Print 40 comment(s) - last by jjabrams.. on Jan 15 at 7:37 AM

Sony hopes to stop losing money on PlayStation 3 next fiscal year

The PlayStation 3 is an expensive piece of hardware for both consumers and SCEI. The entry price of the PlayStation 3 fell significantly in 2007 – and while component costs also went down, Sony was still selling hardware at below cost.

At the time of the PlayStation 3 launch in mid-November 2006, iSuppli estimated that Sony was losing $240 on each 60GB PS3 and $300 on each 20GB PS3 that it sold.

Sony’s gaming division chief Kazuo Hirai spoke at a news conference at CES revealing hopes of turning a profit in the next fiscal year.

"We want to get to the positive side of the equation as quickly as possible," said Hirai in a Reuters report. "The next fiscal year starts in April and if we can try to achieve that in the next fiscal year that would be a great thing. We are going through the budgets right now. That (profitability) is not a definite commitment, but that is what I would like to try to shoot for."

The introduction of the 40GB PlayStation 3 SKU brought the entry price of the system down to $399 – a price that managed to entice buyers to finally put down their money. Sony said that it sold 1.2 million PlayStation 3 consoles throughout the holiday season, representing two-thirds what it sold in the rest of the year.

Given Hirai’s sentiments that the company is looking to "get to the positive side of the equation," gamers will likely see the $399 (for the 40GB) and $499 (for the 80GB) price points sustain throughout the foreseeable future.

Hirai’s comments also inadvertently reveal Sony’s failure to meet hopes of turning a profit by the end of this fiscal year, which ends March 2008. Sony said in July 2007 that had hoped to eliminate the negative margin during this period.

“For the negative margin to go away, the big trigger would be the cost-down in the Cell and RSX semiconductors. They are the key, and also optical pick-up is another factor, significantly,” Sony executive VP Nobuyuki Oneda said in 2007.

Comments     Threshold

This article is over a month old, voting and posting comments is disabled

too ambitious?
By dome1234 on 1/8/2008 10:40:37 AM , Rating: 2
sale of ps3 is trailing both 360 and wii, and it's still the priciest box out there gaming-wise (it's a bloody good bluray player to be fair). Instead of pursuing profit, a price cut might be more 'profitable' in the long run.

RE: too ambitious?
By FITCamaro on 1/8/2008 10:45:59 AM , Rating: 2
Honestly I see $400 as a good price for the PS3. The real reason I haven't put down the money is the games. You people who own one can cry all you like, but I already have a 360. There's just not enough exclusive games that I want to buy.

Heavenly Sword wasn't rated that highly and is extremely short. Ratchet & Clank doesn't appeal to me. And the few other exclusives just aren't drawing me to it either. About the only thing that's got a shot is Final Fantasy and Metal Gear Solid. But then I'm not sure I want to drop $600 when it's all said and done just so I can play those games. And MGS4 might come out on the 360 anyway. So that just leaves Final Fantasy.

If Square Enix releases a new Final Fantasy based MMO as a sequel to FFXI though, that'll get me to buy a PS3.

RE: too ambitious?
By SirLucius on 1/8/2008 11:05:15 AM , Rating: 2
There's just not enough exclusive games that I want to buy.

Nobody can argue with that. If the games don't appeal to you, than that sucks for Sony. But at least you're not saying nothing is available.

RE: too ambitious?
By jjabrams on 1/15/2008 7:37:10 AM , Rating: 2
Having that one killer title really makes you WANT one but otherwise the wallet/missus decides that you just dont need one because its going to burn that huge hole in your wallet.

RE: too ambitious?
By ajfink on 1/8/2008 11:55:16 AM , Rating: 2
I might buy a PS3 when they drop to the $299-$350 range. There just aren't enough worthwhile titles for it yet that I can't get for my 360. That might change, and if it does...hell, I'll have a Blu-Ray player.

