Sony needs to change their game plan.

[Bodhesatva]

twesterm said:

SlorgNet said:

 

For every dollar Sony loses on a PS3, they'll make five dollars elsewhere. All Sony needs to do is reduce the PS3 to $500 this fall, and to $400 by 2008, and they'll do just fine as the Mercedes of gaming.

God, I love it when people make arguments like "for every dollar Sony loses on a PS3 they'll make five dollars elsewhere." That could be true, whatever, but the fact still remains the PS3 still is losing money.

Oh, and way to assume some horrible price cut strategies.

And it also plays precisely into my point.

Sony can stand to lose money on the PS3, there's no question. A few billion perhaps, it's hard to say, but they'd probably jettison the division if it kept that up for long.

The problem is that Microsoft can stand to lose even more money than Sony can -- a whole lot more. If Sony makes five dollars elsewhere, Microsoft makes fifty, and that's the problem here. Sony's strategy for market dominance relies on burning those extra 5 dollars, but Microsoft can burn a great deal more than that.

I'm going to re-emphasize this, because I still feel people don't realize the enormous difference between Sony and Microsoft. They see that both companies make billions of dollars, both companies have lots of other avenues of revenue and profit, and see each as giant, money making organizations. They're basically the same, right? No. Microsoft has 7-8 times as much money in reserve and has 10 times as much profit per annum, so it's not even close.