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Forums - Sony Discussion - Sony: "Unlike PS3, we are not planning a major loss with the launch of PS4"

MoHasanie on 12 May 2013

If Sony are willing to take a loss then why don't they do that subscription plan thing MS has been rumored to be doing with the Nextbox. It would certainly help sales and most likely be more profitable in the long run.



    

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Zero999 on 12 May 2013
SOLIDSNAKE08 said:
$449.99 would be perfect. they wont take too much of a loss and sales will be decent.

bolded 1: true

bolded 2: no



g911turbo on 12 May 2013
drkohler said:
Captain_Tom said:
Toddifer said:
So they aren't planning a 'major' loss, which obviously means they may still take a smaller loss on the PS4 initially, which I really wouldn't find surprising. I can understand selling a product below cost, as long as it's not an enormous amount below cost. I'm guessing PS4 will launch at $499 and they'll be taking a $30-$50 loss on each console, which is still significantly below the loss they were taking with the PS3 at launch, I belie


It is projected to only cost around $450-$500 to make.  Expect a $400-$450 price point (Depending on if MS does end up selling their console for a rediculous $500).

So in your small and very naive world, you sell your goods at (or more precisely, below) manufacturing costs?

Toddifer is quite right in his assessment, over the long run. However, the initial batches of consoles usually carry a much higher loss, depending on the planned time span (and batch size) the manufacturers want to recoup costs. My estimate is that initial PS4s carry a production cost around $550-$600 (always keep in mind these complex SoC are completely new and untested so there is quite a risk of extremely low initial yields).

I'm really tired of those people here who say "anything over $299/$399 is too much". For both XBox and PS4, a price of $600 would be more than fair (considering a similarly equipped PC costs you more).


I agree with you on your assessments of intial costs, low yield, etc.  However, MARKET determines the price at which the console will sell.  Sony only determines the asking price.

I also agree with you that 299 is ridiculous.  399 seems to be a sweet spot for keeping that dreaded "4" out of the first number, but it will be difficult for Sony to achieve.  And the comparison to a similarly equipped PC is ridiculous.  I can't update my resume on a PS4, or print, or download millions of pieces of software as I choose, etc.  People pay for perceived VALUE, not hardware.  Despite you knowing that the hardware is beefy, a lot of that is lost on the mainstreem who doesn't give two shits about what's under the hood.  They only care about what the final results are and how much it costs them to get it.

At the end of the day, all these boxes will be gaming/media hubs.  That's why you cannot compare the pricing to cell phones and PCs, since you can actually get real work done on those too.



drkohler on 12 May 2013
MoHasanie said:
If Sony are willing to take a loss then why don't they do that subscription plan thing MS has been rumored to be doing with the Nextbox.

Because PSN is free? You can't take a subscribtion loss for something that is free from the start. So making a subscription program basically means psn would no longer be free for the rest of the users (PS3 and PS4).....



Toddifer on 12 May 2013
g911turbo said:
drkohler said:
Captain_Tom said:
Toddifer said:
So they aren't planning a 'major' loss, which obviously means they may still take a smaller loss on the PS4 initially, which I really wouldn't find surprising. I can understand selling a product below cost, as long as it's not an enormous amount below cost. I'm guessing PS4 will launch at $499 and they'll be taking a $30-$50 loss on each console, which is still significantly below the loss they were taking with the PS3 at launch, I belie


It is projected to only cost around $450-$500 to make.  Expect a $400-$450 price point (Depending on if MS does end up selling their console for a rediculous $500).

So in your small and very naive world, you sell your goods at (or more precisely, below) manufacturing costs?

Toddifer is quite right in his assessment, over the long run. However, the initial batches of consoles usually carry a much higher loss, depending on the planned time span (and batch size) the manufacturers want to recoup costs. My estimate is that initial PS4s carry a production cost around $550-$600 (always keep in mind these complex SoC are completely new and untested so there is quite a risk of extremely low initial yields).

I'm really tired of those people here who say "anything over $299/$399 is too much". For both XBox and PS4, a price of $600 would be more than fair (considering a similarly equipped PC costs you more).


I agree with you on your assessments of intial costs, low yield, etc.  However, MARKET determines the price at which the console will sell.  Sony only determines the asking price.

I also agree with you that 299 is ridiculous.  399 seems to be a sweet spot for keeping that dreaded "4" out of the first number, but it will be difficult for Sony to achieve.  And the comparison to a similarly equipped PC is ridiculous.  I can't update my resume on a PS4, or print, or download millions of pieces of software as I choose, etc.  People pay for perceived VALUE, not hardware.  Despite you knowing that the hardware is beefy, a lot of that is lost on the mainstreem who doesn't give two shits about what's under the hood.  They only care about what the final results are and how much it costs them to get it.

At the end of the day, all these boxes will be gaming/media hubs.  That's why you cannot compare the pricing to cell phones and PCs, since you can actually get real work done on those too.

I'm not saying that selling goods below cost is necessarily the smartest business strategy, but it's a strategy nonetheless. If I were in such a business it would be a strategy I'd try to avoid, but I can see circumstances when it may work.



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zumnupy10 on 12 May 2013
drkohler said:
MoHasanie said:
If Sony are willing to take a loss then why don't they do that subscription plan thing MS has been rumored to be doing with the Nextbox.

Because PSN is free? You can't take a subscribtion loss for something that is free from the start. So making a subscription program basically means psn would no longer be free for the rest of the users (PS3 and PS4).....

