Sony has lost over $3 billion on the PS3

[Neo65]

A lot of people don't understand technology. Especially not when it comes to manufacturing of electronic gadgets and economies of scale.

For example, people have been growing corn for centuries and at this point, little techology improvement can occur in the manufacturing of corn, so if a bushel of corn costs $1 to make a year ago, anyone assume that it would cost roughly $1 to make next year (barring the weather) would be absolutely right. But people who grow corn won't understand the manufacturing of PS3s.

PS3s manufacturing costs follows a very predictable path, and Sony is not going to announce to the world that they are now technically profitable on the unit console basis (if it were). Somehow, the mystique of paying less for something that costs more to make is a good selling point.

If the PS3s are still not breaking even, I suspect it is a close to parity, and I suspect the 80GB model is very likely to be profitable for them.

But noone except insiders would know for sure.

[aviman33]

Originally Posted by ikbradley

Right. Just like cartridges were the best thing and the CD was a novelty fad. Cartridge based systems were cheaper to manufacture and the read time was faster. Too bad the PS1 really pushed 3d game environments a generation forward.

By any chance, are you an AVS HD DVD refugee? January 2008 really seems to be a convenient time to join.

The PS3 is a great system that has a few flaws. It's a shame it wasn't pushed up in price. I would have loved an 8800 series card with duel HDMI outs and a faster drive.

Do you own a PS3 because I have not come across too many people who own a PS3 that say it's overpriced - even early adopters. It's only the people that were too cheap that said so.

For once Sony did right. It sunk billions into a format war and actually won; however, like most critics, I assume you will be adopting downloadable HD from Apple and truly enjoy compressed 720p resolution with awesome dolby sound.

This fanboy is glad he got the 20gb unit and thinks every penny 'wasted' by Sony has been to his benefit.

I never owned or endorsed HD DVD players and I was an early adopter of both CD and DVD formats. It's just my opinion the PS3 should have been released early with a removable DVD player. The Blu-Ray player could have been added later as a plug in unit (not a dumb stand alone). That was their 1st major mistake. They missed the whole gaming market in both timing and cost. Their second mistake is letting their game system become part of a format war. Hey, it's my opinion.

[lch]

i thought the 40gb is selling very near to the actual cost.
of cos, even if they were starting to get profit, it still won't be able to cover the r&d cost.

[Neo65]

Originally Posted by lch

i thought the 40gb is selling very near to the actual cost.
of cos, even if they were starting to get profit, it still won't be able to cover the r&d cost.

Normally, all electronics goods have selling prices close to 3x the bom (bill of materials) which is roughly the cost of parts of building the thing, not counting any other fixed overhead costs (R&D is a fixed overhead). This is what's required to feed the food chain [the middlemen] ( including the salespeople ).

Game consoles have never been sold at this 3x bom as they do get a percentage of game sales --- the pricing of consoles look a lot like mobile phones and cable settop boxes --- the hardware can be subsidized because the service provider gets ongoing revenue from further sales or monthly charges.

[Bobby Henderson]

Originally Posted by Neo65

PS3s manufacturing costs follows a very predictable path, and Sony is not going to announce to the world that they are now technically profitable on the unit console basis (if it were).

A lot of people rushing to criticize Sony over this reported loss may be overlooking a common tactic of just about any major corporation: they sometimes do anything and everything they can to report as big a loss as possible if it reduces payments on things like taxes. It's just like an individual getting as many deductions as possible to reduce his tax burden.

Hollywood movie studios are infamous for the "rolling break even" brand of accounting they use. If you work on a film project, it's best to get paid up front. You may not see nearly as much as expected if you're waiting afterward to get paid on a "points" basis.

Sony could be writing down a lot of different things in this report as well to get it out of the way quickly. The faster Sony gets to profitability in its quarterly reports will translate into a faster rising stock price.

[Canada]

Look at it this way Sony won the format war so for the next 10 yrs or so people will be buying Blu Ray players. If Sony lost all that money it means that it is a better deal for the consumers. Sony will be able to recoup that money, they will even get royalties from Toshiba. But damn, $ 3 billion must hurt!

[joeorc]

Originally Posted by ThePhantomOak

June 15th called, it wants it's thread back!





Anyway, That number is not stagering at all. Unlike the 360, the PS3 is a computing innovation. Sony can use what they learned from the PS3 in other parts of the business world, where are 360 cannot. Also, 360 has had greater losses over the lifetime (so far between XB and 360 they have lost nearly 7 billion) and just started turning a profit of around 90 million a month. At that rate, Microsoft will take 6 and a half years to get in the black on the X box line, while Sony is still selling PS2, PSP, and PS3

also add 6.4 more billion to that total..the Entertainment D. at Microsoft PAID for an online ad agency for 6.4 billion last year on top of the xbox loss in the xbox part of Microsofts biz.

[Ectoplasm]

Originally Posted by Banjo

It's just as stupid as that piece CNN ran a week ago or before that. The piece was the so-called fact that PS3 would consume 5 times when compared to a fridge.

