By using this site, you agree to our Privacy Policy and our Terms of Use. Close

Forums - Sony - Sony have thrown in the PS3 towel... (for now anyway)

makingmusic476 on 17 May 2008
shams said:

The financial results & follow-up statements all but confirmed this.

Where Ninty are making bucket-loads of cash, and even MS have had two profitable qrts in a row - Sony have now lost a total of $3.6bn on their gaming division over the last two years.

It simply had to stop - and it will. There will be NO more price cuts on the PS3 - for a good 12 months at least. Every PS3 they are selling is losing them a significant amount of money, and its no longer being offset by PS2/PSP sales (PS2 sales are significantly down, and will continue to drop). I personally think their PSP forecasts are excessive, but that is another discussion.

The focus now shifts to bringing down PS3 manufacturing costs as soon as possible, while not artificially selling more PS3's than they should. A price cut would do the following:

PS3 loss = $loss per console x #number sold

...after a price cut of $100...

PS3 loss = ($loss per console + $100) x (#number sold * 1.5)

...

Sony's aim with the PS3 (which they have stated will have a 10yr + lifetime - they ARE banking on this, quite literally) is basically to make it profitable - at the expense of additional market share.

A year ago, the PS3 was on tenuous ground - and the price cut & stripped down model definitely helped them gain ground against the 360. They needed to do this, as they were at a real risk of losing the BluRay battle and the HD console battle in general.

They would be pretty happy with their current market position (again compared to last year), but also that this is the wrong time to be making aggressive price moves to win more market share. The next move is MS's to make, and as long as they are turning a profit - MS is in no big rush to make this move. Profitability was always going to be critical for them as well, with pressure from the rest of MS (get profitable, or get out!).

...

The other angle is software - this is the only way way that Sony can "win" this generation. And producing top-notch PS3 software is a very expensive, and time consuming thing to do.

This next 12 months on the market is now a consolidation point for them - work on software, almost double their install base, bring the PS3 back to price parity - and maybe even work on the first "PS3 slimline" models.

After this period, we may see a more aggressive Sony/PS3 again - pushing for more market share with a cheaper model, and some compelling software. But in the meantime... the towel has been thrown in. 


Um...it already did.  SCE made a profit of over $100 mil. in the fourth quarter of last year (their 3rd financial quarter), and that number should only grow as the install base grows, more games are released, and manufcaturing costs go down. 

I'm not quite sure what they made this past quarter, however.



Around the Network
Username2324 on 17 May 2008
shams said:
skip said:

throwing in the towel is what ms did with the original xbox when they slit its throat after 3-4 years on the market (dependant on region). Though not all blame can fall on them for that with the issues with nvidia.

Another such example of throwing in the towel was atari with the 5200, but that was mainly the fault of the crash.

I think MS did with the XBOX what they needed to.

They wanted to migrate all their customers to the 360 ASAP, I think it generally worked. They also wanted to migrate their developers and dev resources to the 360 - it was all part of the strategy of launching a year early in the market.

It did cost them money (they could have milked a lot more from the XBOX), but it helped them out in the long term. They won't be killing off the 360 as quickly as they did the XBOX, that is for sure.

It wasn't really a throwing in of the towel either, as it was more of a strategic decision - the PS2 has already won the market years before that. The XBOX (and GC) were never in the race.

 

So releasing a year early with a faulty console and killing off a previous console that they could have gotten more money from is a "strategy", but trying to profitable, keeping a successful platform out, and saving your best cards for when you need them isn't a strategy?

(Must a point out your so called "migration" did them little good, as it is obvious that they will again be in last by the end of generation, and should have took the time to develop a better console)

 



shams on 17 May 2008
makingmusic476 said:
shams said:
...

Um...it already did. SCE made a profit of over $100 mil. in the fourth quarter of last year (their 3rd financial quarter), and that number should only grow as the install base grows, more games are released, and manufcaturing costs go down.

I'm not quite sure what they made this past quarter, however.

They lost around $250m (?more?) for the last SCEE qrt.

As I said in the first post - the last 2 years of the PS3 have cost them $3.6bn so far. 

That $100m was purely a result of high PSP & PS2 sales for the Xmas qrt. If there was no PS3, the profit would have been closer to $300m.

