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Forums - Sales Discussion - Sony loses $18 per console in US, possible profit in UK

Slimebeast said:
Alby_da_Wolf said:
Slimebeast said:
Alby_da_Wolf said:
Slimebeast said:
Alby_da_Wolf said:

We know, or at least we are told, that MS profits on XB360 HW. But is it overall or on each SKU? Does it profit only on Elites or on Arcades too?

Edit @Slimebeast: Obviously digging at Sony (or MS or Nintendo) with sense of humour is always welcome, we all know that hateboys aren't really able to use it

Dude, what's that supposed to mean? I was serious.

Irony can be used in serious speeches and you did it, nothing wrong about it and much better than hateful rants.

Sony managed to drop a $600 console down to $300 in less than three years, and still lose only $18.

Meanwhile MS has dropped his console only from $400 to $300 in four years. Yes, with a little profit per console sold, but that's negilible in the big picture because an X360 with HDD should cost only $200 by now.

No irony is hidden lol. It's the dry serious truth.

I thought there was irony for both.

Anyway, the different parts of the two consoles followed very different curves of cost reduction, blue laser, in particular, was subject to different and opposite forces, the natural cost reduction as production increases and process is refined, and occasional shortages tending to keep the price high, particularly when HD-DVD was still fighting the format war, then, after the format war victory, BD could really start the normal fast cost reduction of optical drives when they reach sufficient maturity. Relying on more standard components, XB360 followed a more regular curve, but its initial serious cooling problems added unpredicted costs, not only to repair or replace faultyunits, but to redesign mobos and cooling several times (CPU and GPU shrinking is normal during their life and after the costs of the shift they start producing savings, but it can be argued that the bigger initial process, having to be abandoned early for cooling problems, spread its costs over a smaller number of units, so it gave more fixed costs than predicted while the shrunk processes will follow their normal lifecycles).

Then there are other factors, some costs, like shipping and warehousing, are roughly fixed, so they weigh in proportion more on cheaper units. Not to mention that selling more in EU, with strong Euro and weak Dollar, is more profitable (or less costly when sales ar still at a loss) than selling more in USA.

Sony isn't winning by any means, but some things it needed, some really dangerous gambles, went eventually the right way, but now it needs to sell at least another 30M+ PS3 to keep the brand alive and respected, but at least another 40M+, instead, if it wants to recover the huge costs too.

MS is in a much better financial position, but weren't it for Halo, Gears of War and other exclusive huge successes and the huge success on it of some multiplatforms too, it would be unimpressive, even disappointing having lost its initial lead on Wii in less than one year. To better even more the financial aspect, XB360 enjoys the highest tie ratio, it's a really excellent SW seller.

That was an excellent analysis, especially the part about cost reductions. You're good at this.

THX. During some courses teachers gave some general explanations of how costs go. Obviously the different components follow their typical curves with occasional jumps or drops due to unpredictable circumstances, but how each component weighs on a complex device isn't a thing manufacturers reveal easily, deals with components producers vary widely, the most striking negative example was the one-sided contract with which NVidia strangled XBox1, while a very positive example is how good IBM has been during the last 10 years at selling PowerPC/POWER as a viable and excellent value for money architecture for general purpose cores in consoles CPU's, and ATI/AMD did quite well too with Radeon GPU's.



Stwike him, Centuwion. Stwike him vewy wuffly! (Pontius Pilate, "Life of Brian")
A fart without stink is like a sky without stars.
TGS, Third Grade Shooter: brand new genre invented by Kevin Butler exclusively for Natal WiiToo Kinect. PEW! PEW-PEW-PEW! 
 


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Squilliam said:
Alby_da_Wolf said:
Squilliam said:
If the hardware losses as implied are this low, then they must be losing money on something else. There are only 3 areas where they have big enough expenses to really lose all that money.

1. Advertising? They must be spending a lot here.

2. Game development? Face it, all HD publishers have been making losses and I doubt that Sony is any different.

3. Research and development? If they're spending heavily here, it means Console number 4 is inbound sooner than you think.

3. It takes some years do develop a new console, not less than 4, most likely 5, and by at least one year (better 1and 1/2 year) before release they must be able to give developers a working development system for launch titles. So if they started development in late 2008- early 2009, just to make a hypothesis, it could mean a 2013-2014 PS4 release, totally coherent with a planned lifecycle ot at least 7 years as main console and 2-3 years (even more if it keeps on selling) as entry level console. So yes, I agree. Curiously there are still people that don't understand that a 10 years lifecycle doesn't mean the next system is released after 10 years from the previous, some companies make latest and previous generations of their products overlap for a period, and Sony is amongst these ones (In other markets, like cars, Renault has currently done it with old and new Clio for a period quite long, not only to clear old stocks, FIAT has sold both old and new Punto for years, with the old one catering for a lower segment, just like Renault does, while Citroen and VW do it for shorter periods, in razors and blades market Gillette sells Mach3, Fusion and older models, etc).

