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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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Not bad
By Mach Omega on 1/8/2008 2:19:52 PM , Rating: 4
I'm not saying it was intentional, but the moderate sales of the PS3 have actually been an advantage to Sony. If it had been selling like the Wii, that actually could have broken Sony as it was taking a bath on each unit. The PS3 has sold well enough to get decent market penetration and snuff out HD-DVD. Now that component prices have fallen to the point that Sony may start to break even on each unit, the upswing in sales is well timed.

I've gotten WAY more use out of my PS3 than my PS2 (or Xbox). The damn thing is built like a tank and quiet as a mouse even after hours of gaming. Now that some decent games are available for it, I'm using it even more. Uncharted was incredible and Ratchet & Clank kicks ass (and I almost never play platformers). Plus, I don't have to pay to play CoD4 online so that's a nice bonus.

My PS3 purchase looks smarter and smarter as time goes on. I won't deny that I feel a twinge of envy whenever I see BioShock or Mass Effect on the shelves but at least I have Haze and MGS to look for to. Free online play, wi-fi, BD and added value for my PSP, which has found new life with my PS3, has definitely made it worth the purchase. If the games coming out for the PS3 are as good as expected, I wouldn't be surprised if it starts to outsell the 360 this year.

RE: Not bad
By rudy on 1/9/2008 2:16:27 AM , Rating: 2
I don't think so, if they had been selling like the wii, they would have been able to keep the same models they debuted with for the same prices and possibly be profitable already. Through several price cuts from sony and MS the wii has stayed the same and stores have actually looked for tricks to get people to pay more.

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