Selling well or not....

Isn't the point of a business or company is to sell for PROFIT?

They are still loosing a few hundred dollers per PS3 unit sold right?

Well not to start the console war or anything.....Pretty piss poor of Sony to put more power in their system then they can afford for it.

.......and is the 360 selling at a profit too? I know the Wii is...but what about the 360?...just wondering...

I do understand that Sony was going to ride out on exclsives or something or third party contracts to make up for losses....but that doesn't seem to go well right?.....To me at least Exclusives are being blended and blurred this generation.....seems like most companies are going all three ways?

@ LightWarrior
I don't think Microsoft is loosing money on the 360. If they were, they could probably press the price a bit farther up. After all, in Norway, it's currently at half the price of the PS3. If they were loosing money, don't you think they would add a few dollars to the price?

Microsoft is loosing money on each Xbox 360 sold. The Wii is one of the very rare consoles that is able to be sold for a profit. I believe Nintendo is loosing money on DS sales, but we don't here anything about it because of the system's low price and plentiful game sales.

Microsoft is losing about $75-$100 on every console they sell. They do predict that by mid 2008 they will finally be selling at a profit. The original XBox never sold at a profit.

This is a sad time for Sony. I have done some research on failed consoles and the majority that failed were over powered thus making them too expensive for the consumer. So I don't see Sony coming out of this very easily if at all.

Spellcheck, folks. 'Unfirtunate'? 'Serverance'?

Anyways. Yeah, Sony seems to have forgotten all the lessons learned from kicking Nintendo and Sega off the ladder.

Santayana's quote has never been so appropriate. Those who forget the past are condemned to repeat it.

--TR

Most folks have no clue when it comes to standard cost structures. Those figures bandied about saying that the PS3 'costs' (notice the quotes) $800 or more are complete tripe. Sony owns large portions of the PS3 parts factories. This means they don't 'pay' (again with the quotes) what you, I, or another company would for the same component. Now, there are buyout parts, of course, notably the processor, but again, Sony will have negotiated a very low OEM 'price' that we don't see. I use the hash quotes around 'cost' and 'price' because I am using them in a cost structure analysis manner, and not the price or cost as we consumers understand it.

Let me be clear - No console maker ever sold a console under cost. EVER. A manufacturing company that does this couldn't pay it's plant workers, let alone the overhead (management, marketing, etc.) And by cost I am saying the total manufacturing cost.

Now, where the idea of 'selling at a loss' comes from is simple. They are selling well below standard margin. Meaning, instead of the 40 - 45% margin that is typical in manufacturing, they probably get closer to 20%. This is typical of console manufacture, since the profit is, and always has been until the Wii, almost exclueively made in software and peripherals.

Now, if you want to talk total production cost, that's a slightly different story - you have to factor in production levels, and is dependent on sales. Meaning, if Sony was able to sell all the PS3's the could make, then they'd break even production-wise, and still be ahead the (assumed) 20% margin. But since sales are much, much lower than projected, Sony has extra manufacturing capacity (which has an intital fixed capital cost), higher production (which has ever changing costs based on several factors), and low cash-flow. This puts them in the state we see them today - they have to cut costs, and the only way to that is to cut overhead. You can't cut the manufacturing cost beacuse some has already been spent (machines, equipment, raw materials), and some is labor (which you can cut, but only so far before your plants are understaffed). You can control production costs by scaling back on production, but again, only so far before you cut off your ability to bounce back quickly if the market turns upward (this would be bad). So, where do you cut costs? Overhead. Middle-managment? Gone. Sony can probably lose half it's office staff and still be functional, albeit, not as robust. So, we see the first of what financial forecasters are predicting - more layoffs for Sony.

Anyway, I personally am of the opinion that Sony could fire it's entire Marketing Department (except Jimmy in the copy room, he's upper management material :D), and be much better off. Way to alienate enough of the gamer fanbase to effectively kill the'hype.' Of course, there will be fanboys, and the pull of exclusive game titles. But seriously, you have to tank pretty badly to piss off enough of the core market to be in the sorry state they are in currently. And I blame their Marketing. Rising development costs are partially to blame, but that is sort-of chicken/egg because one could argue that the cause of rising dev costs are because game sales for the PS3 are down (tied to the console). At the end of the day, if Sony doesn't put PS3's into the market in a major way, they will have to scale down even further. Game devs are already focusing on the Wii and 360 because there is a verifiable installed market with those consoles.

The Sony balloon has burst, but this is actually better for gamers in the long run. A a scrappier, leaner Sony can be looked at as good thing for their competitive drive, which previously was, "We're the King, buy our shit, even if it is just that." I feel bad for those who've been layed-off, I've faced a few rounds of those myself, and they are rough, and one con only imagine what it'd be like to lose your livelyhood.

Personally I'm just waiting for some good games to come out on the PS3 before I pick one up. There isn't one game on the current PS3 market that I would actually buy. And I know that is probably a factor in the poor sales. Combined with the 360s large year to establish itself, bad games at launch can't help.

Luckily Lair and Heavenly Sword are around the corner. And Final Fantasy 13 is announced for December. Maybe those games, and a few others, will help with sales.

Doesn't Sony also produce the Cell CPU? They did create it with IBM afterall.

I have a hard time paying attention to comments where people cannot comprehend the difference between "lose" and loose". Please, redo third grade spelling before posting.

Just as a note, company layoffs starts by trimming off the fat(well except the fat high enough to dodge). So the first to go would be people drawing a salary and have no real skill. On the navy base I worked at, there were huge layoffs in my area. All of the office workers, people without degrees, and watercooler folk were pretty much fired. The physicists, chemists, computer scientists, etc all stayed right where they were.

Sony probably is doing the same thing. Cleaning house

@Sidewinder

"Xbox 360 costs $715 to make" - Joystiq

Way more than the $100 suggested by E. Zachary, the premium pack loses about $315 while the core loses $415. Not including the controllers, HDDs, ect.


And on an off topic note:
@Belgarion89
YAY!!! Another Belgariad/Mallorean fan! Eddings pwns Tolkien!

The cell processor is a join creation of Sony, IBM and Toshiba. I belM and Toshiba produce the actual Cell. However as of now its only current usage is on the PS3 however IBM is for some reason putting out a server to render rich graphics based on the Cell...

`the1jeffy
oh great one tell us what would have happened if Sony had a brain and sold the PS3 for 3380 minus the wireless stuff and had a 20GB HD you could then upgrade on your own,would they not have have been neck and neck with nintendo and knocked HDVD out of the market loses v gain would be worth it since their movie line rakes in 100X profit of what they lost?


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on a side note the 360 was losing moeny I think they are breaking even now but how can you lose moeny on things you make yourself and only pay 30% the cost for materials/manufacturing/workers MS might lose money since they do not directly manufacture but sony dose.

Ah, ok, my mistake. Then again, I was at school and used google since 90% of the net it blocked there.

This is par for the course, SCEA has to show stockholders they're doing something besides calling consumers retarded. If I worked for Sony I would have already started surfing Monster.com when the first sales records came out much lower than expected.

Maybe if their units cost less than an arm and a leg, and there were some games that intrest consumers.... Oh, and maybe they were not SONY! The one company that makes Microsoft look humble!

Maybe it is time to refocus.

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