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Forums - Sony Discussion - PS3 a faster money sink than the Xbox? I can see why no price cuts soon.

Username2324 said:
starcraft said:

On public forums, I find it is sensible to adopt a common sense approach to sourcing.  On the first page of this thread, Username speculated that the Xbox 360 alone cost Microsoft $7 billion.  He did so without a source and was, of course, blatantly incorrect.  But because I applied common sense, it was clear he was wrong and therefore I did not ask him for a source.

In my case we are talking about the creation of a media standard.  If it cost less than billions to develop, market and help to victory a media standard, we would see them come about FAR more often.  OF course I cannot find specifics on the cost of developing Blu-Ray, as these are closely guarded Blu-Ray consortium secrets.  But common sense tells us there is a reason manufacturors are not constantly putting out new media standards, and the reason is thta developing an advanced, managable, marketable, supported media format takes an AWFUL lot of money.

 

You've made several statements in this thread that I would like to see sources for:
I would like to see your source stating the losses of the PS3
I would like to see your source stating the R&D cost of Blu-ray (If you can't you probably shouldn't be throwing numbers around)
I would like to see your source stating the losses of the 360 (I believe you said it was 2.5 billion)

The reason new standards are not constantly released is not solely cost, its the market you'd be putting your product in, would anyone want to buy the latest and greatest if they knew something else would be coming out next week? Would studios want to support the latest and greatest? Would the public want 12 different players in their living room?

 

The source in the OP covers the losses of the PS3.  Here is an additional one showing losses of almost $2.5 billion just over a year ago:

http://www.pcauthority.com.au/News/72377,sony-ps3-loss-to-reach-257bn-by-march.aspx

As I stated in the post you quoted, actual development/marketing costs of Blu-Ray are Blu-Ray consortium secrets, and arn't as easy to assertain from company reports as the PS3's losses, as Blu-Ray doesn't fall under an outlying division like the game division.  But I will show how you're own post proves my point:

Noone wants to be forced into buying an entirely new medium.  Studios are wary of supporting a new medium.  The public only want ONE medium.  With that in mind, ignoring the massive costs of actually developing a new technology like this, do you have any idea how massive an investment was required of Sony and it's partners to market, distribute and subsidize Blu-Ray against HD DVD, not to mention paying studios for loyalty.

To put beyond doubt the likelihood that Sony has spent FAR more than a billion dollars on Blu-Ray, see the link below.  Sony spend over HALF A BILLION DOLLARS just to bring ONE studio permanantly into Blu-Ray's exclusivity portfolio.

As for Microsofts losses on the 360, theres a very convenient table floating around VGC with a quarter by quarter, year by year breakdown.  Failing that, you can simply visit Microsoft's website and get their financial results.

In future, if you're going to make ridiculous, unsubstantiated claims such as your $7 billion on the 360 alone post, it would be inadvisable to then accuse OTHERS of insufficient referencing later on in the SAME thread.

 



starcraft - Playing Games = FUN, Talking about Games = SERIOUS

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There's a phrase your provided article you should read, "predicted loss" those aren't official numbers, and those "predicted" numbers are lower than what you claimed earlier.

With your blu-ray arguement you have now expanded into the marketing and gaining of support for blu-ray to back up your "1 billion cost" claim. I have been referring to the actual cost to develope the technology, not to market it. Again, Sony "paying" for loyalty of a studio isn't part of the cost to create blu-ray.

I'm sure someone of your intelligence would recognize that looking at MS financial statements won't help you find out it's losses on the 360 either, as MS has clever included several other products into the same division.

You're quite funny starcraft, I made one claim, not even a claim, and you try to criticize me, while you have made several claims, and when asked for a source you refer to someone else's OPINION.

If you want to pull off this whole "I'm smart and mature and us common sense" you might want to handle yourself better, especially your sources of information.



MikeB said:

@ BengaBenga

That's why companies develop strategies. Usually you have to choose. In this case it's Profit vs Marketshare/Brandname.
I'm pretty sure Sony overestimated the PlayStation brandname.


I don't think this has anything to do with it. If Sony sold more PS3s their investment losses would have been greater.

But I think Sony's upper management must have been shocked by Ken Kutaragi's vision for the PS3. He and his team made decisions which are great from a technology perspective but imposes great financial challenges for the short to mid run. Kudos to him though, else the PS3 would have been a far less interesting long term product with regard to potentials. Sony upper management would have focussed too much on short term advantages to please shareholders.

But everything is meanwhile under control, Sony's profits overall tripled and Sony's gaming devision is set to make a profit this year. It will take many years though to recoup all the investments poured into the product.

 

 No. The PS3 IS a failure. A fantastic failure. 3 billion in the hole and they don't really have much to show for it. Actually I would put the price of that failure at between 5-7 billion dollars. Thats the difference between a successful PS3 and an unsuccessful PS3. Thats the opportunity cost factored in as well. Face it, it was a terrible design, they screwed up worse than Microsoft did! 70% market share - 23%, Billions in profit - Billions in losses.

Nintendo >>>>>>>>>> Microsoft >>>>> Sony as far as intelligent business decisions go.



