Do you think Sony will ever make a net profit from the PS3?

[Dodece]

I would have to say no. They will have incurred too many loses on the console. Remember the loses exceed hardware components. Development costs, marketing, exclusivity contracts, software support, and other support all go on the spread sheet. When Sony spends twenty million dollars advertising the PS3 that has to be billed to the division. When Sony buys exclusivity that must be billed to the division. Every software update Sony does was coded by employees that had to be paid. Basically there are a lot of hidden costs on top of the inferred hardware losses.

Even if Sony gets to positive monetary gain on the hardware some point late in the next fiscal year. They still have to offset all of these incurred losses. Which they will continue to incur as the hardware becomes profitable. They might have a fifty million dollar advertising tab to pay off. They might have spent thirty million dollars in buying exclusive content. They may have to pay upwards of ten million dollars in software development. All of those added costs would drag the profitability into the next fiscal year at the very least. So it will have taken them three years to stop bleeding money. Realistically thats half of a consoles life devoted to bleeding badly.

That is actually the sunny version. The way things can go right for Sony. The grim version is that Microsoft forces Sony to reduce prices again. Their game sales remain in a slump. The other formats lower price increases pressure on Sony's own. Their console begins to get squeezed out of the market. Almost all of it is out of Sony's hands. They have no control over Microsoft or Toshiba's pricing. They can't change the buying habits of their customers. Changing market impression of your product is hard. The longer they stay out on the fringes the less likely it is they will be noticed or considered later on.

Everything Sony supposes has to be based on current trends, but what if those sales start slipping in response to these factors. Either Sony bleeds a lot more money to stay in the race, or they have to accept that they are going to slide off the map. After all it cost them over two hundred dollars more per console last year to keep that from happening. There has to be a limit somewhere. Where is the point of no return I wonder. Either way the result is the same.

They either have to increase losses to stay in the race, or they stand firm and watch the market drift away from them. Sony just isn't going to have a choice in the end. They either end up selling more consoles at a major loss, or they sell fewer consoles at a smaller loss.