Well... if you leave it on 24/7... that could happen but who would be stupid enough to do that?

And the fact that it doesn't easily turn off. The PS3 lacks a dedicated on/off switch on the PS3 remote. I hate that.

[DavePS3]

They did the right thing. I haven't been a Sony fan in the past - too many bad experiences both as a consumer and in retail but I freakin' LOVE the PS3. It's classy and built like a tank. I support Sony 110% in the unit and attached software sales. They outdid themselves on it and it shows every time I boot it up and play Blu-Rays or games. The damn thing just rocks and I wouldn't trade it in for 100 '360-Elites'.

[Bobby Henderson]

The PS3 lacks a dedicated on/off switch on the PS3 remote. I hate that.

You hold down the PS button on the remote to turn off the PS3. You can turn on the PS3 with the same button.

[ranma]

But you need select between
quit game(if you were playing a game)/Movie,
Turn off controller
Turn off console.

There is no free-of-mind way to turn off console through remote controller.

[The Lion King]

I'm glad they lost all that money. It'll teach them to include fricking backwards compatability in their next console. Idiots.

[The Lion King]

No swearing on this forum. tsk tsk tsk

[Hedchekr]

Does anybody know if this is just related to the console or does include money for upkeep of the PSN. They offer it for free but its not free for them to run or maintain. And are they still losing money per unit sold, if so then the more they sell the more they lose. Its about the attach rate, I haven't checked for a while but the PS3 had the lowest attach rate of any current gen console. The software is were they make their money for the first several years.

[ottscay]

Originally Posted by aviman33

The Blu-Ray player could have been added later as a plug in unit (not a dumb stand alone). That was their 1st major mistake. They missed the whole gaming market in both timing and cost. Their second mistake is letting their game system become part of a format war. Hey, it's my opinion.

And your opinion is demonstrably wrong. Allowing a later "plug in" BD player would never have lead to the Blu-ray market penetration we have now, and that means that the format war would likely continue. Also, cell processor yields were problematic until maybe 6 months before the PS3 shipped, so they really could not have shaved much development time off of the PS3 by foregoing the BD drive.

Finally, the PS3 desperately NEEDS that much storage space for their games. They are already shipping a DL BD disk, and it's been 1.5 years since inception. Worse, games would have needed to be released on both BD and DVD (since not all PS3 owners would get the plug-in), forcing developers to make 2 versions of the same game for one console, one demosntrably inferior. This would lead to endless shelf-space problems for B&M stores, consumer confusion ("my mom totally bought the crappy version for my birthday!"), etc. It would have been an utter disaster.

If they didn't build the technological overhead in to stay competative for at least 5-6 more years (and go head to head with whatever next-next-gen drek Microsoft throws out in the console market in 2-3 years) the brand-value proposition that Sony uses to help justify the premium market placement (and pricing) of the PS3 would have gone up in smoke, and most likely killed the brand name before the next generation (PS4).

Console wars are not fought for a year or two, but for most of a decade. The PS3 will either beat or tie the 360 in hardware sales this year, and beat it soundly from here on out. In two years the installed user base will far outstrip the 360, and all good exclusives will be on it (or the Wii, but those are very different types of exclusives).

The BD/HD DVD format war, otoh, had to be fought quickly. If it had taken 3-4 years for one to win, both would have fizzled. So Sony made the right choice on both fronts; use the PS3 to help drive Blu-ray to a quick(er) victory via piggybacking on their console, and at the same time equip their console to win the overall war in the long-haul competition against the 360.

[player2006911]

Originally Posted by ranma

But you need select between
quit game(if you were playing a game)/Movie,
Turn off controller
Turn off console.

There is no free-of-mind way to turn off console through remote controller.

Are people really that lazy nowadays? What are they afraid of? Getting arthritis in there fingers by pushing the PS button push up once to highlight turn system off clicking it then push left for yes then clicking it again. people are hilarious nowadays

[Simplayer]

The PS3 is pretty much even with the 360 in the number of games bought per year per console (4.6 to 4.7). The Wii is trailing at 3.6 or something like that.

[dialog_gvf]

Originally Posted by The Lion King

I'm glad they lost all that money. It'll teach them to include fricking backwards compatability in their next console. Idiots.

Their deficit to the end of March 2007 was $2 billion, and that was the period of exclusively the 20/80GB units with backward compatibility.

Gary

[bdLuvr]

Originally Posted by SonOfTorah

Sony are due respect for delaying the release of the PS3 to include Blu Ray. They could have shipped the PS3 out with a regular DVD drive, as i believe was orignally planned...

Im trying to remember if the Sony booth back in Siggraph 1998 was that of the RISC engine. Can anyone add to this? Maybe it was 1999?

[AliceT]

Originally Posted by player2006911

Are people really that lazy nowadays? What are they afraid of? Getting arthritis in there fingers by pushing the PS button push up once to highlight turn system off clicking it then push left for yes then clicking it again. people are hilarious nowadays

I Really dont understand people who want to turn off their console. Its designed to be on " stand by" not completely off. Do you unplug your TV every time you arent watching it?