Next Round of Price Cuts

[NJ5]

gorgepir said:

Sony has more power to drop the price than microsoft. It is really simple in my opinion. First of all microsoft are already in the red because of xbox, while I think it is fair to assume sony is in the black for ps2.
secondly sony is not smaller than microsoft, so it can tolerate a few billion dollars in red if the cost is high enough, and while video games might not justify that cost, I am pretty sure that sony don't want to let microsoft get the central home enterntainment media market.

Sony has more power to drop the price than Microsoft? Don't make me laugh...

Microsoft's situation:

- lost a lot of money with the xbox
- can make that kind of money back with a single quarter of profits with their cash-cow products (Office and Windows)
- has precisely $0 in debt
- has a currently profitable console, and no money drains (the xbox was discontinued)
- so far, had a $50 drop in price on the Xbox 360
- has had the most time to drop the price of production

Sony's situation:

- keeps losing money every quarter (in the gaming division) due to the PS3. Despite the PS2 and PSP, in the past 1.5 years has lost half the money they made in the previous ten years on the gaming division.
- has about $10 billion in debt (last I checked)
- has a lot of fierce competition in every single market they're in
- due to the above, makes measly profits (both profit margin and absolute value in comparison with MS) or loses money in most quarters
- has already dropped the price of the PS3 by $100$ / 200 € / $200 depending on where and how you interpret the price drops
- has had the least time to drop the price of production