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Smashchu2 on 31 January 2011
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Squilliam said:
Smashchu2 said:
Squilliam said:

1. Theoretically Microsoft could sell one copy of Windows to every man, woman and child on the planet too.

2. How much the brand is worth is not the same as how much money they have made with products attached to the brand. The brand is worth billions, the losses are as inconsequential to Sony when deciding on what to do with their console business moving forward.

I think your missing the point here.

1)This is irrelevant as we are talking about Nintendo and their business goals. Not Microsoft. Microsoft makes their money by selling to computer manufactures. Nintendo's goal is to expand gaming. Even so, you forget the truth that it's risky to release a new system and with the 3DS, they are already putting a lot on the table. There is no gaurentee that old users will take up the new system as the PS3 is evidence of that.

2)Brands are a lable of the product; it's the product that makes the money. The Gameboy was a strong brand, but was discontinued for the sake of the DS. The worth of the brand is the worth of the product. You could tell Sony investors "It's OK that the PS3 is losing the company money because the brand is worth so much." They care that their investment is growing. They don't give two licks about how good that brand is if the product is a money hole and throwing away the investment they made. They would be more inclined to kill it as all it's doing is eating away the money they made.

The problem here is that your responses have little to do with cash flows and earnings. Brands are nice and all, but how good is that if the finacials don't show a gain and their is no growth from that brand. Sure, a new console would increase revenue (as releasing a new product does), but it doesn't take in the risk factors of doing such a thing.

1. No their goal is to make a profit, the expansion of gaming is one means to that end. Whilst there is no assurance, the PS2 proved that you can sell two systems at a rapid rate at the same time. They would do well with a high selling $299 console as well as a cheaper $149 console. It is just as risky to not act as it is risky to act in many cases. Given the relative sales positions, the current console balance is tipping against Nintendo in terms of both profit and market share, the status quo is not a good position for Nintendo's own sustained profit, let alone trying to grow that profit in the home console market.

2. Sony obviously crossed that bridge back in 2007 when they cut the price and took on even greater losses. What you think about their decision is irrelevant given only Sony really know what goals and information they based their decision on.

Still missing the point

1)Risk my friend, risk! First off, Sony sold the PS2 and the PS1 which was already on the market. They were not juggling two new and fresh system releases, and they relied on third parties (a luxury Nintendo will not get) and a booming economy.Also, Nintendo does not have the assets and the income buffer that Sony has (or had). They will put a lot of money on the line hoping their idea works. Likely, they would rather release when there is potential conpetition which could steal third party support.

What are forgetting is how the market that is video games works as well as what Nintendo's analysis has shown. That is software. Nintendo sold 4 million Wiis in a single month, in a very slow year. So then you have to wonder, if the system still has a lot of steam, why release a new one? Why not just make software. Nintendo has said 2010 was slow for them because they did not have strong software, and they will change that with better software.

Market share doesn't matter as Nintendo is using Blue Ocean Strategy and Disruption. The latter says focusing on market share is bad and Disruption doesn't mention it. Not to mention software sales across the board are down (meaning people aren't buying). Release a new system is putting too much out there when there is no real thread (the other guys are doing better by dropping price)  and the alternative is easier. Your forgetting about software.

2)This one is weird because you say "What you think about their decision is irrelevant given only Sony really know what goals and information they based their decision on." It makes me wonder why we are having this conversation. We are talking about what the businesses will do and what they should do. You have been saying Nintendo should release a new system (so this stament would apply to you too as I've said Nintendo goal is to release more software).

Sony had to cut price because the system was overpirced beyond it's value. PS3s were not worht $600 or $500 in the market. This is a huge problem as they made a system that was more expensive then what consumers wanted, so to move the thing, they had to sell it at a lose.

I've said before that they reason they are continuing with the brand is becasue they hope it will make money soon. Of course, I expect the line to continue to lose. Seeing as Sony is faultering, I wonder what will happen to them.