Sony losing $260 per PS3?


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Sony losing $260 per PS3?

Thursday 15-May-2008 1:36 PM

Sony could be losing a significantly larger amount of money per PS3 shipped than it's letting on?

While Sony's recently-announced financial results showed that the company reduced its PlayStation division losses by over 100 billion yen last fiscal year, a factor it attributed largely to falling PS3 production costs, Jack Schofield at the Guardian speculates that the platform holder may be losing double the $130 per console shipped that its internal figures suggest.

"On Sony's own figures, the games division made a loss of ..."

Read the rest at CVG

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Not a huge shocker.. everybody was saying that it was impossible they were breaking even and it was obvious they were packing their revenue numbers from sales of PSP and PS2 always to show PS3 in better light.

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With the longevity of the PS2 I don't think taking losses now is going to be a big deal in the big picture. Sony wanted to put the best hardware into its console and its paying for it (literally) Microsoft didn't, they wanted a cheaper console and to make money, and as much as I don't like them, they certainly are achieving what they set out to do. Although Nintendo really owned them in both of those areas.

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With the longevity of the PS2 I don't think taking losses now is going to be a big deal in the big picture. Sony wanted to put the best hardware into its console and its paying for it (literally) Microsoft didn't, they wanted a cheaper console and to make money, and as much as I don't like them, they certainly are achieving what they set out to do. Although Nintendo really owned them in both of those areas.

I thought the consoles were nearly on par, hardware wise, each having advantages over the other in different areas. Aren't they?

I think the fact that costs Sony the most money was the Blu-Ray drive obviously. They will already make up for that in the future which will solidify millions (maybe billions :p) for them.

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I thought the consoles were nearly on par, hardware wise, each having advantages over the other in different areas. Aren't they?

I think the fact that costs Sony the most money was the Blu-Ray drive obviously. They will already make up for that in the future which will solidify millions (maybe billions :p) for them.

I think he's talking about the hardware used, cheap parts, not the raw horsepower of either console -- referring to disc drives that scratch DVD's, or the RRoD.

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The R and D that went into the cell processor took a huge chunk of cash. That coupled with the initial poor fabs of the cell caused them to go into the red ink. The choice for bluray was a big factor for losing money per console sold initially, but as bluray becomes cheaper sony will lose less per console and might even break even with smaller fabs of cell in the future. The xbox360 used a dvd drive and ibm processors. Im not saying that the choice of the dvd drive and ibm processors didnt work out or by any means makes microsofts choice bad. I just am saying its much cheaper to choose existing technology.

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The R and D that went into the cell processor took a huge chunk of cash. That coupled with the initial poor fabs of the cell caused them to go into the red ink. The choice for bluray was a big factor for losing money per console sold initially, but as bluray becomes cheaper sony will lose less per console and might even break even with smaller fabs of cell in the future. The xbox360 used a dvd drive and ibm processors. Im not saying that the choice of the dvd drive and ibm processors didnt work out or by any means makes microsofts choice bad. I just am saying its much cheaper to choose existing technology.

A big chunk of R&D for both were picked up by other companies -- Toshiba and IBM for the Cell, and Philips for the Blu-ray. Not only that, but they sold the Cell processing plants to Toshiba, and with the death of HD-DVD, they'll recoup in royalties from Blu-ray discs (both movie and game).

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I think he's talking about the hardware used, cheap parts, not the raw horsepower of either console -- referring to disc drives that scratch DVD's, or the RRoD.

Well it seemed like a cheap attempt at a fight, so I hope what you said is what he meant instead. :D

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Where's AB and his "blu ray & cell prices falling" malarky now? :p

Does this surprise anyone really? Especially with all the price cuts they are making, they definitely aren't out of the red by a long shot.

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Where's AB and his "blu ray & cell prices falling" malarky now? :p

Does this surprise anyone really? Especially with all the price cuts they are making, they definitely aren't out of the red by a long shot.

I think they have it under control. I don't think they need our concern.

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Its completely normal for companies to take losses on hardware and recoup them later in software. it has alwas been this way. This is nothing compared to how much MS has lost so far on the xbox\360 brand, I know that it is over $6 billion since the introduction of the xbox brand, and then their warranty extension they did with the 360 was said to cost them at lest a $1 billion. While the Playstation brand has been keeping Sony afloat for the past decade the xbox brand has been bleeding money for MS for start to present.

