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Forums - Sony Discussion - Will PS3 have a successful year in 2009?

NJ5 on 23 November 2008
jkimball said:

You are probably right about the price cut. But there is no way they have 12 months to think about this. No way. Decisions need to be made...now.

Let me put it this way: you don't want a price cut because it will cost $1B. but you are willing to wait around a year, which by your own math, also will cost a $1b?

if the world economy hadn't just collapsed, then they might have a year. But it did. So they don't have a year. They have to take a 1B risk by cutting the price, or get the heck out. And it will happen in early spring.

 

personally I'll wait for the firesale :)

If my assessment of Sony's holiday quarter is correct, by the time spring comes Sony will already have announced significant measures to reduce costs. That would for sure include significant job cuts, and perhaps exiting some markets which allows them to sell off assets. I don't think job cuts alone would be enough as a response to a 1-3 billion dollar loss, but it's not easy to predict what products they could get rid of.

I'm thinking that one of the easiest things to do could be selling off their 50% stake in Sony Ericsson. That wouldn't affect their business much. Another good idea would be to downsize or eliminate their music publishing business, CDs are dying anyway. Blu-Ray should stay for sure, after all it's their first winning format and it probably doesn't incur big costs at this point.

If the PS3 is one of the unlucky products (I don't think it's very likely, not in the next few months at least), I'm guessing you'd get your firesale before spring. If they don't get rid of the PS3, you won't get any price cut or firesale though, they'll have to be very careful about wasted money.

 



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amirnetz on 23 November 2008
NJ5 said:
jkimball said:

You are probably right about the price cut. But there is no way they have 12 months to think about this. No way. Decisions need to be made...now.

Let me put it this way: you don't want a price cut because it will cost $1B. but you are willing to wait around a year, which by your own math, also will cost a $1b?

if the world economy hadn't just collapsed, then they might have a year. But it did. So they don't have a year. They have to take a 1B risk by cutting the price, or get the heck out. And it will happen in early spring.

 

personally I'll wait for the firesale :)

If my assessment of Sony's holiday quarter is correct, by the time spring comes Sony will already have announced significant measures to reduce costs. That would for sure include significant job cuts, and perhaps exiting some markets which allows them to sell off assets. I don't think job cuts alone would be enough as a response to a 1-3 billion dollar loss, but it's not easy to predict what products they could get rid of.

I'm thinking that one of the easiest things to do could be selling off their 50% stake in Sony Ericsson. That wouldn't affect their business much. Another good idea would be to downsize or eliminate their music publishing business, CDs are dying anyway. Blu-Ray should stay for sure, after all it's their first winning format and it probably doesn't incur big costs at this point.

If the PS3 is one of the unlucky products (I don't think it's very likely, not in the next few months at least), I'm guessing you'd get your firesale before spring. If they don't get rid of the PS3, you won't get any price cut or firesale though, they'll have to be very careful about wasted money.

 

I am completey with you NJ5.

Sony is going to be awashed with red ink in the coming quarters and drastic measures must be taken. Selling assets in this climate is not going to work too well - capital sources are drying out and there is hardly anyone who has enough cash or credit to buy anything - let alone a losing business. Look at the rock bottom valuations today in the market to understand that there are no buyers in this market.

The only option is to cut. Cut deep. Cut whatever is losing them money. The PS3 is the biggest money loser Sony has. The gaming division is losing over $1B/year. Since the PS2 and PSP are profitable, it means that the loses of the PS3 are 1B+these other product profits. Huge.

Unless the PS3 can balance itself out, it might be game over for console much sooner than anyone can expect.

 



Prediction made on 11/1/2008:

Q4 2008: 27M xbox LTD, 20M PS3 LTD . 2009 sales: 11M xbox,  9M PS3

whatever on 23 November 2008

If the PS3 manages a $100 price cut, it will blow the 360 away in 2009. In the end, the PS3 will finish ahead of the 360.



Hawkeye on 23 November 2008
jkimball said:
amirnetz said:
jkimball said:
good discussion, but noone mentioned the 600lb gorilla in the room...what the accountants refer to as 'industry exit'.

When a product is unprofitable but has positive margins elsewhere (ie it supports blu-ray, or helps pay the bills in a plant where other profitable products are made) you keep making it short term. Long term, if the product appears to have no chance of profitability you stop making it aka 'industry exit' (blu ray doesn;t need it, the lease on the plan expired and the company can move to a smaller plant...)

Sony needs to
A) Cut the price immedidately to build critical mass in the marketplace for the PS3. It does not have that now. It needs to be within 80% of the sales of the xbox360 to be relevant in the HD market. Today that means it needs ~ 23M*.8=18.4M It is already behind and falling away every week...

or

B) prepare on withdrawing from the home console market.

So in early spring of 09, look for a drastic price cut...or a fire sale...

The price cut is not an option right now. They just cannot afford it. They are already losing $1B/year in their gaming division and $100 price cut on 10M consoles will exactlu double that loss. Since the company made only $20M in profit in the last quarter I doubt it will be willing to take a x100 of that in loses just for one product. The PS3 alone can sink the whole company.