 

My instant answer to your post would be PS+

But I'm not sure what Sony could offer subscribers in the early days of the PS4.   Something inside me says Knack will be available on PS+, if Sony decides to push PS+



DietSoap on 13 May 2013
Zero999 said:
SOLIDSNAKE08 said:
$449.99 would be perfect. they wont take too much of a loss and sales will be decent.

bolded 1: true

bolded 2: no

How is decent defined in your mind? What kind of numbers, say, per month?



g911turbo on 13 May 2013
Toddifer said:
g911turbo said:
drkohler said:
Captain_Tom said:
Toddifer said:
So they aren't planning a 'major' loss, which obviously means they may still take a smaller loss on the PS4 initially, which I really wouldn't find surprising. I can understand selling a product below cost, as long as it's not an enormous amount below cost. I'm guessing PS4 will launch at $499 and they'll be taking a $30-$50 loss on each console, which is still significantly below the loss they were taking with the PS3 at launch, I belie


It is projected to only cost around $450-$500 to make.  Expect a $400-$450 price point (Depending on if MS does end up selling their console for a rediculous $500).

So in your small and very naive world, you sell your goods at (or more precisely, below) manufacturing costs?

Toddifer is quite right in his assessment, over the long run. However, the initial batches of consoles usually carry a much higher loss, depending on the planned time span (and batch size) the manufacturers want to recoup costs. My estimate is that initial PS4s carry a production cost around $550-$600 (always keep in mind these complex SoC are completely new and untested so there is quite a risk of extremely low initial yields).

I'm really tired of those people here who say "anything over $299/$399 is too much". For both XBox and PS4, a price of $600 would be more than fair (considering a similarly equipped PC costs you more).


I agree with you on your assessments of intial costs, low yield, etc.  However, MARKET determines the price at which the console will sell.  Sony only determines the asking price.

I also agree with you that 299 is ridiculous.  399 seems to be a sweet spot for keeping that dreaded "4" out of the first number, but it will be difficult for Sony to achieve.  And the comparison to a similarly equipped PC is ridiculous.  I can't update my resume on a PS4, or print, or download millions of pieces of software as I choose, etc.  People pay for perceived VALUE, not hardware.  Despite you knowing that the hardware is beefy, a lot of that is lost on the mainstreem who doesn't give two shits about what's under the hood.  They only care about what the final results are and how much it costs them to get it.

At the end of the day, all these boxes will be gaming/media hubs.  That's why you cannot compare the pricing to cell phones and PCs, since you can actually get real work done on those too.

I'm not saying that selling goods below cost is necessarily the smartest business strategy, but it's a strategy nonetheless. If I were in such a business it would be a strategy I'd try to avoid, but I can see circumstances when it may work.

Agreed.  I was simply stating whether or not the strategy will succeed depends on market value, which is determined by what people are willing to pay (duh right).  What people are willing to pay only goes results deep.  What I mean by that is people don't really care what's under the hood in terms of 1s and 0s.  Yeah you can market it better graphics, faster, and more connected than ever, etc.  But at the end of the day even Sony is not going to wast their time touting specs.  Because with most people, that will fall on deaf ears.

 

Then again, Sony is as good as anyone at Marketing spin, so we shall see.  



Captain_Tom on 13 May 2013
drkohler said:
Captain_Tom said:
Toddifer said:
So they aren't planning a 'major' loss, which obviously means they may still take a smaller loss on the PS4 initially, which I really wouldn't find surprising. I can understand selling a product below cost, as long as it's not an enormous amount below cost. I'm guessing PS4 will launch at $499 and they'll be taking a $30-$50 loss on each console, which is still significantly below the loss they were taking with the PS3 at launch, I belie


It is projected to only cost around $450-$500 to make.  Expect a $400-$450 price point (Depending on if MS does end up selling their console for a rediculous $500).

So in your small and very naive world, you sell your goods at (or more precisely, below) manufacturing costs?

Toddifer is quite right in his assessment, over the long run. However, the initial batches of consoles usually carry a much higher loss, depending on the planned time span (and batch size) the manufacturers want to recoup costs. My estimate is that initial PS4s carry a production cost around $550-$600 (always keep in mind these complex SoC are completely new and untested so there is quite a risk of extremely low initial yields).

I'm really tired of those people here who say "anything over $299/$399 is too much". For both XBox and PS4, a price of $600 would be more than fair (considering a similarly equipped PC costs you more).

Um yeah that is how this business works...  The PS3 cost $800+ to make and they sold it for $600.  Thus selling a $500 console for $400 isn't nearly as big of a deal...



Zero999 on 13 May 2013
Captain_Tom said:
drkohler said:
Captain_Tom said:
Toddifer said:
So they aren't planning a 'major' loss, which obviously means they may still take a smaller loss on the PS4 initially, which I really wouldn't find surprising. I can understand selling a product below cost, as long as it's not an enormous amount below cost. I'm guessing PS4 will launch at $499 and they'll be taking a $30-$50 loss on each console, which is still significantly below the loss they were taking with the PS3 at launch, I belie


It is projected to only cost around $450-$500 to make.  Expect a $400-$450 price point (Depending on if MS does end up selling their console for a rediculous $500).

So in your small and very naive world, you sell your goods at (or more precisely, below) manufacturing costs?

Toddifer is quite right in his assessment, over the long run. However, the initial batches of consoles usually carry a much higher loss, depending on the planned time span (and batch size) the manufacturers want to recoup costs. My estimate is that initial PS4s carry a production cost around $550-$600 (always keep in mind these complex SoC are completely new and untested so there is quite a risk of extremely low initial yields).

I'm really tired of those people here who say "anything over $299/$399 is too much". For both XBox and PS4, a price of $600 would be more than fair (considering a similarly equipped PC costs you more).

Um yeah that is how this business works...  The PS3 cost $800+ to make and they sold it for $600.  Thus selling a $500 console for $400 isn't nearly as big of a deal...

when you're selling your own buildings and firing employees, it is a BIG deal. sony is nowhere near the same situation as in 2006, they can't afford a big loss on ps4.