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Its completely normal for companies to take losses on hardware and recoup them later in software. it has alwas been this way. This is nothing compared to how much MS has lost so far on the xbox\360 brand, I know that it is over $6 billion since the introduction of the xbox brand, and then their warranty extension they did with the 360 was said to cost them at lest a $1 billion. While the Playstation brand has been keeping Sony afloat for the past decade the xbox brand has been bleeding money for MS for start to present.

The Xbox didn't make MS any money, but then it was their first venture into console gaming in an already crowded market. To make a second console was a surprise at all tbh. As for the 360, it has made money for quite some time now. Although I'm not sure what their situation will be these days with the 3yr warranty. With revenue coming from XBL (and all it's content) and a huge software attach rate, I don't think they have much to worry about :)

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The 360 was making money per lost console from jut before the first year was over roughly. the 3 ear warranty set them back a bit, but they where still making money on hardware sales by that time.

I also don't think they ever had losses of the kind the PS3 has right now, even if it is "only" 130. and they certainly where never close to the huge per console losses the PS3 had in it's first 6+ months.

yeah sure the money they make up from the PS2 helps them this time, but this was the first generation where neither of the next gen consoles could make money on their launch, or rather where the initial losses would be so high, next generation will be even worse as they'll require even more advanced technology to stay ahead and they can't charge what the components cost or noone will buy. the question is, while Sony is able to absorb the initial PS3 losses this round, can they do the same when it's time for the PS4 and even higher losses per console is likely.

of course much of the losses this round is due to bad tech solutions and decision on theirpart, like blu-ray where they have to buy the laser from a third party. with low production speed and high premiums, The Cell developement and ultimate failure at what it was supposed to do, the hack solution of adding on a graphics card in the 11th hour. Next round they're going to have to design and plan a lot smarter, cause Sony is barely affording their debt this time around, if they do this again, they won't be able to take the hit.

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The 360 was making money per lost console from jut before the first year was over roughly. the 3 ear warranty set them back a bit, but they where still making money on hardware sales by that time.

I also don't think they ever had losses of the kind the PS3 has right now, even if it is "only" 130. and they certainly where never close to the huge per console losses the PS3 had in it's first 6+ months.

yeah sure the money they make up from the PS2 helps them this time, but this was the first generation where neither of the next gen consoles could make money on their launch, or rather where the initial losses would be so high, next generation will be even worse as they'll require even more advanced technology to stay ahead and they can't charge what the components cost or noone will buy. the question is, while Sony is able to absorb the initial PS3 losses this round, can they do the same when it's time for the PS4 and even higher losses per console is likely.

of course much of the losses this round is due to bad tech solutions and decision on theirpart, like blu-ray where they have to buy the laser from a third party. with low production speed and high premiums, The Cell developement and ultimate failure at what it was supposed to do, the hack solution of adding on a graphics card in the 11th hour. Next round they're going to have to design and plan a lot smarter, cause Sony is barely affording their debt this time around, if they do this again, they won't be able to take the hit.

Couldn't have said it better (Y)

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The 360 was making money per lost console from jut before the first year was over roughly. the 3 ear warranty set them back a bit, but they where still making money on hardware sales by that time.

Actually, because they wrote off a billion dollars to account for RROD returns, they will not actually "make" money on 360 hardware for a long time.

Because it was a one time write off, it may seem like the 360 makes money from the next fiscal year, but the billion dollar damage is still there.

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not actually true but whatever.

remember the writeoff is the MAX they could ever get if every 360 broke. and it doesn't fully take into account that most of europe has very good consumer protection allready. so me for example any production fault with the 360 I would get repaired in warranty in the 2-3 years in any case, but because it's not a short life item, I think the xbox actually falls under the 5 year mandatory factory faults "warranty" all items sold here have to adhere to. So in large parts of europe extra costs for repairs hae to allready be calculated into the business, wich is also why stuff often costs more in europe, and not just the ~25% VAT.

Fact is they're far fro the worst case scenario they planned for, and in europe the warranty was mostly allready covered the economics and icnreased prices. and you are severly under estimating the mony they are making on the 360's.

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