fooflexible said:
Just to comment on soe of your points, because I like how you present your arguement yet I still think many people fail to look at this like a business. You can't argue it's selling well for an expensive system. The whole point of their being a smaller market for high-end products is that the profit margin is larger. the ps3 actually has the opposite scenario. I think for a product that gives away for free an extra 200 dollars worth of technology, it's selling poorly. Too with the psp, there is nothing wrong with their position, but they didn't create a business model to have half the userbase of Nintendo's machine. They designed a system that blows the DS away in techonlogy, they took a huge loss on it hoping it would recieve the bigger portion of the pie. Nintendo actually created inferior machine, cheaper yet with an actual profit margin designed to succeed even if it failed to sell really well. Forget about price for a minute, just think profit percentage. The product with a higher profit percentage is designed to profit off a smaller base. The company with the smaller or in Sony's case negative profit margin is designed to not only sell more but is betting on staking claim to the majority of the base. Not getting that is hurting them big time. Think of this too, last gen they had only the ps2, this gen they have the ps3 and the psp and combined they won't sell nearly as well as just the ps2. And they obvouisly combined cost far more than the ps2, so how can a company that expands it's product line and combined loses a percantage of the market be considered a success?(I'm not saying they are falling out the industry or anything but this gen Sony has taken a huge hit) |
This sums up the business side of it pretty well- especially the point about profit margins. Microsoft has been consistently profitable for a long time, and committed to entering the video game market knowing they would lose a lot of money. The XBox 360 is doing reasonably well (I think the attach rates are really good?), the jury is still out on Microsoft's long-term business here to be fair.
OTOH, Sony has been treading water in its other business units for awhile, and has relied heavily on PS1 and PS2 profits to drive the entire company. So from a business standpoint, they can't afford to lose a lot of money (or really any money for that matter) with the PS3. I applaud them for making a bold move with the PS3 hardware, but frankly their execution has been lacking. I think Sony's original desire was to milk the PS2 for another year, then release the PS3 with better, cheaper Blu-Ray manufacturing so the price point is closer to $400. But Microsoft made their own bold move by EOL'ing the Xbox a year early (bold since Xbox was the last to come out last gen!), and sorta put Sony in between a rock and a hard place- not only with hardware production but software development as well.
Because of competition, the name of the game here is sell hardware at a loss, but make it back on games. To do this really well, you need to sell a lot of units, and have each of those buyers buy as many games as possible. Sony has not done well with either so far.
Nintendo is the odd man out, in terms of comparing the companies. They are a gaming only company, so don't want to risk selling hardware at a loss. They've rebounded nicely with the DS and Wii, and hopefully will continue to innovate in the future- their prosperity really depends on it.
None of this directly matters to individual gamers, there's nothing wrong with the PS3 per se because it's only sold X units instead of Y units, or whatever. Down the line, the install base of each console does influence developer support though. We all want the console we own to sell well, if only to ensure developer support and new games for it down the road- who wants an expensive paperweight? So of course on an internet message board there's going to be a lot sniping and so forth. Who really cares in the end, how many people actually care to read message boards of a web site dedicated to video game SALES?
Sony still has a chance to recover, but they're going to really have to pull a rabbit out of their hats, considering how much PS3 sales have slowed. Console-wise it's not yet a disaster, but for Sony corporate I would say that it has been. The one saving grace is that they have succeeded in establishing an early lead for Blu-Ray. But will Blu-Ray become the next-generation movie format? It had better, because Sony really endangered their video game business by putting that player in the PS3.
