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Sony expects to ship 11 million PS3s this fiscal year  (Source: SCEI)
Sony Computer Entertainment Inc. reports net loss of $237 million, income up 60 percent

At the helm of Sir Howard Stringer, Sony Corp. is now a profitable organization. For the quarter, Sony had $16 billion in sales and registered a profit of $808 million.

That’s not to say, however, that every single division of the electronics giant is making money. Sony Computer Entertainment Inc. had a net loss of $237 million, although income was up 60 percent.

For the quarter, Sony shipped 0.71 million PlayStation 3 consoles, 2.7 million PlayStation 2 consoles and 2.14 million PSP handhelds. On the games side for the quarter, Sony shipped 4.7 million PS3 games, 31.1 million PS2 games, and 9.9 million PSP games.

The latest NPD Group sales data continues the ongoing trend of the older PlayStation 2 outselling its next-generation iteration. During June, the undying PlayStation 2 sold 270,700 units, while the PlayStation 3 was the lowest-selling, current-market console, with only 98,500 units.

Sony’s forecast for the rest of the fiscal year expects that the PlayStation 2 to continue its strong sales with plans to ship 10 million PS2 units. The company has great hopes for the newer console, however, and plans to ship even more PlayStation 3 units at 11 million units. Sony has said that sales of the PS3 have been up 135 percent since the price cut of the 60GB console.

Sony also intends to ship 9 million PSP, which was the highest selling console for the company last month. The new slimmer, lighter hardware may further spark sales once it ships this fall.

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Nothing new
By mdogs444 on 7/27/2007 9:19:06 AM , Rating: 3
quote:
Sony Computer Entertainment Inc. had a net loss of $237 million, although income was up 60 percent.


This just goes to show that the PS3's features & price point may have been a bad idea from the start. Im not arguing that they are not top notch, state of the art, and great for gamers....but sometimes too much functionality can cost you, and thats exactly what's happening here.

Income was up, because of the increase in sales figures of the 60gb PS3 at $499, as well as with how the PS2 is selling strong. But problem is they are probably still losing money on the PS3, so the more they sell, the more income, but the more net loss. Not exactly a good business equation.

The PS2 is saving the Sony Computer Entertainment division. Its low price point, plus a next to nothing cost to produce anymore is the only thing keeping the net loss from growing. Of the $130 it cost to buy a PS2, probably 50% of that right now is profit. We know the PS3 is not profitable and is probably losing about $150 - $200 per console.

Sony also counts on high sales of accessories for their consoles - memory cards, controllers, etc. With the ultra low sales figures of the PS3 - up until the last few weeks - the accessories sales are so low that they cannot recoup and be where they want.




RE: Nothing new
By therealnickdanger on 7/27/2007 9:29:49 AM , Rating: 2
First off, the majority of 60GB PS3s sold at the normal $599 price, not the $499 price. Every Playstation-related piece of hardware and software contributed to their income. You actually have it backward. Selling more volume of the PS3 will help them, not hurt them. More hardware sales means more software and accessory sales, which will support them until they reach a status of profitability on the hardware.


RE: Nothing new
By mdogs444 on 7/27/2007 9:36:42 AM , Rating: 2
I didnt say the majority of the 60's sold at 499. I said the recent sales (up 135% because of the 499 price tag) helped contribute.

quote:
You actually have it backward. Selling more volume of the PS3 will help them, not hurt them. More hardware sales means more software and accessory sales, which will support them until they reach a status of profitability on the hardware.


I dont have it backwards, read my post clearly. I stated that they lose profits on each console sold, but make their money off accessories. With the low amount of consoles sold, that means low sales of accessories which is they they are not profitibale right now.


RE: Nothing new
By h0kiez on 7/27/2007 9:42:42 AM , Rating: 2
I hate Sony and their BS, but we're in the 2nd or 3rd inning of a 9 inning game. Relax and stop trying to pick winners at this point. I don't have a PS3 and have no interest in one at the moment, but I'd be willing to bet I'll own one 3 years from now.


RE: Nothing new
By mdogs444 on 7/27/2007 9:47:45 AM , Rating: 1
No one is predicting winners or losers. In fact, not a single other company was mentioned. This was about their net loss in the Computer Entertainment division, and why.

