| libellule said: damn, EDIT : Sony's Hirai eyes PS3 profit as costs decline
By Franklin Paul LAS VEGAS (Reuters) - Sony Corp (6758.T: Quote, Profile, Research) gaming chief Kaz Hirai hopes to turn a profit on the PlayStation 3 console business in the entertainment conglomerate's next fiscal year, fuelled in part by falling costs for the parts used to make the device. "We want to get to the positive side of the equation as quickly as possible," Hirai, who is chief executive of Sony Computer Entertainment, said late on Sunday on the sidelines of a news conference at the Consumer Electronics Show in Las Vegas. "The next fiscal year starts in April and if we can try to achieve that in the next fiscal year that would be a great thing. We are going through the budgets right now. That (profitability) is not a definite commitment, but that is what I would like to try to shoot for." His comments came after Sony announced stellar holiday sales for the PS3. The company said on Sunday it sold 1.2 million PlayStation 3 video game consoles in North America over the period, two-thirds what it sold in the rest of the year. The Tokyo-based electronics and entertainment conglomerate currently loses money for each PS3 it sells. Sales of the PS3 have lagged those of Microsoft Corp's (MSFT.O: Quote, Profile, Research) Xbox 360 and Nintendo Co Ltd's (7974.OS: Quote, Profile, Research) Wii consoles due to what analysts say is its lofty price and a dearth of must-have games. Great games, which draw consumers to buy the console, matched with declining component prices will hopefully lead to profitability for the PS3 and the company's gaming division overall, Hirai said. "Component costs are coming down, and the number of components ... we are seeing a reduction," he said. "The 40 gigabyte PlayStation 3 obviously has fewer components (than more powerful models), and uses less power, which means that components required to dissipate heat, for example, can be smaller, so there is some cost reduction there." "So costs are coming down significantly," he added, noting that the decline is in line with what the company had expected. (For more from the Consumer Electronics Show, please visit the MediaFile blog: blogs.reuters.com/mediafile/)
==> I suppose the important word is "hope" ... |
SphereWell, this pretty much answers the question, doesn't it? Yes, they could make a profit, but it depends on how soon BD starts selling at a higher rate. That will naturally drive costs down and as the BD drive is the single most expensive part of the PS3, will make the biggest difference. No one knows right now (as far as I've seen) where Sony is in selling the 40GB units. How much of a loss is that?
In any case, the article also makes it clear that while they (of course) "hope" to make a profit on the console over the next year, they're fully prepared not to. They know they may need to drop price again in response to MS or other market pressures. The fact that they think they even MIGHT be profitable over the next year should tell people that they're not losing near as much per unit as they used to be. Something worth checking out, don't you think?
Either way, we all know Sony has always made profits on the software end, not the hardware. They've been operating this way for some time now. It's much more crucial for MS to get profitable in their gaming division and stay that way. MS MUST sell a good bit more of the 360's than they did with the original Xbox. Right now over 2 years into the lifecycle as opposed to about 4 years for the original Xbox, it looks like they're on pace to slightly outsell the original Xbox. I'm assuming they lose less money on the 360 than they did that original unit (one of the reasons they switched to PPC, etc) so hopefully they'll be able to attain overall profitability on that product. If not, they'll have to seriously evaluate strategy when bringing out their next generation. And before people get their backs up, yes I know MS has tons of money, but they still operate under business principles and that means they expect profitability from ALL their divisions, at least after initial scrambling to carve out a spot in the market. We'll see...
