Lord N said: .

 

This concerns the gaming divisions. The other divisions in the company mean nothing. Sure, Microsoft can afford more losses than Sony because of the revenue from Windows and Office, but investors are going to want to see a profit from the 360 regardless of what they're making with their operating systems and office tools. If you'll pay special attention to the article, you'll see that even Microsoft is not going to allow a profitable division to babysit one that's losing money.

Also, the PS3 does not need to be the market leader in order to be profitable, and even if it isn't in 1st place at the end of the generation, it wouldn't be that big of a deal. Like I said, the only thing that's really hurting it is the price point, which can be easily remedied. It won't be $600 forever, and even at that price point, its sales haven't been a complete catastrophe, so they will most likely be okay this generation, even if they aren't the market leader.

If Sony were to leave the console market, it would be as a result of everything in their gaming division bombing hard and the PlayStation name being sullied beyond all repair, and they'd have to make 1990's Sega type mistakes with the PS4 and PS5 in order for the Vice President to decide to shut down the division(cut support for the PS2 and PSP, cut ties to third-party developers, refuse to bring popular games to the West, make their system virtually impossible for programmers, etc.), which they haven't done.

You also have to understand that Microsoft's game division isn't as important to it as Sony's is, so the former would have less qualms about nixing it, especially if it's just losing money.

 

 

As you said, company comes before one part of it. If PS3 doesn't make enough money, they can't afford developing the PS4. Or if the whole company isn't profitable enough, they can't take loans needed to fund the development. Of course, M$ shareholders aren't just going to watch M$ to lose money on consoles, but neither are Sony shareholders. The difference between Sony and M$ is that M$ has money to keep shareholders happy, Sony doesn't. PS2 was so popular, that it will be getting support for a while. Sony doesn't need to cut the support, 3rd parties will. If Sony wants to get the PS3 selling, they better focus on the PS3, not PS2, so in that way, they should cut their own PS2 support and leave it to 3rd parties. PS3 wont be at its current price forever, but it's not going to be the cheapest. They should have the pricedrop (which they can't afford) before M$ gets more Sony exclusives ported and before Wii is too far ahead. If Sony can't boost up the PS3 sales, it will end up selling as GC/XBOX and i don't think Sony can make profit with those sales numbers. Anyway, PS4 and PS5 depends solely on can SCE be profitable with PS3 or PS4. Same thing with X720 and X1440. M$ has announced next-gen for 2012, Sony hasn't yet said anything, but i think they target the same year. Nintendo propably hits next-gen 2013.

It's about who can stay in the game longer. MS has a history of subsidizing failed ventures. IE 1-4 were abysmal failures. But MS gave it away and subsidized development tools and integrated windows with it so it had (at one time) 95% of the world's browser market. MSN has never been a revenue generator for MS, it's still around and is looking to outlast AOL. Both of these actually generate ill will towards MS. Yet MS still maintains and pours money into it until it achieved monopoly in the sector. Despite the losses, the Xbox program actually generate good will towards MS. It has the leading on-line console service and many developers are profitable developing for it. It's marketshare is definitely growing and is looking to be the second place console of the current gen. The 2006 losses were tied to the console launch and dearth of games in the first half. But, it has the highest attach rate and has the best library of titles launching this year, it is quite conceivable that the losses this year will be back to the level of 2005 (1/4 of 2006 losses) and unless Sony has a compelling case at end of 2007, it can conceivably break-even or make a profit So, there is no reason to give up the segment that it has invested $22 bln in to achieve its marketshare. Particularly since Nintendo is growing the console market. MS, at worst, can be a successful niche player. At the end of the day, MS is insanely profitable. It's got nearly $40 bln in cash and it's worth their while to get a good position in the fastest growing software segment worldwide.

