What is this, proof by assumption of smartness?

I agree wholeheartedly...There are a lot of "ifs"....like "if" blu-ray is successful...and "if" it lasts for "x" amount of years, etc. (And as NJ5 brought up, if they are getting royalty payments for each blu-ray sold, how much per disc? etc.)

 There are no gaurantees for profitability, I just wanted to point out that many are being VERY narrowminded when they discuss the ps3 and profitability (or lack thereof).

Unfortunately, the TRUE loss or gain on the ps3 may never be determined because its effects are so far reaching.

The PS3 itself, software, blu-ray (which IF successful is a direct result of the ps3), brand name, TV sales, etc., etc...

Brand names bolster sales for the company as a WHOLE.

In layman terms...I own my own business and go to a few convention shows each year.   The one show cost around $12,000.  I NEVER sell anything directly at the show, so is it a $12,000 loss?  Directly to the books and eyes, yes, it's a loss.  But is it truly?  The brand recognition and advertising from the show MAY result in many sales for my business over the next few years, but it is impossible to measure.  Overall though, I feel promoting company name is well worth it.  This is just one of the extra ways the ps3 supports Sony's business as a whole.

The blu-ray media is another whole separate agenda, but COULD possibly make the console business seem small down the road, the losses insignificant according to many analysts such as Michael Pachter.

Sony's other divisions COULD see similar boosts due to the ps3,e.g. increased HD tv sales, increased blu-ray player sales, increased software sales, increased stereo/home theater equiptment sales, etc...  It's nearly impossible to measure.

Actually, MS if DEEP in the whole for the XBox project (and even just the 360.)  They JUST started making a quarterly profit, which means they JUST started cutting in to the huge loss they have sustained.

(1) err.. what? I think you need to rephrase something here.

(2) Which is exactly what my point is. That can be added as an example.

Hey Rol... how did you (or Renar) get the gaming division operating profit for 96-98? because I have just been looking through those reports and I couldn't find anything other than revenue and sales for gaming division... all the operating profits were lumped together for the company rather than being seperate.

anyhow.... I copied some of the charts from various reports to build up a picture... so this shows the sales revenue and operating profit from 1999 onwards, but also revenue for 95-98.

There seems to have been a change in their reporting methods between 2000 and 2001 by the way, because the lower left chart is from 2000, but shows lower sales than the 2001 chart (which i put on it's side).... I believe they may have reported sales to retail pre 2001, before changing back again recently.

Also I don't know what operating margin is, so don't ask me.

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and finally, I guess the numbers Renar has given you do not include the R+D costs for the PS1, which will probably have been in the 95 or 94 report... so Sony won't have made 383billion Yen in the PS1 era.

and according to the 1997 report the xchange rate then was 124 Yen to $1... but unless it went up a lot before coming down recently I don't suppose that makes too much difference.

(1) Oops, whole = hole >_<

(2) My point is that the XBox 360 has yet to make a net profit.  So there is no guarentee that it even will, so I fail to see a correlation between the 360 and the PS3 being profitable.

Well some people believe it is gaining profit. And I can respect that so I see the same outcome for the PS3. Essentially I think it will go in the footsteps of the 360 in terms of profit. If they couldn't see a forecast of profit on either console then I doubt neither would be in production right now.

I don't see the PS3 necessarily having the same history as the 360 in terms of net profit, for several reasons:

1- The PS3 has had many more price cuts than the 360. The PS3 is the more expensive machine by far, yet it's being sold at almost the same price as the 360.

2- PS3's first party games have been extremely expensive to develop, yet some sell miserably to the point of being flops. This doesn't happen for the 360.

3- The 360 has had the RROD problem (partly cancels out the factors above, but it should be pointed out in this comparison for fairness).

4- Xbox Live subscription fees. There's no corresponding revenue source for Sony.

If you look at these factors alone, you can see that you're comparing two totally different situations.

(1) Are you friggin kidding me? Yeah, seems like it. The PS3 has had 2 price drops thus far, while the 360 has had more than 2 through out the 2 years its been on the market. Get your facts straight, man. Its embaressing. In b4 you say "yeah but 2 price cuts through its first year, thats not good!" :P

(2) Bold assumption, nothing solid, so there goes that theory though. Aside from this since that topic has already been addressed by some large game developers, stating that next gen game developement in general lies around 20+ million or so. I dont see it be any different for the Sony's part. Maybe they look they're expensive to you since they are quite graphically advanced ;).

(3) Err, alright.... ain't doing me a favour though lol.

(4) Suddenly there's no such thing as DLC or Downloadable games on PSN. Yeah, tha-... oh wait ;)

The way I see it,  they're not different. This business as it stands now, is a competition. They're definitely the most alike in this field. Its really naive to put them into a proces where they have to get the same stand on each point to believe that one or another won't catch onto the other. Both of them take use of different strategies which they consider to be efficent and effective. So the possibility for profit, for both is existent.

1) No, are YOU friggin kidding me!? The 360 has had a single price cut of $50 / 50 €, while the PS3 has had several price cuts (depending on the region) for a combined $200 / 200 €. As you said, "get your facts straight".

2) Read what I wrote, it's not just about development cost.

4) I said "subscription fees". Again, read what you're replying to, especially when you're so eager to demolish others' arguments.