I dont have a PS3 or a 360 or a Wii. In fact, i dont really even play games at all, i just like to keep up on the new technology - as well as companies profits and fiscal reports because i have alot invested in tech stocks.


RE: Nothing new
By akugami on 7/27/2007 9:51:25 AM , Rating: 2
quote:
This just goes to show that the PS3's features & price point may have been a bad idea from the start. Im not arguing that they are not top notch, state of the art, and great for gamers....


I'd argue that such a high price is indeed bad for gamers. Keep doing it and you'll effectively commit seppuku (suicide). This takes a player out of the game and reduces diversity. As much as Sony's games development is derided for most of it's life, they have come out with some decent games like Ico.

And as much as I like Nintendo, it would be bad for the industry if there was only one console maker around. I think Nintendo got a bit complacent after the SNES. The N64 helped bring us the analogue stick but nothing truly has improved in controllers since then. I do believe the DS and Wiimote is a direct result of Nintendo's poor (though still profitable) last two consoles. MS is putting up decent sales numbers with an impressive net loss. We need both Sony and MS to shape up. They seriously need to shape up. And although I own the Xbox as well as 360, it's looking like the 360 will not be a profitable console at all. I'm not talking about one or two quarters of profitability but the console as a whole from the beginning of it's development to it's end.

On the plus side for Sony, it's movies divisions are doing good...but only because of Spiderman. They need to produce more hit films, not necessarily over budgeted summer blockbusters, just good films that people want to see.

I've always liked their phone division Sony Ericsson. Two of my brothers as well as my GF owns various models. They make pretty good phones and along with Nokia are usually the two brands I first look at when making a new phone purchase.

Their camera division, while doing good, is one I don't like. I have a preference for Nikon and Canon. Probably a case of consumers seeing the familiar Sony branding on the cameras.


RE: Nothing new
By mdogs444 on 7/27/2007 9:56:05 AM , Rating: 2
quote:
I'd argue that such a high price is indeed bad for gamers. Keep doing it and you'll effectively commit seppuku (suicide).


I agree, and thats what i meant. I was saying the price is terrible...but the features of the console are great.


RE: Nothing new
By omnicronx on 7/27/2007 10:20:17 AM , Rating: 2
The price maybe high, but for all those who know what kind of computer it takes to run the equivalent games on a pc with the equivalent graphics, you would realize why the pricepoint is so high. The ps3 is not aimed at those interested in just gameplay, you want that go buy a wii, the ps3 is for those who want a cutting edge system with amazing graphics period!. Sony just overestimated on how many people will actually care, i know i do .. and maybe you do, i was a former avid pc user until console games started to compare with pc games. But too bad for sony most of the market just does not care, and i think it was a major oversight.. but once again, they would have been damned if they did, damned if they dont ;)

All im trying to get at is no matter what sony did people would have whined; if it was cheaper but the graphics were subpar, people would have said "WELL IM STICKING WITH PC BECAUSE THE GRAPHICS ARE BETTER", and of course on the other end we know how it worked out at the current pricepoint.


RE: Nothing new
By mdogs444 on 7/27/2007 12:27:16 PM , Rating: 4
Actually, it doesnt take that powerful of a pc. A basic dual core system(amd ~ $130) w/ 2gb ddr2($74) and a 7900gs ($100) would play those games at max settings.


RE: Nothing new
By smitty3268 on 7/27/2007 10:23:54 AM , Rating: 2
It's not like this is a surprise or anything. Sony knew it would lose money on the PS3 initially, and is counting on software and movie sales to make it up. Eventually the hardware will become cheap enough they can make money on it as well, just like they're doing now with the PS2 sales.


RE: Nothing new
By masher2 (blog) on 7/27/2007 11:00:54 AM , Rating: 2
> "so the more they sell, the more income, but the more net loss. Not exactly a good business equation."

Its the equation that made them fat, rich, and happy on the PS2. Losses today in exchange for much larger gains tomorrow. It's essentially the same business model used by makers of inkjet printers and (some) electric shaving razors.

Will history repeat itself for Sony? I rather doubt it, at least to the same degree. But that doesn't mean the model itself is flawed.


