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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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Trouble at Sony
By crystal clear on 1/9/2008 8:21:31 AM , Rating: 2
To refresh memories-

Sony has agreed to sell the semiconductor factories responsible for making PlayStation 3 chips to Toshiba in a deal expected to be valued at about Y100bn ($865m).

"Dubai fund takes stake in Sony"

Sir Howard Stringer, Sony's chief executive, said: "We are happy that the DIC has recognised the strength of the Sony brand as well as our unique competitive advantage in having both entertainment and electronics assets to drive our businesses forward in the digital age."

Although Sony is on track to meet its 5 per cent operating margin target this year promised by Mr Stringer, analysts are concerned that the prolonged losses in its games unit - in the red for seven straight quarters - are stymieing more robust results at the electronics conglomerate.

Then came this news item from a respectable financial source in India-

Zapak set to buy out Sony Online for $300 mn- Internet -Infotech ...
NEW DELHI: Zapak Digital entertainment, the online gaming company promoted by
Anil Ambani-led ADAG group, is all set to buy out Sony Online Entertainment ...

This page has apparently been pulled down from their site for obvious reason,that "secret negotiations are going on &
both the parties dont want publicity"

Now what do they have in mind-to sell of their gaming business completely !

RE: Trouble at Sony
By crystal clear on 1/9/2008 8:30:59 AM , Rating: 2
Managed to locate it on another site-

Coming up in the next few days is a strategic acquisition of Sony Online Entertainment (SOE) by Reliance ADAG Group company and top player in the Indian gaming space, Zapak Digital Entertainment.

Sources familiar with the deal said Zapak is all set to acquire SOE for a whopping $300 million (Rs 1,200 crores). The deal, which has been brewing for the past two weeks or so, will be finalized in the next few days. Possibly by next week, Zapak will have full rights to all content owned and published by SOE.

The game- development and publishing- arm of Sony, California-based SOE, has come out with several games, including Everquest, PlanetSide, Star War Galaxies, and Vanguard.

Eighty percent of content in the gaming industry is created internationally. The acquisition makes sense for Zapak, which wants to cut costs by buying SOE studios, and relocating them to India. With a major part of gaming expenses being on content and marketing, Zapak hopes to cut costs from nearly $30 mn to just $10mn with the SOE buy-out.

Earlier on, Sony had signed a deal with 'Virgin Comics', a Bangalore-based collaboration between celebrated spiritual guru - Deepak Chopra, veteran film maker - Shekhar Kapur, and self-styled billionaire and head honcho of the Virgin Group - Sir Richard Branson.

By virtue of the acquisition, Zapak will gain control of all deals signed by SOE (past, present, and future).

"You can bet that Sony built a long-term business plan about being successful in Japan and that business plan is crumbling." -- Peter Moore, 24 hours before his Microsoft resignation

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