Sony have already won...

[sieanr]

krik said:

sieanr said:

SlorgNet said:
Sony and Nintendo are both winners in this generation of consoles. Microsoft is in a pickle, because it has yet to recoup the $6.5 billion it has lost since launching the Xbox line, or to reclaim the 31% market share it had as recently as 2006.

Also, it's too easy to bash the PS3 for being pricy and for losing Sony billions. The billions were well-spent, in the form of a top-notch media player - for every yen Sony loses on a PS3, it gains three back in the form of TVs, electronics and BluRay discs. The PS3 is part of an integrated media strategy, it's not a standalone product.

Interesting theory, but it looks like things aren't going according to plan. In September Sony reported losses from the TV division amounting to 60 Billion yen ($526 million). Bluray is still in a fight with HDDVD, and in time that may make up for the PS3 losses. Yet that remains to be seen, and its an awfully big gamble. 

The problem with an "integrated media strategy" such as this is when it doesn't go according to plan everything falls apart. Losing money on the PS3 will only work if it really drives sales in the other areas enough to make up for the losses of the gaming division. But because they underestimated the competition this time around in the gaming division the PS3 is doing far worse than they expected and thus cannot full fill this strategy as much as they would've hoped. The problem is just because a person buys a PS3 doesn't mean they're tied in to Sony electronics. Some people will make a whole entertainment suit with only Sony electronics, but they are already loyalist to the brand. Most will buy whatever is cheapest or most competitive, and that generally isn't Sony. Because of that the only real way I can see the PS3 benefitting the electronics division is via Bluray and royalties.

Essentially they decided that the other areas were more important than gaming and that the PS brand could still win out despite this. Now they've pissed away the better part of two gens worth of profits, market leadership and consumer loyalty. The question is if that sacrifice will make up for itself in the long run with Bluray, and wether or not that sacrifice will severely hurt them come next gen.

 Last quarter (July 1 to Sept 30 2007) Sony reported a profit of $930M on their Electronics division and a loss of $841M on their Game division. So between the 2 they are about even. Get your facts right please. 

Here is the link: http://www.sony.net/SonyInfo/IR/financial/fr/07q2_sony.pdf

 EDIT: Changed values from Yen to USD.

Except the PS3 is cited as helping to drive TV sales. This isn't about the electronics division as a whole since its illogical to claim that viao or MP3 player sales will increase due to the PS3. My facts were correct, you just didn't understand the argument.