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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.

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RE: too ambitious?
By reader1 on 1/8/2008 11:00:41 AM , Rating: -1
The PS3 has been outselling the 360 worldwide since the end of November. It's also selling at a faster rate than the Xbox 360 was at the same point in its lifespan.

It's going to be interesting to see how sales pick up now that Blu-ray has won. The PS3 has always been the better overall value than the Xbox 360. But, with the format war, the Blu-ray feature wasn't as effective as it could have been. The PS3 should outsell the 360 this year.

Also, Sony is apparently allowing the PS3 to transfer Blu-ray movies to the PSP (a smaller version of the movie).

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.

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