But that is what is determining if you can lower the price of the hardware. They do not make money with the console after all but with the software and accessories they sell with it. So lowering the price for the china-build console and selling more software developed by their japanese yen payed developers should be the logical result.

Of course this is as simplistic as the other view.

Kyros said: I don't think anyone said PS3 manufacturing is getting more expensive. But that is what is determining if you can lower the price of the hardware. They do not make money with the console after all but with the software and accessories they sell with it. So lowering the price for the china-build console and selling more software developed by their japanese yen payed developers should be the logical result. Of course this is as simplistic as the other view.

No, your view is even more simplistic. You're only taking expenses into account and not revenue. In this case, both are dropping but revenue seems to be dropping faster (especially when you consider the PS2/PSP decline).

 

Kyros said: Again this is bullshit. I don't know who is manufacturing each PS3 part. But most likely its pretty much identical to the 360. Processor from IBM(USA?), GPU from NVIDIA(Taiwan?), put together in China? and so on and so forth. Yen-Dollar conversion may lower their profits in yen but it hardly makes manufacturing a PS3 more expensive for them. At least not much.

 

I don't think anyone said it was going to make it more expensive to manufacture it. This will just affect their revenue.

Last week Sony made ¥36,480 of $399*
This week Sony will make ¥35,798 of the same $399*

*Just an example, Sony doesn't actually make $399 per console sold

 

 

@NJ5

*Points to Kyros' avatar...

I hadn't realized its been dropping straight for three months...

? The article was arguing that SONY has in effect made price cuts because of the rising yen, correct? This is a stupid argument when you consider that most PS3 are assembled in China (there is a japanese factory but it is much smaller), and the parts come from all over the world and most likely from the same locations as for the 360.

Nobody was arguing about the financial results of sony or of their problems due to sinking PS2 sales. The article made a statement and its simply wrong.

Kyros said: In this case, both are dropping but revenue seems to be dropping faster (especially when you consider the PS2/PSP decline). ? The article was arguing that SONY has in effect made price cuts because of the rising yen, correct? This is a stupid argument when you consider that most PS3 are assembled in China (there is a japanese factory but it is much smaller), and the parts come from all over the world and most likely from the same locations as for the 360. Nobody was arguing about the financial results of sony or of their problems due to sinking PS2 sales. The article made a statement and its simply wrong.

Price cuts = dropping revenue
Strong yen = dropping revenue

The effect is the same in terms of revenue. What you're talking about is expenses, which is a different matter.

 

Think they need to focus more on areas with higher exchange rates. With how much SONY has to sell at certain prices to make a profit, they are in a very tight and narrow spot....

NJ5 said: woopah said: this will also cut into nintendo's profits as well, luckily its got the resoruces to not be as badly affected Nintendo has a ton of advantages over Sony to weather this storm: 1- Higher profit margins (20-30% as opposed to 1-4% in Sony's case) 2- Their products are more recession-proof 3- No debt (as opposed to $10 billion in debt in Sony's case) 4- They make money on everything, not just software 5- None of their products is declining (in Sony's case the PSP and PS2 are) 6- From what I read, they have a higher proportion of expenses in foreign currencies (not sure about this one)

 

Yes, your last point is true: Nintendo has been paying for some things in dollars lately.  I wonder if Sony could do the same; it's about the only thing they can try.

As I've posted before, the strength of the yen (currently a dollar buys only 91.65 yen) is harming Sony's ability to cut prices.  Meanwhile MS is more able to cut prices in Japan and EU because the dollar is weaker vs those currencies.

Kyros said: In this case, both are dropping but revenue seems to be dropping faster (especially when you consider the PS2/PSP decline). ? The article was arguing that SONY has in effect made price cuts because of the rising yen, correct? This is a stupid argument when you consider that most PS3 are assembled in China (there is a japanese factory but it is much smaller), and the parts come from all over the world and most likely from the same locations as for the 360. Nobody was arguing about the financial results of sony or of their problems due to sinking PS2 sales. The article made a statement and its simply wrong.

 

 Sony reports in yen, what do you not understand about that?

Paul said: Kyros said: In this case, both are dropping but revenue seems to be dropping faster (especially when you consider the PS2/PSP decline). ? The article was arguing that SONY has in effect made price cuts because of the rising yen, correct? This is a stupid argument when you consider that most PS3 are assembled in China (there is a japanese factory but it is much smaller), and the parts come from all over the world and most likely from the same locations as for the 360. Nobody was arguing about the financial results of sony or of their problems due to sinking PS2 sales. The article made a statement and its simply wrong.    Sony reports in yen, what do you not understand about that?

 

I dunno, it's pretty clear in Sony's revision:

http://www.sony.net/SonyInfo/IR/financial/fr/08revision_sony.pdf

And since this revision, things have only gotten worse.

@FishyJoe: Nice graph, I hadn't seen it yet but it confirms the perception I had pretty well. Losses during this quarter and perhaps in the fiscal year as a whole.