Tease.

Blu laser disk development was from very early developed and sold as profesional data archiving systems many years before the existing blu-ray movie stamping process existed.
The mass effect of the market demand for blu-ray drive mechanisims by sony, samsung, panasonic, sanyo , sharp ,apple , dell etc is driving the cost of the blu-ray drive down to littel more than a standard DVD/CD only drive.
Agree with the last post - Sony are probably making profit on hardware already.

Approx 50million PS3 Blu-ray games disks have been sold, this is more than double the number of blu-ray movies sold !



PS3 number 1 fan

No need to cut the price of the PS3 it is selling heaps every week. Last week it sold like 320k. PS3 will outsell the 360 worldwide no matter what the 360 does. PS3 price will not be cut in the future unless the 360 beats the PS3 in weekly console sales.



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Squilliam said:
MikeB said:

@ BengaBenga

That's why companies develop strategies. Usually you have to choose. In this case it's Profit vs Marketshare/Brandname.
I'm pretty sure Sony overestimated the PlayStation brandname.


I don't think this has anything to do with it. If Sony sold more PS3s their investment losses would have been greater.

But I think Sony's upper management must have been shocked by Ken Kutaragi's vision for the PS3. He and his team made decisions which are great from a technology perspective but imposes great financial challenges for the short to mid run. Kudos to him though, else the PS3 would have been a far less interesting long term product with regard to potentials. Sony upper management would have focussed too much on short term advantages to please shareholders.

But everything is meanwhile under control, Sony's profits overall tripled and Sony's gaming devision is set to make a profit this year. It will take many years though to recoup all the investments poured into the product.

 

 No. The PS3 IS a failure. A fantastic failure. 3 billion in the hole and they don't really have much to show for it. Actually I would put the price of that failure at between 5-7 billion dollars. Thats the difference between a successful PS3 and an unsuccessful PS3. Thats the opportunity cost factored in as well. Face it, it was a terrible design, they screwed up worse than Microsoft did! 70% market share - 23%, Billions in profit - Billions in losses.

Nintendo >>>>>>>>>> Microsoft >>>>> Sony as far as intelligent business decisions go.

 

Its actually worse than that ... The PS3 put the division $3 Billion and was one of the major factors to (dramatically) lowering the profitability of the Division for the two years leading up to its launch; that should work out to being close to a $5 Billion expense, and if the product was successful they should be able to make a couple billion dollars and fund the research and development of their follow up console.



So long as the PS3 outsells the XBox 360 in total console sales LTD. Beating the 360 in total market share is all that matters to the PS3. 5.5 million gap and closing. the Nintendo Wii is out of reach. The Wii is 14 million ahead of the PS3 and margin is growing.



HappySqurriel said:
Squilliam said:
MikeB said:

 

 No. The PS3 IS a failure. A fantastic failure. 3 billion in the hole and they don't really have much to show for it. Actually I would put the price of that failure at between 5-7 billion dollars. Thats the difference between a successful PS3 and an unsuccessful PS3. Thats the opportunity cost factored in as well. Face it, it was a terrible design, they screwed up worse than Microsoft did! 70% market share - 23%, Billions in profit - Billions in losses.

Nintendo >>>>>>>>>> Microsoft >>>>> Sony as far as intelligent business decisions go.

 

Its actually worse than that ... The PS3 put the division $3 Billion and was one of the major factors to (dramatically) lowering the profitability of the Division for the two years leading up to its launch; that should work out to being close to a $5 Billion expense, and if the product was successful they should be able to make a couple billion dollars and fund the research and development of their follow up console.

 

 Damn, you're right... it depends how far forward you project the losses and if you factor in "good will" as a cost as well.

 so, $5 billion now? + another $5 billion easily that they could have earnt then this whole fiasco could have cost them a cool $10,000,000,000 - factoring in goodwill, profit/sales forgone, etc. Oh yea they also sold off their fabs as well.. probably to improve their cash position I bet.

I think there are some very nervious people in SCE headquarters...



Tease.

Rock_on_2008 said:
So long as the PS3 outsells the XBox 360 in total console sales LTD. Beating the 360 in total market share is all that matters to the PS3. 5.5 million gap and closing. the Nintendo Wii is out of reach. The Wii is 14 million ahead of the PS3 and margin is growing.

It will be quite hillarious if the 360 gets a price drop soon and spanks the PS3 for the rest of the year. It'll be even funnier if they maintain profitibility whilst doing so.

 



Tease.

Squilliam said:
Rock_on_2008 said:
So long as the PS3 outsells the XBox 360 in total console sales LTD. Beating the 360 in total market share is all that matters to the PS3. 5.5 million gap and closing. the Nintendo Wii is out of reach. The Wii is 14 million ahead of the PS3 and margin is growing.

It will be quite hillarious if the 360 gets a price drop soon and spanks the PS3 for the rest of the year. It'll be even funnier if they maintain profitibility whilst doing so.

 

 

That will never happen. The PS3 has continuously outsold the 360 in weekly console sales since December 2007. Over 30 straight wins- PS3 over the 360 and counting.

360 will never outsell the PS3 in weekly console sales.