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Forums - Sony Discussion - Pachter says PS4 will sell at a small profit for Sony, GTTV

Porcupine_I on 16 June 2013

I wonder if they actually set the price only after the Xbone price reveal. They may have been prepared to go even lower and take a loss like in the past, but with that competition they don't need to do that at all.



“It appeared that there had even been demonstrations to thank Big Brother for raising the chocolate ration to twenty grams a week. And only yesterday, he reflected, it had been announced that the ration was to be reduced to twenty grams a week. Was it possible that they could swallow that, after only twenty-four hours? Yes, they swallowed it.”

- George Orwell, ‘1984’

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Zero999 on 16 June 2013
binary solo said:
Purple said:
Considering the price of the XBox One, it seems highly unlikely Sony are making a profit on each unit sold...

Xbone would for sure be selling at $399 if Kinect wasn't packed in. So I don't think the Xbone price point means as much to PS4 costs as some people might think.

Anyway, Pachter has the word of computer geek tech guys to go on. Does anyone have references to other computer geek tech guys who are putting manufacturing at a much higher cost?

People are saying GDDR5 is expensive, but if Sony did a 3-year fixed price deal for 10s of millions of GDDR5 units then they could be getting that RAM for way below current market price.

bolded: that aplies to every part in every console from every company in history.



ViktorBKK on 16 June 2013

I am gonna get flamed for this but I have to say it. I like Pachter. It is obvious that he isn't much of a gamer, but when he talks business he makes sense, to me at least. The only minus I would give him, is that his views are some times a bit US - centric. Other than that, more often than not, I tend to agree with his assesments.

To the point. Sony is basically pulling a 360 with the PS4. They put the best hardware they could inside the box, and kept the price low, just enough to break even. It is the PS Plus subscription that will be pulling the profits for Sony. From a business perspective, this is a brilliant move. People will be lured by the low price point of the console, but in the long term, they will be spending more due to PS Plus. Sony didn't come up with this. They are simply copying the 360 model. What baffles me, is that Microsoft, the guys who originaly came up with this model, are now royally screwing their next product and leaving the market wide open for their competitors.



Mummelmann on 16 June 2013

Is that including R&D, distribution, advertising, launch game publishing, storage and licensing fees?

I find it a tad hard to believe that Sony would turn a profit on 399$ from the start, I just can't see it.



ViktorBKK on 16 June 2013
Mummelmann said:
Is that including R&D, distribution, advertising, launch game publishing, storage and licensing fees?

I find it a tad hard to believe that Sony would turn a profit on 399$ from the start, I just can't see it.


Add a game and 1 year of PS Plus in the mix and the profit is there.



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Mummelmann on 16 June 2013
ViktorBKK said:
Mummelmann said:
Is that including R&D, distribution, advertising, launch game publishing, storage and licensing fees?

I find it a tad hard to believe that Sony would turn a profit on 399$ from the start, I just can't see it.


Add a game and 1 year of PS Plus in the mix and the profit is there.


Yeah but that's kind of like the Wii U's "loss is offset with the purchase of one piece of software" statement. That means that the hardware itself isn't profitable yet, which is to be expected. There aren't many consoles that turn any kind of profit from the start on hardware alone.



ViktorBKK on 16 June 2013
Mummelmann said:
ViktorBKK said:
Mummelmann said:
Is that including R&D, distribution, advertising, launch game publishing, storage and licensing fees?

I find it a tad hard to believe that Sony would turn a profit on 399$ from the start, I just can't see it.


Add a game and 1 year of PS Plus in the mix and the profit is there.


Yeah but that's kind of like the Wii U's "loss is offset with the purchase of one piece of software" statement. That means that the hardware itself isn't profitable yet, which is to be expected. There aren't many consoles that turn any kind of profit from the start on hardware alone.


At least they are not in a "PS3" situation, loosing hundreds of dollars per unit. Still, I don't think they are selling at a loss. Worst case scenario they are even.



small44 on 16 June 2013
Flanneryaug said:
This confirms that the PS4 will not sell for a small profit.

Yes they will sold it with a big profit.



PS4 - over 100 millions let's say 120m
Xbox One - 70m
Wii U - 25m

Vita - 15m if it will not get Final Fantasy Kingdoms Heart and Monster Hunter 20m otherwise
3DS - 80m

Mummelmann on 16 June 2013
ViktorBKK said:
Mummelmann said:
ViktorBKK said:
Mummelmann said:
Is that including R&D, distribution, advertising, launch game publishing, storage and licensing fees?

I find it a tad hard to believe that Sony would turn a profit on 399$ from the start, I just can't see it.


Add a game and 1 year of PS Plus in the mix and the profit is there.


Yeah but that's kind of like the Wii U's "loss is offset with the purchase of one piece of software" statement. That means that the hardware itself isn't profitable yet, which is to be expected. There aren't many consoles that turn any kind of profit from the start on hardware alone.


At least they are not in a "PS3" situation, loosing hundreds of dollars per unit. Still, I don't think they are selling at a loss. Worst case scenario they are even.

I guess that's a good thing, they certainly can't afford more losses at this point.



TheJimbo1234 on 16 June 2013
binary solo said:
TheJimbo1234 said:
binary solo said:

http://www.gametrailers.com/videos/1zpcu1/e3-2013-e3-2013--pachter-interview--stream-

I watched the interview yesterday and can't be bothered going through it again for the exact numbers. But he says their [virtual?] tear down puts manufacturing at about $325, add other costs to get the units to stores, and the marketing expenses I gues that might put the cost of PS4 up by about $25. Pachter thinks about $375 wholesale, with the retailer getting a $24 margin.

I know Pachter's predictions are often terrible, but I think his technical contacts making these estimates must be reasonably good at what they do. So I'm picking that this is a reasonable estimate. At worst his margin for errorprobably puts PS4 at break even for Sony. Which is still a really good starting point.

I haven't seen any teardown estimates for Xbone, but I'm picking Xbone must be making a small profit too, unless Kinect is a helluva expensive piece of kit.

Anyway, this bodes very well for Sony, and it means Sony will be in a position to drop the price any time after the first year on market and remain profitable per unit. Either to stay within a certain price diferential with Wii U, or to remain cheaper than Xbone, or to just drop the price on a pre-determined pricing schedule.

Sony is a greedy, evil corporation, we must not lose sight of that fact. But they are doing a damned good job of pretending to be our friend.

Sorry I am still an embed noob.

The hell?! Tin hat time already?

I find it to be a good default setting when it comes to any corporation, even moreso when it's a multinational. That way you're not surprised when they decide to shit on you. Sony has made many attempts to take a dump on consumers, they will again at some time in the future. Right now, the know they need the short attention span consumer to see Sony as their best friend. When it's profitable to be dismissive of conumer sentiment their attitude will change, kinda like Microsoft's attitude to the consumer with Xbone at the moment.


It's not "evil" as it is not an entity, nor people sitting around trying to do others harm....they simply want to make profit. Just becaue some of their ideas or prices are not what you would like means only that. As companies go, Sony has been pretty good so I don't understand why you are claiming they are dire, especially as bad reputation means less customers which is something they do not want.