You'd only account the costs of the R+D against the PS3 specifically if the R+D directly related to that console or successor. Since another handheld is expected far sooner than a new console you'd expect a majority of their efforts to be focusing on this area. Pre-production work and ramping up R+D are two different things, they have people working on the PS4 but probably not even a tenth of the people working directly on the successor to the PSP. Well at least thats the way I see it.

I completely forgot PSP! (*)  Yes, you're right about this, PSP successor should arrive quite sooner than PS3 one, given the disappointing results of the attempts to revive the former, while those for the latter worked a lot better. PSP2 release in Autumn 2011 wouldn't surprise me. OTOH , if PSP Go was meant to lengthen PSP life, an Autumn 2010 PSP2 release would be rushed, and I guess Sony prefers a meh Xmas 2010 for PSP rather than ruining PSP2 launch.

(*) Actually I don't like portables very much, I'm just mildly attracted by DS for its interactive recipe books, particularly those that suggest possible almost edible dishes given a disastrous choice of ingredients available in the fridge and larder.  



Stwike him, Centuwion. Stwike him vewy wuffly! (Pontius Pilate, "Life of Brian")
A fart without stink is like a sky without stars.
TGS, Third Grade Shooter: brand new genre invented by Kevin Butler exclusively for Natal WiiToo Kinect. PEW! PEW-PEW-PEW! 
 


Alby_da_Wolf said:
Squilliam said:

You'd only account the costs of the R+D against the PS3 specifically if the R+D directly related to that console or successor. Since another handheld is expected far sooner than a new console you'd expect a majority of their efforts to be focusing on this area. Pre-production work and ramping up R+D are two different things, they have people working on the PS4 but probably not even a tenth of the people working directly on the successor to the PSP. Well at least thats the way I see it.

I completely forgot PSP! (*)  Yes, you're right about this, PSP successor should arrive quite sooner than PS3 one, given the disappointing results of the attempts to revive the former, while those for the latter worked a lot better. PSP2 release in Autumn 2011 wouldn't surprise me. OTOH , if PSP Go was meant to lengthen PSP life, an Autumn 2010 PSP2 release would be rushed, and I guess Sony prefers a meh Xmas 2010 for PSP rather than ruining PSP2 launch.

(*) Actually I don't like portables very much, I'm just mildly attracted by DS for its interactive recipe books, particularly those that suggest possible almost edible dishes given a disastrous choice of ingredients available in the fridge and larder.  

They would want to be reasonable close to the DS replacement launch. If they're a year late they could very well lose the market before they even get a chance to do anything about it. I suspect the hardware will be finalised sometime during this year, given the rumours about using IMG for their graphics chipset. They will probably want to release it in 2011 but they will probably be ready for late 2010 just in case.

Interactive recipe books? That actually sounds like a very good reason to get a DS XL! Haha, I never thought I'd get a handheld this time around...



Tease.

Squilliam said:
Alby_da_Wolf said:
Squilliam said:

You'd only account the costs of the R+D against the PS3 specifically if the R+D directly related to that console or successor. Since another handheld is expected far sooner than a new console you'd expect a majority of their efforts to be focusing on this area. Pre-production work and ramping up R+D are two different things, they have people working on the PS4 but probably not even a tenth of the people working directly on the successor to the PSP. Well at least thats the way I see it.

I completely forgot PSP! (*)  Yes, you're right about this, PSP successor should arrive quite sooner than PS3 one, given the disappointing results of the attempts to revive the former, while those for the latter worked a lot better. PSP2 release in Autumn 2011 wouldn't surprise me. OTOH , if PSP Go was meant to lengthen PSP life, an Autumn 2010 PSP2 release would be rushed, and I guess Sony prefers a meh Xmas 2010 for PSP rather than ruining PSP2 launch.

(*) Actually I don't like portables very much, I'm just mildly attracted by DS for its interactive recipe books, particularly those that suggest possible almost edible dishes given a disastrous choice of ingredients available in the fridge and larder.  

They would want to be reasonable close to the DS replacement launch. If they're a year late they could very well lose the market before they even get a chance to do anything about it. I suspect the hardware will be finalised sometime during this year, given the rumours about using IMG for their graphics chipset. They will probably want to release it in 2011 but they will probably be ready for late 2010 just in case.

Interactive recipe books? That actually sounds like a very good reason to get a DS XL! Haha, I never thought I'd get a handheld this time around...

Yes. Being ready just in case can make sense, but Sony must bite the bullet about that, Nintendo rules the portable market and decides when a generation really begins. Sony should be humble and content itself of 2nd place for PSP2, but with a much better tie ratio, unless Nintendo completely botches DS2.

