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Forums - Sales - David Reeves: Sony's priority is to make a profit....... right

sethnintendo on 06 January 2009

The exchange rates are probably hurting Sony the most now.



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Goddbless on 06 January 2009

I still think Sony can stay competitive with good software. If their big titles light up sales as expected that can keep them afloat long enough to survive until they can cut the price.



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Squilliam on 06 January 2009

Every dollar they have to borrow will probably be charged interest at a pretty hefty level because Sony is now higher risk than before and the economy changed. It may be better for them in the long term to not have to borrow than to gain market share.



Tease.

TheBigFatJ on 06 January 2009
BrainBoxLtd said:

 

I know what you meant. But an executive from Sony saying their VERY short term goal is making money makes me think they're just waiting for the slightest glimmer of hope to slash the price and throw a lot of money behind the PS3.

David Reeves leads me to beleive they want to run a marathon the very moment they bandage a pair of broken legs. =P

 

By saying it like that, he's downplaying Sony's business failures.

Assume Sony wants to maximize its profit overall.  This usually means many long term goals that might require significant investment.  That's how Sony has approached consoles as well.  Think of it like short term vs long term investing: longer term investing brings you more money, in general, than a series of short term investments.

Recently, Sony has decided to sacrifice long term goals to give them better short term performance.  This is generally bad for business, but it is a necessity for Sony now.

So Sony wants to say, "hey, we're just looking at pulling a profit here and doing it real quick.  Once that's done with, it's back to business as usual."  But, of course, that's rubbish.  Sony is in for some hard times for at least a year, probably longer.  So they'll be looking at squeezing short-term profit out wherever they can in the name of survival.

Right now, they're not looking at generating long term profits.  They're looking at keeping their company in tact for the long term.  That means swimming now.



BrainBoxLtd on 06 January 2009
TheBigFatJ said:
BrainBoxLtd said:

 

I know what you meant. But an executive from Sony saying their VERY short term goal is making money makes me think they're just waiting for the slightest glimmer of hope to slash the price and throw a lot of money behind the PS3.

David Reeves leads me to beleive they want to run a marathon the very moment they bandage a pair of broken legs. =P

 

By saying it like that, he's downplaying Sony's business failures.

Assume Sony wants to maximize its profit overall.  This usually means many long term goals that might require significant investment.  That's how Sony has approached consoles as well.  Think of it like short term vs long term investing: longer term investing brings you more money, in general, than a series of short term investments.

Recently, Sony has decided to sacrifice long term goals to give them better short term performance.  This is generally bad for business, but it is a necessity for Sony now.

So Sony wants to say, "hey, we're just looking at pulling a profit here and doing it real quick.  Once that's done with, it's back to business as usual."  But, of course, that's rubbish.  Sony is in for some hard times for at least a year, probably longer.  So they'll be looking at squeezing short-term profit out wherever they can in the name of survival.

Right now, they're not looking at generating long term profits.  They're looking at keeping their company in tact for the long term.  That means swimming now.

 

Again, I understand that, my concern is Reeves is only interested short-term profitability just long enough to make more risky long term investments that might not pay off which is what got them in this position to begin with. That's what I was getting at with my joke they're long term goal is losing money.

 



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NJ5 on 06 January 2009
BrainBoxLtd said:
NJ5 said:

That's not what I meant. I said "as soon as that doesn't make them lose money". By "them" I mean SCE as a whole.

At some point, PS3 hardware production costs will be low enough for them to cut the price. Unfortunately for Sony, there's a number of factors conspiring to delay this:

- Exchange rates (could improve again).
- Quickly declining PS2 sales, and declining PSP sales.
- The competition stealing sales from them (a Catch-22 here).

That's why I think a price cut may come late in 2009, or even in 2010 only. It depends on how these three things go.

 

 

I know what you meant. But an executive from Sony saying their VERY short term goal is making money makes me think they're just waiting for the slightest glimmer of hope to slash the price and throw a lot of money behind the PS3.

David Reeves leads me to beleive they want to run a marathon the very moment they bandage a pair of broken legs. =P

Last year that would be possible, but now I think the Japanese execs will really push profitability hard, given the hard times the company is in. I see your point though.

 



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