Sony profits down, but PS3 sales up The financial results for Sony's first quarter of 2008 are out, and things aren’t looking good. However, the firm's PlayStation business will be smiling because PS3 and PSP sales increased. For three months ended June 2008, Sony only brought in ¥35bn (£163m/$326m) – representing a 47 per cent drop from the ¥66.5bn (£312m/$618m …
I see lots of claims about numbers of consoles sold but no actual numbers of how much money the PS3 made for them. I wonder if this is because they still lose money for every machine sold and that overall software numbers are still not big enough to offset the cost of the console. How does this make them the jewel in the crown?
In fact I would suggest the SCE division is at least partially responsible for this massive dip in profits as it continues to bleed cash.
It's hard not to see a Sony bias in the Reg when you so blatantly turn dismal results into a win for Sony.
The PS2 saw a decline and still shifted almost as many units as the PS3... Why would inferior hardware with inferior games... umm... I mean less graphically impressive games... shift almost as many units? Could it be because there are actually a host of games worth playing on the PS2 for a reasonable price?
I'm amazed they're still in profit. Their most successful product loses them money and they're not the electronics leader that they used to. The PS1 and Triniton were the last two Sony products which really led their markets, now Sony equipment ranges from "better than average" (plasma TVs) to "dire" (home audio).
Personally I'll be glad to see the back of them. I refuse to buy their products, because unlike some Microsoft software classes (not windows), their competition is actually a lot better.
Having thought about it for a bit I reckon it's pretty obvious why Sony deliberately sold each PS3 at a loss, I thought it was public knowledge?
They did it primarily to win the BD/HD format wars... just because HD-DVD is now dead, they can't RAISE prices, can they?
I reckon they expected it to take longer to win that fight. But they certainly factored in a loss for at least the life of the PS3.
They also sell the best machine out there, arguably. The Cell CPU is powerful and flexible, as is the PS3 (you can build hardcore Superclusters withem), and they're BD and HDTV ready....
I reckon they are planning for the future in a big way. Lose millions now, but get as many of these cut-price cutting edge boxes in homes that can afford them and you've got a damn loyal and moneyed market. The kind of people that buy Sony HD TVs and Sony games and watch Sony Movies on Sony's own BD discs.
After years of decline they've gambled a significant amount on this, and they've all but won, looking at the figures and HD-DVD.
They'll see a return on their investment for years to come but it won't be in the PS3 division.
At the end of the day sony are winning the HD format war, bluray wins hd-dvd dies, thats what a lot of the ps3 is about. It helps that the ps3 is also the far superior console spec wise but damn is it hard to develop for compaired with the 360. For those that cant afford a ps3 fine go get a 360 and have fun, for those that can well we just get both.
For the record my ps3 runs almost silent where as my 360 sounds like a hairdryer. Im thinking of selling it to get another quieter unit, but long story short fanboys arnt the true market for ether sony or microsoft, is the people who will buy their console regardless of what they already own for their exclusive games because those are the people with the money to spend.
Allegedly the Wii is made at a profit.
The PS3 is made at a loss, supposedly; this is common in the industry - the console manufacturers make their profits initially by taking a cut on game sales. If you pay $100 for a game, the console manufacturer gets $10-20.
In the later lifetime of the console the hardware price has gone down and game volumes are higher, so that's when the real money is made.
...Ronny
Ahh, a comment that somebody daren't even put their name to. I think that the fanboi before you was trying to point towards the overheating issues that cause the 360 to RROD, because the already loud fan doesn't actually do its job well enough.
It was actually the reason I chose a PS3 while two of my colleagues bought 360's. A choice which turned out to be justified when BOTH of their consoles recently died and had to be sent back for repair the second the weather started to warm up.
"The PS1 and Triniton were the last two Sony products which really led their markets,"
Apart from the PS2, which I believe has sold over 100 million and continues to sell.
"Historically every console is sold for a loss."
No, not every console. Initially that might be the case for *some* consoles but only for a brief time before economies of scale kick in. According to Sony, it was not only selling each console for a profit but had also paid back its $2 billion development cost by the time it passed 20 million - and that is before software licensing fees.
The maths is simple. The PS3 has cracked 10 million in sales. Say each console has sold for a $50 loss. In order for your loss theory to be true, you've got a $500 million hole in the books somewhere in addition to the $2 billion or so spent developing it.
It is the same with the Wii - a loss on each of 12 million consoles sold should show up somewhere, but Nintendo is rolling in cash.
(Acts of Gord explains it better - http://www.actsofgord.com/Proclamations/chapter02.php)
...It is the Sony Erricson phone ventures that have cost them more dearly as a company than any of their other arms. They poured money into higher end handset development and the consumer hasn't wanted them.
Read any of the business press. PS3 Sales might not be as high as they wanted but most the business analysts in the press seem to hint that the relatively steady income from various playstation strands and software have, if not significantly boosted profits, stopped them slumping further than they have.
No this isn't a pro PS3 comment either before someone says!!
Don’t turn your PS3 on while its still in its box, I know you don't want to damage it since it cost you the deeds to your box but you are in fact causing it harm, remember folks always give your PS3 oxygen.
