Sony scales back expectations for Vita after weak sales performanc

[Soleron]

RolStoppable said:

Soleron said:

Their expenses are more than just hardware and assembly for the consoles. They also pay people for marketing, accounting, legal, game development, supporting external game developers, developing new hardware and maintaining online. Any or all of those areas could be loss-making.

When we say hardware is profitable, surely it's sale price minus wholesale parts minus assembly and shipping costs. That doesn't preclude it making a loss as a business.

but you're Rol, so I suspect you know all that and I'm being trolled here.

All these people in the first paragraph also had to be paid in calendar year 2011 when the gaming unit was profitable and I doubt that they suddenly got significantly bigger paychecks in calendar year 2012.

Also, Sony has been lossleading with their previous four systems, so why should the Vita suddenly be an exception? There's nothing about it that suggests that Sony has changed their overall gameplan.

Simple example: Suppose all those extra expenses are, as you say, fixed. Say $150 to employ all those people.

Last year product made $200 profit on $400 revenue.
This year  product  made $100 profit on $200 revenue. (Same profit per unit)

Last year overall: $200 - $150 = $50 profit
This year overall: $100 - $150 = $50 loss

Same number of people employed in other departments, same product profit, less unit sales can turn profit to loss. I think that's what happened to Sony, lower hardware and software unit sales, same profit margin and same other expenses.

If Sony can't increase Vita sales, they need to cut marketing and other things to match the new, smaller size of their actual business.