RE: too ambitious?
By HighWing on 1/8/2008 1:18:35 PM , Rating: 1
I love the PS3 and think it's a great piece of all in one Hardware, but as much as I hate to admit it, there just aren't that many games out there for it that I am interested in other then GTA4 and YES I am interested in the @Home (if it ever launches).
Other then that, I would have to say I bought mine as a Blue-Ray player and replacement for my PS2.

RE: too ambitious?
By Tiamat on 1/8/2008 3:31:00 PM , Rating: 2
True, I dont mind the 400$ price at all. But, the games available now don't appeal to me either. I bought the PS2 solely for FFX, then got roped into Gran Turismo 4, and other games. For the PS3 to be justifiable for me, I need at least Gran Turismo 5 and one of the FFXIII titles. Looks like I might be buying a ps3 this next christmas, but not much sooner than that.

RE: too ambitious?
By Chris Peredun on 1/8/2008 4:09:36 PM , Rating: 2
Assuming it makes the rumoured launch date of November 15, 2008, God of War III will bring in another bumper crop of PS3 sales next year at around the same time.

RE: too ambitious?
By reader1 on 1/8/08, Rating: -1
RE: too ambitious?
By dwalton on 1/8/2008 11:12:57 AM , Rating: 2
It not a question of outselling the 360 worldwide (the PS3 has done that before), its a question of maintaining the current sales advantage.

Spring is the time of traditional price cutting and if the MS knocks off an additional 50 dollars off the 360 and Sony can't follow we might see an reversal of position again.

Sony has cutoff 33% of the original retail price within the first 12 months. While MS just trimmed 6.7% off the Core/Arcade and 12.5% off the Premium in the first 26 months. MS should have more flexibility in price cutting this year.

RE: too ambitious?
By FITCamaro on 1/8/2008 12:17:43 PM , Rating: 1
How do you figure that when Microsoft sold 4.3 million 360s over the holiday season and Sony only sold 1.2 million PS3s?

RE: too ambitious?
By Future145 on 1/8/2008 12:32:23 PM , Rating: 2
i doubt that they sold 4.3 million in 2 months, overall yes but not in 2 months

RE: too ambitious?
By FITCamaro on 1/8/2008 12:40:52 PM , Rating: 1

3 months.

Sony sold it looks like around maybe 300,000 PS3s at best worldwide in October. So if their 1.2 million figure was November-December, 1.2 million + 300,000 = 1.5 million. Hell lets call it 1.6 million.

Still a far cry from the 360s sales.

RE: too ambitious?
By reader1 on 1/8/2008 12:48:20 PM , Rating: 2
That's 4.3m worldwide for the 360 from Oct-Dec. The 1.2m is North America only for the PS3 from Black Friday to New Year's.

I made a mistake, vgchartz now only shows the PS3 has been outselling the 360 since Christmas by a small amount.

RE: too ambitious?
By deeznuts on 1/8/2008 12:56:26 PM , Rating: 2
Please please do not use VGChartz. Just wait for the earnings report from each company. Those are the numbers I only truly trust. They come out end of this month I believe.

RE: too ambitious?
By deeznuts on 1/8/2008 12:55:03 PM , Rating: 2
Ehh, I think you've been corrected but yeah, 4.3M over three months worldwide for the 360. 1.2M from black friday to the end of the year (a little more than 5 weeks) just in North America for the PS3. 2 totally different numbers.

RE: too ambitious?
By SirLucius on 1/8/2008 11:02:33 AM , Rating: 3
You have to remember world wide Sony is doing pretty well. It's sales figures (globally) are about the same as or better than the 360's at a similar point in it's life cycle. Plus more of the exclusives that people have been waiting for will be coming out this year.

It may be tough, but with recent developments with the HD war and some of the big name games people have been waiting for set to come out, I think it's definitely possible for the gaming devision to turn a profit.

RE: too ambitious?
By defter on 1/8/2008 11:56:46 AM , Rating: 2
Wait until Bluray wins a HD format war. Suddenly $399 price for a PS3+Bluray player is not so bad compared other alternatives (console + separate Bluray player)...

RE: too ambitious?
By Flunk on 1/8/2008 12:36:01 PM , Rating: 2
If this happens, expect to see a Xbox 360 + Blueray player. Microsoft will do anything to compete with Sony.