...

@Username2324: The XBOX was dead anyway - there was no question of them "winning" anything with it. All it would have done is damage the 360.

You have to wonder how the PS3 would have gone if Sony KILLED the PS2 off straight away - although with the amount of money being made on the PS2, it would have been a financially insane move.



Gesta Non Verba

Nocturnal is helping companies get cheaper game ratings in Australia:

Game Assessment website

Wii code: 2263 4706 2910 1099

obieslut on 17 May 2008

so how much money is sony losing on each ps3 sold



ssj12 on 17 May 2008

this isn't throwing in the towel, this is focusing on their produce.



PC gaming is better than console gaming. Always.     We are Anonymous, We are Legion    Kick-ass interview   Great Flash Series Here    Anime Ratings     Make and Play Please
Amazing discussion about being wrong
Official VGChartz Folding@Home Team #109453
 
Around the Network
FJ-Warez on 17 May 2008

They are camping!!!

No more aggresive strategies for the rest of the year, maybe they are expecting a nice boost from some good games, until that happens they are not going to touch the price of the PS3...



By me:

Made with Blender + LuxRender
"Since you can´t understand ... there is no point to taking you seriously."
PS360ForTheWin on 17 May 2008

how does switching focus from HW to SW in the short term to boost sales equal throwing in the towel?



montrealsoon on 17 May 2008
shams said:
skip said:

throwing in the towel is what ms did with the original xbox when they slit its throat after 3-4 years on the market (dependant on region). Though not all blame can fall on them for that with the issues with nvidia.

Another such example of throwing in the towel was atari with the 5200, but that was mainly the fault of the crash.

I think MS did with the XBOX what they needed to.

They wanted to migrate all their customers to the 360 ASAP, I think it generally worked. They also wanted to migrate their developers and dev resources to the 360 - it was all part of the strategy of launching a year early in the market. 


I've always had a problem with the early retirement of the XBOX.  I think it is really unfortunate that a manufacturer arbitrarily cuts the value of their product, and the consumer has to pay (in this case, for a 360...  I haven't, my XBOX is still fine!)

I think doing that has come back an bit them in the ___.  As a console provider, they still have no experience in dealing with the "general market", only the "shooter market" (for lack of better terms, sorry.)

I hope MS sticks with the 360 through a consoles natural life cycle, and gains at least some exposure to all of the market segments. 

 

 



Xponent on 17 May 2008

I think some here are taking the OPs 'throwing in the towel' comment out of context.

If we were talking about the current generation of consoles in a very general sense, then obviously, to throw in the towel suggests that Sony are giving up on the PS3 altogether, which is clearly not the case.

However, in the context of a battle for first place, the comment is valid, because as the OP illustrates, Sony now appear to be more concerned with generating a profit, over marketshare. They have given up on that objective, hence, throwing in the towel.



FinalEvangelion on 17 May 2008

Last year, they got where they needed to - even thought they spent $1B more than they intended. That was to make sure MS wasn't going to run off with the HD development. Probably 3rd parties directly threatened to drop them if they didn't get it to $400 by the end of 2007 (my guess).

I think it was pretty clear to both MS and Sony that the Wii wasn't going to be topped for quite a while.

I'm guessing the PS4 will be a PS3.5, and at least break even on every unit out the door at $400. PS3 was a lesson learned for Sony. They might as well use the R&D for the PS3 for the PS4.



"Naturally the common people don't want war: Neither in Russia, nor in England, nor for that matter in Germany. That is understood. But, after all, IT IS THE LEADERS of the country who determine the policy and it is always a simple matter to drag the people along, whether it is a democracy, or a fascist dictatorship, or a parliament, or a communist dictatorship. Voice or no voice, the people can always be brought to the bidding of the leaders. That is easy. All you have to do is TELL THEM THEY ARE BEING ATTACKED, and denounce the peacemakers for lack of patriotism and exposing the country to danger. IT WORKS THE SAME IN ANY COUNTRY."  --Hermann Goering, leading Nazi party member, at the Nuremberg War Crime Trials 

 

Conservatives:  Pushing for a small enough government to be a guest in your living room, or even better - your uterus.