I don't understand your logic here. We know that Sony is still losing money on each PS3 they sell, so how come you're saying that they expected to make money out of it by selling more of them because of the name? How can a "misunderstood demand" cost them money in this case? The less sold, the less money lost.
Could it be that they expect to make money out of it in the next 6-7 years - as they always said - and that right now they are not after marketshare - as they also said - if not for the amount necessary to have at least parity of treatment with the 360 among developers?
I'm no businessman, but that's very reasonable and it's what I would expect to do if I wanted to market a console selling it at a loss for the inital part of its lifecycle. Maybe the truth is simple in this case?
Judging by your illogical post I must say you are the living embodiment of the mark twain quote on your tag.
Ignorance is rife on vgchartz these days.
Let me break this down for you in simple terms. Sony expected the ps3 based on playstation name, to sell at for 599$ when it was realeased.
Reality - the ps3 did not sell well at the $599 price and it was consistently beaten by the gameboy advance. This is why sony lowered the price faster than any console in history in 2007. This led to massive annual billion dollar losses.
In Sony's financial statements they openly admit that the debt incurred due to the ps3 will likely never be recovered.
So let's recap - Sony dropped from 70% to 20% market share and they have incurred over 4 billion dollars of debt. Sony lost all of the money the ps2 made on the ps3 fiasco.
This is a horrible business strategy any way you look at it.
First of all I thank you for stooping down to my level of ignorance and for breaking it down in simple terms. I feel much better now, enlightened and all fuzzy inside.
I only have a few questions for you, I hope you might be as calm and useful as in your latest post.
"Sony expected the ps3 based on playstation name, to sell at for 599$ when it was realeased"
And still, it was sold at a loss, a much bigger loss than the following hardware revisions actually: it did cost $840 to make.
This doesn't sound like someone wanting to make a profit out of the hardware, this sounds like someone knowingly selling it at a loss to early adopters and tech enthusiasts to put a foot in a market where MS's console was getting turf undisputed and help with the ongoing format war between BluRay and HD-DVD.
... But I am so illogic that you will surely explain me why it is not so, and how they wanted to make money by selling many of them at a loss thanks to their brand.
"Reality - the ps3 did not sell well at the $599 price and it was consistently beaten by the gameboy advance. This is why sony lowered the price faster than any console in history in 2007. This led to massive annual billion dollar losses. "
In 2007 Sony introduced a starter pack bundle for $599, when the hardware revision had brough down the cost to $804. Then about 9-12 months after the launch the 80 and 40 GB models were introduced with simplified hardware with again lowered production costs.
In my ignorance I would have said that a major hardware revision like this must have been planned for some time, that you can't redesign the mainboard, the BC subsystem and the firmware on a whim. That such alternative designs were probably under work since before the launch and that when you collaborate with IBM and Toshiba to design a new family of chips to include in consoles, TVs and other electronic systems you also plan in advance a several years long roadmap for both features/performance and cost reduction by fabrication at smaller scales, as employed in revised 40 Gb models sold for $399.
That when you embark on such enterprises where digital media market is at stake you are ready for losses upfront, such as Microsoft gladly losing 4 billion dollars in the first 4 years of their Xbox division, in exchange for market penetration in diversified fields.
... But I will be glad to hear you explain me how not selling enough consoles at a severe loss and being beaten in sales by the gameboy sent them into a panic to lower the selling price even more. And how this is due to their inability in multiplying two numbers (loss per console x console sales).
"So let's recap - Sony dropped from 70% to 20% market share and they have incurred over 4 billion dollars of debt. Sony lost all of the money the ps2 made on the ps3 fiasco.
This is a horrible business strategy any way you look at it."
In my ignorance, I would have thought that "20% market share" as in PS3/(PS3+360+Wii) is not significative at all in business terms. That the PS2 that constituted the 70% did not suddenly disappear just because this site or other sites decided to track the "current generation" consoles as a single market. That in business terms the thing that counts while you're selling console hardware at a loss is to keep developers producing software for your system and people buying games for it to rack up license money.
That estabilishing BluRay as the physical medium of choice for the next years, having an upgreadable media hub and client of network media services in quantities almost on par with MS, notwithstanding the 14 months delay, and bringing almost all developers on board with at least multiplatform releases could be looked at as successful aspects of the business strategy.
...But I expect your explanation on how nothing of this has any value
Last but not least, I am glad that you like Mr Clemens' quote in my signature. Ignorance and confidence seem to go hand in hand indeed.