerably thats all I was looking at. I didn't compare it to the DS, its doing poorly relative to how its performed in the past. I have my doubts that the games will substantially increase the sales of the device because from the information I have games have sold poorly overall on the system and its getting greater competition from the iPhone and iTouch and their clones for the significant multimedia functions which make up a large proportion of its selling proposition to consumers.
The old razor/blades model isn't something im challenging.
Where im coming from in relation to the Xbox 360 is this:
The Xbox 360 Arcade breaks even with accessories -> quoted from someone in Microsofts senior management.
We are going for 2nd place in this generation -> paraphrased again from Microsoft management
Looking at the financial statements and reading between the lines I have seen nothing which implies that the Xbox 360 operations are anything but profitable by a healthy margin. So if one took the idea that the Arcade breaks even with accessories it means that the variable costs involved in shipping a single Arcade console to market last year were very close to breaking even. Im not counting advertising, R+D or anything like that, just the cost of the machine from factory to shelf on its own. So if they chose, they could probably cut the prices down quite considerably once more as the difference in cost between the Arcade and the Premium aren't excessive as it is essentially just a HDD unit which seperates the two and that would cost no more than $40 all up.
EDD is a slush fund, its got the barely profitable Windows Mobile which may very well be losing money now thanks to the iPhone and increased investment, Zune HD fixed costs, Natal development costs plus related aquisitions of I.P, The Zune is definately losing money, actually the whole thing is one big research and development pit of named and unnamed projects. I doubt that any of this however will dictate their choices in relation to the Xbox 360 hardware platform. They probably have the best revenue model in the industry, they can afford to lose quite a bit on hardware upfront if it means they can recoup an average of $20 per year per console for the next 5 or so years along with any applicable game and download revenue.
The EDD dropped into the red on a one off charge of $150M and SCE being in the black by $4M or so was essentially an accounting trick to make the division look better, well that was my take on it anyway. Theres development for a new console, perhaps as there always is, however the really serious outlays are for I.P etc which only gets paid in large quantities close to the release of a new generation console.
You didn't hurt my feelings, I secretly have a passionate relationship with my PS3, I play Flower and it makes me feel so good! 
Tease.
