THIS IS AN INTERVIEW WITH HOWARD STRINGER
"Sony CEO, the 66 year-old Sir Howard Stringer, has told German news outlet Welt Online that he does not expect the R&D cash spent on PS3 to be recouped soon. Asked by the Welt if he could ever see the $3 billion ($1.6b or Euro 2.03b) spent on development of the console, he responded, "Not for as long as I live (laughs). It will certainly take some time."
He was, however, bullish in terms of consumer uptake of the PS3, saying that, "Consumers are purchasing our PlayStation 3 video game consoles faster than we can produce them."
"We currently have a production bottleneck with the PlayStation 3", he continued.
He also confirmed that even with hardware bottlenecking due to demand, "You also know, however, that our business model is not perfect, and that we make a loss on every console we sell."
He was then drawn on one of his company's competitors, Nintendo. Strangely, or with good PR vetting of questions, Microsoft and the Xbox 360 did not merit a mention. "The Wii is a well-made device that has found a new target group. For a while, we held the same target group with the SingStar karaoke game. But perhaps we neglected to pursue that avenue."
"The major difference lies in the fact that Nintendo makes money with the hardware alone, which may be a superior business model. But the Wii is not succeeding at our expense – it is not hurting us. We decided years ago to build a game console that offers much greater functionality. The PlayStation 3 has an enormous processor; it is gradually emerging as the central server in our users' homes."
So, how is Sony making any money from PS3? Quite simple according to the Welshman, "In the meantime, we earn money with the games. We are currently at the stage in which we need to get a grip on the production costs. That takes time. We are already making more money with the games than we are losing with the hardware."
The source for this was neogaf, but I read the original article this morning before I went to class so I know its from another site. The author of this post tried to post the address where this was taken from, but I think the site was banned from Neogaf.
So the hardware itself is still sold at a loss. The statement about software is kinda vague also. He could either be talking about PS3 sales alone or the whole gaming division. But I think, ATM, the gaming division should be slightly profitable for the quarter, which reopens the window for a price drop IMO.