Let me get this straight
By FITCamaro on 7/27/2007 12:05:26 PM , Rating: 3
quote:
The company has great hopes for the newer console, however, and plans to ship even more PlayStation 3 units at 11 million units.


So despite only selling < 4 million units in 8 months, they think they're going to sell 11 million in the remainder of the fiscal year? Granted I don't know what their fiscal year is but even if it just began and they had until July of 08 to sell that many, they'd have to nearly triple sales to hit that target. And raising the price of the PS3 back up to $600 doesn't really help them. Sure they'll probably again lower it to $499 this holiday season but its still expensive and out of reach for most. Especially when parents have the far cheaper Wii to buy and the 360 at a cheaper price point with far more games.




RE: Let me get this straight
By adam92682 on 7/27/2007 12:18:51 PM , Rating: 2
Maybe that executive that said he would pay $1200 for PS3s that are still on store shelves if finally going to make good on his promise.


RE: Let me get this straight
By deeznuts on 7/27/2007 2:12:00 PM , Rating: 2
Well they sold 4.8M I think (for 4.58 something like that) as of last count, with almost no games to speak of. This holiday season with games should be a better one. It is possible.

I think their FYE is March 31.


RE: Let me get this straight
By FITCamaro on 7/27/2007 2:35:13 PM , Rating: 2
VG Chartz puts the current PS3 count @ 3.89 million. And I just don't see them tripling sales in 7 months.


RE: Let me get this straight
By Legolias24 on 7/27/2007 2:45:02 PM , Rating: 3
While I agree Sony probably won't triple their sales over the next 7 months (although I hope they do), the article didn't say they were hoping to sell 11M units in this fiscal period. The article stated that they were going to SHIP 11M units. And as many people have pointed out (usually to support their argument about Sony failing) that shipping is not the same as selling.

But again, I do agree that the likelihood of Sony tripling (sp.) sales over the next 7 months is...well not that likely! :P


RE: Let me get this straight
By pakigang on 7/29/2007 2:11:21 AM , Rating: 2
Games like Metal Gear, Kill Zone 2, Heavenly Sword, LittleBigPlanet, to name a few, if released on time can possibly make it.


The weak YEN !
By crystal clear on 7/27/07, Rating: 0
RE: The weak YEN !
By smitty3268 on 7/27/2007 10:30:05 AM , Rating: 2
I don't know how weak the yen has gotten, but it's hard to believe it's gotten weaker faster than the dollar has the last few years.

It would be interesting to see another report on how much it costs to make the PS3. The only one I could find was that initial report saying it cost over $800 but prices for components have come down quite a bit since then.


RE: The weak YEN !
By crystal clear on 7/28/2007 5:29:11 AM , Rating: 2
Its the Yen against all major currencies & not only the USD.
like the Euro,pound/sterling,etc etc.

Yes production cost have definitely fallen,especially the blu-ray componnents,cell processor,etc etc.
Sony cannot deny it.

To summarize it-lower production cost & the low yen all put together enables Sony to lower its prices.


RE: The weak YEN !
By crystal clear on 7/28/2007 10:01:55 AM , Rating: 1
additions to the above post-

Sony's PS2-PSP Docking Patent

http://kotaku.com/gaming/top/sonys-ps2+psp-docking...


RE: The weak YEN !
By roadhog74 on 7/30/2007 4:22:28 AM , Rating: 1
The USD is significant because a lot of currencies are pegged
to it I know the Chinese and Malaysian currencies are i am
pretty sure the Taiwanese currency is as well.

Whats more most multinational trading companies would
hedge against the currency quite firmly. Sony after all
tries to make money out of appliances and IP not currency
fluctuation.

Most of a PS3 would be made outside of japan anyway.

Therefore it is unlikely the the YEN has much if any
impact on the price of the PS3.


By Carl B on 7/27/2007 10:01:07 AM , Rating: 2
The first paragraph of the article states:

"At the helm of Sir Howard Stringer, Sony Corp. is now a profitable organization. For the quarter, Sony had $16 billion in sales and registered a profit of $808 million."

But Sony has *always* been profitable, with no yearly loss reported in eons. Sure some quarters have had a loss, but that's been as much the case under Stringer as not.




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