One of the issues that no one mentions is the size of the Sony's gaming sector. They're huge. They needed to be to keep up with the PS2 dominance days and yet they haven't cut down dramatically to keep in sync with the PS3 sales. The Yen is just one factor. The overhead their gaming sector has needs to come down in accordance with how the PS3 is doing. Not how well the PS2 did.

As for the people saying "drop the price and make it up in software!!!!" Dropping a $100 in price requires 10 addition pieces of software to be sold to break even, per unit, going by average royalties. That's not going to happen. Dropping the price would simply ensure that the PS3 lifecycle would always be in the red.

The putting together may be in China but this only accounts for a couple of dollar. (Or yuan). The components of both consoles are very cosmopolitic. The memory is most likely done in Taiwan. The main processors could even come out of America, the mainboard could be China. In short the Yen or the dollar do not have much to do with the manufacturing costs. The only thing that counts would be the write-off for research and development costs by both companies. This could lower the profit of their entertainment divisions but it shouldn't change the calculation for console pricing.



Both Sony and Microsoft have other profitable departments. Sony is by far the bigger company after all. Doesn't change the fact that neither company will support big losses this late into the generation. That's simply not how capitalism works. Both companies try to MAKE money.
The point is that MS sells a 360 WITH hard-disc for almost half the price of the PS3 in Europe. And the gaming division is making some money. Now they are selling lots of software but please Sony should get off their lazy asses.

taxman said: goddog said: the same for MS, but wait they cut the real price too! damn them ^ The problem for MS, the prices in the US are actually higher than in UK. This might be the first time this has ever happened in the history of consumer electronics products.... Maybe they weren't anticipating the sudden weakening in the Pound and the Euro and went too far with their cuts....

 

true that, but they are still turning a profit in the division. sony is not even with not cutting real prices. if sony does not post a profit this quarter for the gaming division do not expect a price cut until it does post one.... thats going to screw up my iea of a march price cut

Next 6-7 weeks will determine if Sony really need to cut the price.

goddog said: taxman said: goddog said: the same for MS, but wait they cut the real price too! damn them ^ The problem for MS, the prices in the US are actually higher than in UK. This might be the first time this has ever happened in the history of consumer electronics products.... Maybe they weren't anticipating the sudden weakening in the Pound and the Euro and went too far with their cuts....     true that, but they are still turning a profit in the division. sony is not even with not cutting real prices. if sony does not post a profit this quarter for the gaming division do not expect a price cut until it does post one.... thats going to screw up my iea of a march price cut

They made even last year profit last quarter so no doubt that they will make this year too.

 

IT doesn't matter. They need a price cut!! They shud borrow money from somewhere.

KillerMan said: goddog said: taxman said: goddog said: the same for MS, but wait they cut the real price too! damn them ^ The problem for MS, the prices in the US are actually higher than in UK. This might be the first time this has ever happened in the history of consumer electronics products.... Maybe they weren't anticipating the sudden weakening in the Pound and the Euro and went too far with their cuts....     true that, but they are still turning a profit in the division. sony is not even with not cutting real prices. if sony does not post a profit this quarter for the gaming division do not expect a price cut until it does post one.... thats going to screw up my iea of a march price cut They made even last year profit last quarter so no doubt that they will make this year too.

Maybe they will, but i doubt it.  They got a profit last holiday season on the strength of huge PS2 sales and very good psp sales.  PS2 sales are way down this year, i haven't been following it too closely but it looks like around half.  That's why they made a profit holiday quarter, then the next quarter went back to losses, because of the PS2.  Also the yen's condition is gonna make it hard to make a profit.  the losses last quarter weren't good, and the yen has gotten even worse since then.

 

sgthaggis said: Sony to raise prices by up to a third to offset tumbling value of the pound Sony is to raise prices of its electrical goods in the UK by up to a third to offset the tumbling value of sterling.A sign here that more firms will have to follow suit.  http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/3496632/Sony-to-raise-prices-by-up-to-a-third-to-offset-tumbling-value-of-the-pound.html

Nice find. The pound was going down so much that I guess they decided they had no other choice. It will be interesting to see what this does to their sales, it might be the beginning of Sony (along with other companies) decreasing in size.

The party is over, it's time to get real about being profitable now.

 

NJ5 said: sgthaggis said: Sony to raise prices by up to a third to offset tumbling value of the pound Sony is to raise prices of its electrical goods in the UK by up to a third to offset the tumbling value of sterling.A sign here that more firms will have to follow suit.  http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/3496632/Sony-to-raise-prices-by-up-to-a-third-to-offset-tumbling-value-of-the-pound.html Nice find. The pound was going down so much that I guess they decided they had no other choice. It will be interesting to see what this does to their sales, it might be the beginning of Sony (along with other companies) decreasing in size. The party is over, it's time to get real about being profitable now.

 

According to the article "However, industry experts have predicted that the price increase will not be passed on to customers because shopkeepers are desperate to encourage spending."

We know that retailers don't make any money off the console itself as is and they certainly won't subsidize the console. So you have a couple of scenarios.

1. Sony keep the price of the PS3 as is and eats up the loss

2. Retailers pass on the cost to the consumer

It'll be interesting to see how it shapes up.