| Soleron said: What matters really is whether Sony can be profitable. If they can't, then it doesn't matter whether they beat the Wii in sales and have hundreds of exclusives - they won't do a new Playstation. |
This
Here are some links, the important part is the Net Profit Margin.
Here's M$
http://moneycentral.msn.com/investor/invsub/results/hilite.asp?Symbol=MSFT
http://moneycentral.msn.com/investor/invsub/results/compare.asp?Page=ProfitMargins&Symbol=MSFT
And Sony
http://moneycentral.msn.com/investor/invsub/results/hilite.asp?Symbol=SNE
http://moneycentral.msn.com/investor/invsub/results/compare.asp?Page=ProfitMargins&Symbol=SNE
I'm well aware this isn't a breakdown of the divisions, but with Sony in the red on Net Profit Margin, it wouldn't be surprising if they have to start cutting divisions if they don't see profit soon.
Someone said something "Sony wouldn't cut one of the biggest names in gaming". Last I checked, Sony is a company, not a group of gaming fans. Profit first, all else second.
M$ has a high profit margin (not just in gaming/electronics), hence the "M$ overcharges on everything". But if it sells, then it sells. The customer always wants a product at the lowest price they can get, and a merchant always wants to sell at the price to obtain maximum profit.
@theprof00, there's something you are missing though, Microsoft responds to Sony's price drops because they don't need to move first. I'm sure they have analysts that are smarter than anyone here that have figured out that they obtain higher profit margins by waiting with price cuts. I'm sure they could easily handle selling everything MUCH cheaper, but they have no need to. That does NOT mean Sony isn't in a price war. Sony needs to cut prices just to be competitive. Is that not a price war?