auroragb said: It's about who can stay in the game longer. MS has a history of subsidizing failed ventures. IE 1-4 were abysmal failures. But MS gave it away and subsidized development tools and integrated windows with it so it had (at one time) 95% of the world's browser market. MSN has never been a revenue generator for MS, it's still around and is looking to outlast AOL. Both of these actually generate ill will towards MS. Yet MS still maintains and pours money into it until it achieved monopoly in the sector. Despite the losses, the Xbox program actually generate good will towards MS. It has the leading on-line console service and many developers are profitable developing for it. It's marketshare is definitely growing and is looking to be the second place console of the current gen. The 2006 losses were tied to the console launch and dearth of games in the first half. But, it has the highest attach rate and has the best library of titles launching this year, it is quite conceivable that the losses this year will be back to the level of 2005 (1/4 of 2006 losses) and unless Sony has a compelling case at end of 2007, it can conceivably break-even or make a profit So, there is no reason to give up the segment that it has invested $22 bln in to achieve its marketshare. Particularly since Nintendo is growing the console market. MS, at worst, can be a successful niche player. At the end of the day, MS is insanely profitable. It's got nearly $40 bln in cash and it's worth their while to get a good position in the fastest growing software segment worldwide.

 Agree

 

Wow, I wish I could have back the time that I wasted reading that silly fanboy garbage. What an absolutely horrible writer -- erm, uh, I mean, I wish he could've put maybe 23, 24 more pages at the end about FUD and marketing, 'cuz that was SO enlightening!!

@auroragb:

Sony will not have a problem financially with PlayStation for the next few years. Given that the PS2 is still selling well, that is still going to give them a nice profit, and there are still more PS2 games to come. At the moment though, Sony has a few problems. Their main problem is sluggish PS3 sales. Although this in itself is not awful as these will pick up when better games come out, all this negative press is extremely bad for them. I agree that they have to invest in a large marketing campaign, however, certainly in Europe, the adverts do not even talk about what they are trying to sell. the current one on Uk TV is the grenade advert, which could be an advert for anything except for the fact that there is the word PlayStation 3 displayed on the screen at the end. With an effective ad campaign, they could boost sales. The other problem is that they are relying quite largely on the PS brand, however, at the moment their products are over priced. However, a price drop by £50 to £350 (it is mainly selling at £400) could put it back in touch with the 360 at least. For example, on amazon UK, the price has recently dropped to £400, which has sent the PS3 to back near the top of the chart from the low teens.

To get back to the main topic, if feel that Microsoft will not leave the console market. If they are loosing so much money on the 360, they might drop out from the console market, but continue to make games, but I don't think that there is any chance they will just give up. I rekon that the new 720 will be coming within the next 3 years, plus a gaming zune. Microsoft will be encouraged that they have done better second time round, but they know there is still a long way to go. Actually I think that the next generation (PS4 etc) will be a 4 way battle,  Sony and Nintendo will definitely be there, but I don't know who else

I find it hard to believe that someone would provide a link to an article on a fanboy wii website about Microsoft leaving the console market and expect to ever again be taken seriously. I tried to read the article in order to make a response explaining why the article is incorrect but it's so fanboyish that I just rolled my eyes and gave up trying to read it past the second page. If you think Microsoft it going to leave the console business I have a bridge to sell for you in New York and some swam... err ecological friendly land to sell you in Florida.

reverie said: @auroragb: 2005 losses were $485 million. 2006 losses were $1262 million. H1 2007 losses were already $383 million. It's not true that 2005 losses were 75% lower than 2006 losses, and given H107 it's unlikely that 2007 losses will be below 2005 losses. The Xbox losses are steady and their size is unheard of in the history if videogaming, and that's what the article is about.

hehe, somehow I recalled $385 instead of $485.  But my point still stands.  Xbox has a viable business model.  They've bought great deal of mindshare from the VG developers.  With developers come games. With games come sales.  A 5.5 attach rate in the first year of a console is unheard of.

As for the losses unheard of, but a $40bln warchest is unheard of either in this industry.  At this loss rate, MS can still stay in the game for another 30 years

@auroragb

Umm I think some of the people here don't realize that Microsoft's fiscal years don't correspond to calender years.  So fiscal year 2006 is *not* from Jan-Dec 2006...  Just a heads up to people using years and fiscal years interchangeably.