RE: too ambitious?
By omnicronx on 1/8/08, Rating: -1
RE: too ambitious?
By tallcool1 on 1/8/2008 1:16:50 PM , Rating: 3
Sony themselves would not stop Microsoft from acquiring a BD license! There are 9 companies (Matsushita, Pioneer, Philips, Thomson, LG Electronics, Hitachi, Sharp, Samsung, and Sony) that form the Blu-Ray Disc Association that develops and license Blu-ray Disc technology.

In fact, I would be willing to think that they would allow it. All 9 companies would stand to profit from it.

RE: too ambitious?
By omnicronx on 1/8/08, Rating: 0
RE: too ambitious?
By ElrondElvish on 1/9/2008 5:04:54 PM , Rating: 2
Thats a silly argument... Sony could *never* deny Microsoft a license to BD, as there are hundreds of millions of Windows PC's in the world (for business and pleasure). To do so would be suicide... its hard enough when Microsoft 'accidentally' breaks support for any tech it doesn't explicitly control on Windows, let along giving them any excuse to pull support outright.

RE: too ambitious?
By BrownJohn on 1/8/2008 1:17:43 PM , Rating: 3
That is what Microsoft wanted all along. They really don't care much about the blu-ray/hd-dvd war. They want people to purchase movies on Live, not through disc based medium where there are a lot more licensing fees. If Microsoft really cared about the war, they could have swayed many of the movie studios with sacks of cash.

RE: too ambitious?
By Alexstarfire on 1/8/2008 1:32:07 PM , Rating: 2
First off, it's not over yet. Secondly, like 90% of the population doesn't give a sh!t about HD. I'm in that group as well. Great for my computer maybe, but I don't have no HDTV and don't see myself being able to afford one within the next 5 years. You have to bring HDTV prices and HD player prices down as well. It's too damn expensive for most people.

RE: too ambitious?
By omnicronx on 1/8/2008 12:40:58 PM , Rating: 2
It's also now the cheapest BD player in many countries. I just bought one last night after the HD-DVD fall out news. In Canada the 40G PS3 is only $399, at Bestbuy the cheapest BD player is $450. Sad part is it took me 10 minutes to pick out a game, as I already have a 360, and the PS3 game selection is terrible. Unfortunately in my instance it proves that the PS3 may no longer only be bought for the gaming console, as it appears BD is going to be the winning High Def format.

RE: too ambitious?
By The0ne on 1/10/2008 12:17:51 AM , Rating: 2
You can't afford to lose on both ends. Usually when you're cutting the price of the system you're expecting to make some of it back or more from the software side. This is the case for PS3 or xbox. A company cannot survive if they keep losing money on the hardware and software side.

Having said the above, I'm not sure what Sony plans to do to be profitable this year. They really can't cut the prices down more. One option I do see is if they have the software support they did on the PS2 to drive everything, including the crappy ones. This time around though is much more difficult as Wii and Xbox are popular as well. There's only so many gamers out there of which specific regions are were not even consider in their plans. Wii has that covered :D

My freaking whole family loves this Wii! It's amazing to see people who had complained about gaming playing games AND having fun lmao.

"We shipped it on Saturday. Then on Sunday, we rested." -- Steve Jobs on the iPad launch

Latest Headlines

Most Popular Articles5 Cases for iPhone 7 and 7 iPhone Plus
September 18, 2016, 10:08 AM
Automaker Porsche may expand range of Panamera Coupe design.
September 18, 2016, 11:00 AM
Walmart may get "Robot Shopping Carts?"
September 17, 2016, 6:01 AM
No More Turtlenecks - Try Snakables
September 19, 2016, 7:44 AM
ADHD Diagnosis and Treatment in Children: Problem or Paranoia?
September 19, 2016, 5:30 AM

Copyright 2016 DailyTech LLC. - RSS Feed | Advertise | About Us | Ethics | FAQ | Terms, Conditions & Privacy Information | Kristopher Kubicki