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Sony loses money on hardware, but the platform as a while is profitable

Sony unveiled the new PS3 Slim officially last week at Gamescom in Germany. The new console was officially announced after months of speculation swirling about not only the slimmer PS3, but a price cut as well. Thankfully, both the price cut and new PS3 console became reality.

Times Online sat down with Sony Computer Entertainment's Kazuo Hirai and had a talk with him about the PS3 and the success of Sony as a whole. Hirai said that the time was right for the slimmer PS3 because Sony wanted to pass the savings on to the customer since it had to put less hardware into the PS3 than it was when the console first launched. The pressure from game developers to cut the price of the console likely figured into the decision as well.

When asked if the price cut was an admission that the PS3 sales have been disappointing, Hirai said sales were slower than the PS2, but on track with what Sony saw with the original PlayStation. He also says Sony looks at things on a 10-year life cycle and with the third anniversary, now coming it's too early to say how well the trajectory for the PS3 is doing.

One of the more telling questions in the interview was whether Sony is still losing money on the PS3. Hirai said, "If you're just talking about the hardware alone, the quick answer is yes. That makes good headlines, but I don't actually know that that's the true nature of the business that we're all in, whether it's PlayStation, Xbox or the Wii. I think the better indicator is to look at the business as a whole platform, to ask are you profitable in terms of the hardware, software, and peripherals. And the answer t o that question is yes on a gross profit level since the last fiscal year."

Hirai said in the interview that the "magic wand" motion controller for the PS3 is set for release in the Spring of 2010. He also said that Sony is working hard to be sure that software supporting the controller is available when it launches as well.

Hirai also says that Sony will not be ditching physical media altogether as some expected with the announcement of the UMD-less PSP Go. He points out that in many countries and locations downloading a full PS3 game would take inexcusably long to do.

He said, "We are committed to the PSP 3000 and the UMD business. A lot of people like to speculate that we're getting out of that business, but nothing could be further from the truth. We're not going to deprive consumers in all those other countries."

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RE: Still?
By epobirs on 8/25/2009 9:05:23 PM , Rating: 5
That is because the early intent was for the PS3 to contain multiple Cell chips. One of the things most heavily promoted about Cell early on was that it would easily gang together to scale on the fly. Sony made some absurd pronouncements about enlisting other household appliances containing Cell chips to help run games better. All of which sounds like a developer nightmare, especially in testing.

None of this became part of the reality. IBM couldn't get the multi-socket scaling to work as intended. Worse, the Cell, which was claimed to be all-new but is really a PowerPC variant, was realy hard to manufacture as the then available process node. This meant low yields for the chip, making it very expensive and plagued by supply issues if each PS3 were going to use several of them.

The decision to go for a more conventional architecture in the PS3 came very late in the process. If you look back at the E3 Press Conference where the PS3 was first supposedly demonstrated, there were no actual PS3 demos. There were Cell demos and there were Nvidia demos. No developer had enough time to do much of anything with the combined platform.

RE: Still?
By SPOOFE on 8/25/2009 10:20:21 PM , Rating: 2
An excellent summary. Looking back at the run-up to launch, and going off of Tretton's comments afterwards, it's clear that Ken Kutaragi was just spouting his mouth off without ever getting significantly concrete information from the engineers actually building and designing the thing. They started out on the wrong foot and are only now correcting themselves. They can still pull out a good chunk of profit for the PS3, but I'm really hoping they learn from their errors and focus on the gaming capabilities of the successor.

"Well, we didn't have anyone in line that got shot waiting for our system." -- Nintendo of America Vice President Perrin Kaplan
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