About food supplies, it's my curse, if I go shopping without a list, and, worse, when I'm hungry, I end up with a completely wrong assortment, usually sausages and cured meats, sweets, cheeses, yoghurt, soft drinks and only bananas, shallots and cherry or grape tomatoes as vegetables and fruits and little else, usually some frozen pre-fried junk (luckily cherry tomatoes, garlic or shallot, chilli pepper and olive oil are enough for the simplest and healthy, but tasty, sauces for pasta)



Stwike him, Centuwion. Stwike him vewy wuffly! (Pontius Pilate, "Life of Brian")
A fart without stink is like a sky without stars.
TGS, Third Grade Shooter: brand new genre invented by Kevin Butler exclusively for Natal WiiToo Kinect. PEW! PEW-PEW-PEW! 
 


Alby_da_Wolf said:
Squilliam said:

They would want to be reasonable close to the DS replacement launch. If they're a year late they could very well lose the market before they even get a chance to do anything about it. I suspect the hardware will be finalised sometime during this year, given the rumours about using IMG for their graphics chipset. They will probably want to release it in 2011 but they will probably be ready for late 2010 just in case.

Interactive recipe books? That actually sounds like a very good reason to get a DS XL! Haha, I never thought I'd get a handheld this time around...

Yes. Being ready just in case can make sense, but Sony must bite the bullet about that, Nintendo rules the portable market and decides when a generation really begins. Sony should be humble and content itself of 2nd place for PSP2, but with a much better tie ratio, unless Nintendo completely botches DS2.

About food supplies, it's my curse, if I go shopping without a list, and, worse, when I'm hungry, I end up with a completely wrong assortment, usually sausages and cured meats, sweets, cheeses, yoghurt, soft drinks and only bananas, shallots and cherry or grape tomatoes as vegetables and fruits and little else, usually some frozen pre-fried junk (luckily cherry tomatoes, garlic or shallot, chilli pepper and olive oil are enough for the simplest and healthy, but tasty, sauces for pasta)

I don't think resigning themselves to 2nd place would be the correct attitude. If I were them I would try to win the market, its just not the right approach to aim for anything less than first place. If they fall back to a close or far second then sobeit, they tried! I suspect a large proportion of their assets they have will be diverted to making first/second generation handheld games to get the system moving. So the games on the PS3 ought to dry up after this year somewhat.

As for your grocery shopping, well you got problems! You need a girlfriend to do the shopping for you! Thats what I do...



Tease.

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Squilliam said:
Alby_da_Wolf said:
Squilliam said:

They would want to be reasonable close to the DS replacement launch. If they're a year late they could very well lose the market before they even get a chance to do anything about it. I suspect the hardware will be finalised sometime during this year, given the rumours about using IMG for their graphics chipset. They will probably want to release it in 2011 but they will probably be ready for late 2010 just in case.

Interactive recipe books? That actually sounds like a very good reason to get a DS XL! Haha, I never thought I'd get a handheld this time around...

Yes. Being ready just in case can make sense, but Sony must bite the bullet about that, Nintendo rules the portable market and decides when a generation really begins. Sony should be humble and content itself of 2nd place for PSP2, but with a much better tie ratio, unless Nintendo completely botches DS2.

About food supplies, it's my curse, if I go shopping without a list, and, worse, when I'm hungry, I end up with a completely wrong assortment, usually sausages and cured meats, sweets, cheeses, yoghurt, soft drinks and only bananas, shallots and cherry or grape tomatoes as vegetables and fruits and little else, usually some frozen pre-fried junk (luckily cherry tomatoes, garlic or shallot, chilli pepper and olive oil are enough for the simplest and healthy, but tasty, sauces for pasta)

I don't think resigning themselves to 2nd place would be the correct attitude. If I were them I would try to win the market, its just not the right approach to aim for anything less than first place. If they fall back to a close or far second then sobeit, they tried! I suspect a large proportion of their assets they have will be diverted to making first/second generation handheld games to get the system moving. So the games on the PS3 ought to dry up after this year somewhat.

As for your grocery shopping, well you got problems! You need a girlfriend to do the shopping for you! Thats what I do...

Currently I'm single and I still live at my parents, but I'm often alone. And even when I was not single, I'm a better cook (when I want and I have time) than most of my former girlfriends, so the solution would have been maybe healthier but quite dull regarding taste (once I even had a gf from Naples, where they cook really good, but she must be the only woman from there that doesn't cook pasta "al dente", yuck!).



Stwike him, Centuwion. Stwike him vewy wuffly! (Pontius Pilate, "Life of Brian")
A fart without stink is like a sky without stars.
TGS, Third Grade Shooter: brand new genre invented by Kevin Butler exclusively for Natal WiiToo Kinect. PEW! PEW-PEW-PEW! 
 


Alby_da_Wolf said:

Currently I'm single and I still live at my parents, but I'm often alone. And even when I was not single, I'm a better cook (when I want and I have time) than most of my former girlfriends, so the solution would have been maybe healthier but quite dull regarding taste (once I even had a gf from Naples, where they cook really good, but she must be the only woman from there that doesn't cook pasta "al dente", yuck!).

Yuck!!!!!

At least you can weave it into something useful like a cap to keep the sun off your head, and in the process you'd get al dente pasta!



Tease.