| Parokki said: Not sure if I'd use a term like death knell. The Wii has without a doubt shown that using proven technology in a new and interesting manner is more profitable and enjoyable to more customers than packing a box full of cutting edge technology, but I think the market niche for that kind of stuff is big enough to support at least one console. Things might be different in a year or two, depending on how completely the Wii hogs up all third party support, but for now the HD consoles are making money. |
What money are they making? The 360's so-called profit is a smoke and mirrors trick, as they slapped 3 years worth of loss ($1b) into one quarter so they could claim minor profit margins in following quarters (which is from a division that includes more than just the 360 BTW). Aside from that, the entire model won't actually be profittable at all until they recoop all the losses - a staggering 6-7 billion. It is unlikely MS will ever recoop those loses or even actually make a healthy profit when RRoD costs are factored in.
As for Sony, yes, the gaming division is making a profit - off the back of the PS2. PSP is starting to realize profit too. But the PS3 is still costing them millions more than it's games earns them. The PS2 made a nice profit but only because it was a runaway success. The Gamecube also made a nice profit, more than half of the PS2's despite selling 1/5th the amount of units. The PS3 clearly is not a runaway success and it's ability to earn a profit will depend very heavily on blu-ray and downloadable content because game sales only can not save it from it's massive incurred (and growing) losses. To the PS3's credit it did win Sony the format war, and that's definately something - what it's worth though has yet to be seen.
As to if they'll continue with this business model - I think MS might, just because they can and are arrogant/stupid that way. That is, if they continue in the console race at all. They'll come dead last this generation and likely with more incurred debt than they entered. Unless there is motivation beyond selling games, I expect MS to focus more on PC games/downloadable content/TV connectivity and drop the xbox.
Sony won the 6th and 7th generation with under powered consoles compared to the competition, and clearly fighting MS on their terms was a mistake. A 'PS2.5' sold at $250 or less would likely be either the market leader now or at least giving the Wii a real race to the finish. I fully expect them to return to their roots and fight Nintendo not MS next generation (but still supporting other Sony interests too).