As for Selling for a loss, don’t forget that this extended warranty that Microsoft has put on the Xbox has cost them a fortune in red ring of death (currently on my fourth) repairs.
"The thing sells for €400, where is the loss?" ... I can't believe I'm even going to bother responding to that, but respond I will.
The loss is where "the thing" costs more to produce than the manufacturer sells it to the wholesalers for.
It's called a "loss leader" -- lose money on the console, recoup it via software sales (hopefully). Which is, as has been pointed out a few times already, is common practice (though not always the case) in the console market.
Hmmm I was quite restrained *pats self on back*
Surely than can't really mean 150m PS3 sold in total? That would mean maintaining the current rate of sales (listed here as 1.5m in Q1 - so be generous and say total 10m per year) for 10 years! I can't really believe that they think that this will be the case. I could understand 50m units - so 5 years. Is this a typo?
Well, Sony, in the 1970s, used to be a company who produced high quality products which could be relied upon. Indeed, this was the case into the 1980s as well.
However, since the late 80s the quality plummeted. Two cases in point, a TV I bought in 1990 and a HiFi I bought at around the same time both died horribly within 5 years and the sound on the TV was terrible too. (This contrasts with the Pye (Philips) TV bought in 1984 which is still going strong.)
Sony stuff is basically tat now, it's not surprising that their profits are shrivelling.
As for the PS3, it's a good product... i.e. it's a great Bluray player which happens to play (a small selection of) games as well. ;-)
Seriously, though, they would have shifted a heck of a lot more units of the PS3 if they'd have kept hardware PS2 compatibility as the amount of PS2 software out there (and still being produced without PS3 versions) is large. Despite the extra costs per unit involved I'm sure they'd have been able to recoup the costs easily with a smaller margin but higher sales.
Ok, a couple have gone down the right lines with this, but just to make it easier for the masses:
The PS3 is sold at a profit per unit (This is a key point).
The outlay for the PS3 was HUGE (Some say 2billion..)!
Sony are still paying back the HUGE outlay (They are maknig a dent, but it still needs paying off).
Currently, the PS3 division is still in -ve accounts, even though each unit is sold at a profit (although, it didn't to begin with...)
Ergo (vis-a-vie), the PS3 is not making Sony a profit.
No positive spin on this.. it's just the way it goes. Nintendo are in profit over the wii because it's not had to invest billions into it's core hardware, just the controllers. Microsoft have pushed a lot of dough-re-me into the Xbox360 to compete with Sony - they have been hit hard with a few things (namely the HD-DVD fiasco), but generally they are doing ok.... except for the firesale of their unit, but even then, the unit is (I believe) still making them a profit.
Personally, it all comes down to the quality of the product:
PS3 - Quality product with very little going wrong with it on the hardware side.
Wii - Qaulity product, but not a next-gen console. Instead a solid hardware base with an excellent user interface that is currently seconded by none!
Xbox360 - With quite a few niggles and issues with hardware, the newer versions of the high end boxes seem to be sorted now. Some people still bitch and moan about the quality, but the end result is a solid games machine.
I have all three, and have to say that the PS3 is my preference for quality; the games for the Xbox are superior, and the Wii's interface is extremely well received. How about a contribution from all three companies to make one super-duper games console??? Now THAT would be something!!
I own neither of the next-gen consoles, my gaming is done on a PC, but this fan-boy bollocks just gets on my tits.
Both companies have yet to make a profit on their next-gen machines.
The previous gen (PS2 and X-Box), Sony made a profit from day one of the console, because the Emotion engine was made at a Sony fab. MS bought everything off the shelf from other people.
MS have yet to make a profit in the console market, ever. They've openly admitted that they are in this for the long haul and are willing to throw money at it to get their market share up, which isn't working outside the continental United States - sales of the 360 and PS3 are broadly similar in Europe and in Japan 360 sales are negligable.
At the end of the day, neither company is altruistic, they are both in it for the money, if anyone thinks different they really need to pull their head out of their arse.
Look at the PS2 sales curve, as the product evolves and becomes cheaper to produce, and hence cheaper to sell, more people buy it.
For the next 6 years, PS3 sales will ramp, and then plateau.
150m is a very achiveable target, especially when you consider it's likely to be the best and cheapest Blu-ray player for some time to come..
At the moment, PS3 is well ahead of the PS2 sales curve, and that sold ~130m to date, as more and more homes have tech goods, then more and more will turn onto PS3.
The PS3 will only remain among the cheapest Blu-ray players while Sony continue to subsidise all those billions in development costs with software sales. As you yourself suggested, Sony can't sell it at a loss for long.
But it's plainly obvious that the PS3 is not what you'd design as the most efficient method of playing Blu-ray films. As the format matures, system-on-chip designs will start to undercut that dramatically - a PS2 is over 4 times what you can pick up a standalone DVD player for. Samsung, Panasonic and indeed Sony themselves have players that can be had for less already. That they're last year's spec isn't going to be an issue now the Blu-ray consortium finally have a standard they're hapy with.
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