The PS3 will need to become profitable without a price cut for the next 10-12 months. As long as it is profitable, Sony can stay in the market even if it is just for playing for 3rd place. With profitability they can justify making a PS4 and give it another go. If they continue to lose money then they will have to do the "industry exit".

They have no more than 12 months to go being either profitable or cutting down the loses and exiting the market.

 

 

You are probably right about the price cut. But there is no way they have 12 months to think about this. No way. Decisions need to be made...now.

Let me put it this way: you don't want a price cut because it will cost $1B. but you are willing to wait around a year, which by your own math, also will cost a $1b?

if the world economy hadn't just collapsed, then they might have a year. But it did. So they don't have a year. They have to take a 1B risk by cutting the price, or get the heck out. And it will happen in early spring.

 

personally I'll wait for the firesale :)

 

 

 

 

If they are exiting the industry, don't buy next spring. They will announce at some point that production has stopped. Dreamcast went for way cheap just a bit after it stopped being available. Buy then :D

But I don't think thats going to happen. What will they do with the games they are planning? What happens to PSP?

 



Hawkeye on 23 November 2008
amirnetz said:
NJ5 said:
jkimball said:

You are probably right about the price cut. But there is no way they have 12 months to think about this. No way. Decisions need to be made...now.

Let me put it this way: you don't want a price cut because it will cost $1B. but you are willing to wait around a year, which by your own math, also will cost a $1b?

if the world economy hadn't just collapsed, then they might have a year. But it did. So they don't have a year. They have to take a 1B risk by cutting the price, or get the heck out. And it will happen in early spring.

 

personally I'll wait for the firesale :)

If my assessment of Sony's holiday quarter is correct, by the time spring comes Sony will already have announced significant measures to reduce costs. That would for sure include significant job cuts, and perhaps exiting some markets which allows them to sell off assets. I don't think job cuts alone would be enough as a response to a 1-3 billion dollar loss, but it's not easy to predict what products they could get rid of.

I'm thinking that one of the easiest things to do could be selling off their 50% stake in Sony Ericsson. That wouldn't affect their business much. Another good idea would be to downsize or eliminate their music publishing business, CDs are dying anyway. Blu-Ray should stay for sure, after all it's their first winning format and it probably doesn't incur big costs at this point.

If the PS3 is one of the unlucky products (I don't think it's very likely, not in the next few months at least), I'm guessing you'd get your firesale before spring. If they don't get rid of the PS3, you won't get any price cut or firesale though, they'll have to be very careful about wasted money.

 

I am completey with you NJ5.

Sony is going to be awashed with red ink in the coming quarters and drastic measures must be taken. Selling assets in this climate is not going to work too well - capital sources are drying out and there is hardly anyone who has enough cash or credit to buy anything - let alone a losing business. Look at the rock bottom valuations today in the market to understand that there are no buyers in this market.

The only option is to cut. Cut deep. Cut whatever is losing them money. The PS3 is the biggest money loser Sony has. The gaming division is losing over $1B/year. Since the PS2 and PSP are profitable, it means that the loses of the PS3 are 1B+these other product profits. Huge.

Unless the PS3 can balance itself out, it might be game over for console much sooner than anyone can expect.

 

 

What would Sony do then? Start advertising PS2 again, start their devs up on PS2 and PSP games? Where do they go from there?



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KBG29 on 23 November 2008

I really am not worried about a successful year for the PS3. I care more about whether Sony itself can do good. The PS3 hass the games to make people happy and that is all that really matters.



Stop hate, let others live the life they were given. Everyone has their problems, and no one should have to feel ashamed for the way they were born. Be proud of who you are, encourage others to be proud of themselves. Learn, research, absorb everything around you. Nothing is meaningless, a purpose is placed on everything no matter how you perceive it. Discover how to love, and share that love with everything that you encounter. Help make existence a beautiful thing.

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Hawkeye on 23 November 2008
whatever said:
If the PS3 manages a $100 price cut, it will blow the 360 away in 2009. In the end, the PS3 will finish ahead of the 360.

 

Except that the cut, if it comes, will be a firesale, and they will stop producing new units. Then in late summer they announce they have stopped production (already stopped for 6 months though) and then drop the price further to clear out the small supply left in the channel. Basically, Sony is strapped for cash  and killing the PS3 might be the best way to stop the bleeding. The horrible downside is that their brand will be destroyed.



SaviorX on 23 November 2008

^^^Being in business to make those games matters too.



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blazinhead89 on 23 November 2008

WTH , all the cries of PS3 doom, SONY And the Economy will be fine, Just watch what unfolds.



FPSrules on 23 November 2008

sony has its chance to overtake the 360 and possiblity the wii next year. if the price drops to $300, advertise their upcoming exclusives, 2009 can be a big year for sony i hope. we just have to wait and see

Can't wait for
1. Gran Turismo 5
2. Uncharted 2
3. MAG
4. Infamous
5. Killzone 2
6. Playstation Home
7. Final Fantasy 13 versus
8. Rachet and Clank
9. Jak and Daxter 4

hope these games live b3yond their hype