PS3 in a Death Spiral

[Toxin]

Ok, here is one from 2007...



http://www.gamasutra.com/php-bin/news_index.php?story=12541

You know, it doesn't matter what I say, every 360 fanboy will have an excuse for it...

Of course we have excuses. Congrats on getting the date right.

Lets start shall we?

According to Microsoft's second quarter results for the period ending December 31st 2006

Please point out were any of us "360 fanboy excusers" said that the 360 always sold at a profit. You can't because we didn't.

It was quoted that since end November last year due to better 360 building, it was selling at a profit.

There another excuse for you.

 

[GavinMannion]

Omg, I'm dealing with idiots. Everybody is going on about the PS3 selling at a loss as if nobody else is doing it. That's just to proof that MS also did it.

Arrrggghhh I just can't get away.

No one has ever said that it's only the PS3 that has ever sold at a loss...

The article is talking about the fact that since the PS3 has such a low attachment rate AND is selling at a loss Sony is losing money hand over fist. Yet the Wii has always made money from day one and the 360 is no longer losing money on the console and is attaching at 3+ per console which means more money.

You are the only one who is confused here.

Facts as of today

Wii is making a profit on every console
360 is making a profit on every console
PS3 is losing money on every console

So if you take games out of it and each company sells 1 million units it is blatantly obvious that the PS3 would be in the worst position. HOWEVER since all the companies make money from game sales as well this needs to be taken into consideration

I have no details on the Wii so I will ignore them for now

The Xbox 360 has an attachment rate of over 3:1
Which means it is making money from games as well

The PS3 has an attachment rate of less than 1:1 which means it is not making money from games yet.

So the PS3 is losing on both counts and the 360 is winning on both counts.

But it doesn't stop there. The PS3 has not been released in the PAL territories yet so the facts are all very misleading, the States prefer the 360 and Japan prefers the PS3. The biggest market left is the EU and no one actually knows who they are going to go with.

The war is still very much on and I personally believe it will be a virtual tie in the end but all 3 consoles can still lose it by making stupid mistakes.

 

[Retro]

Please point out were any of us "360 fanboy excusers" said that the 360 always sold at a profit. You can't because we didn't.

Posted by Diabolus

MS are selling units at a PROFIT, Sony are making a huge loss.

That was his reason why Sony is aparently in trouble. I think the whole point of this thread got lost. So let's stop with all the PS3 vs 360 arguments and get back on topic?

 

[Toxin]

Posted by Diabolus


That was his reason why Sony is aparently in trouble. I think the whole point of this thread got lost. So let's stop with all the PS3 vs 360 arguments and get back on topic?

Well I can't speak for Diabolus, but perhaps he meant to say "MS are selling units at a PROFIT now, Sony are making a huge loss."

Cause they are...... now.

While the only thing Sony can do now is drop backward compatibility to save some cash in the long run.

EDIT:

But you are right, more than likely there were a few misunderstandings going around. I still think we're on topic tho.

 

[diabolus]

Anyone ever read further into the articles they post?

Despite the US $289 million loss, the Entertainment Devices division was responsible for US $2.63 billion (EUR 2.03) profit during the second quarter.

According to Microsoft, repair expenses and the extension of the 360 console warranty from nine months to a year in the US and Canada ate into the division's profitability.

Firstly note the MILLION vs. BILLION , overall MS is still making , and let me quote again

The overall company profit was down to US $2.63 billion (EUR 2.03bn), a drop of 28 per cent, compared to US $3.65 billion (EUR 2.82) in the previous year.

MS are making less PROFIT, they're not making a LOSS...big diff there.


Now how about Sony ? [keeping in mind their gaming division includes things like the PS2 and PSP, which is a big cash cow and which MS do not have...]

This is what i meant about Sony being in trouble...words like "recovering" and "struggling" in every article:

http://www.nytimes.com/2007/01/31/t...89270c628c92b3&ei=5088&partner=rssnyt&emc=rss

The dip in Sony’s quarterly earnings released early Tuesday underscores what many analysts call the biggest single challenge now facing the recovering Japanese electronics conglomerate: the shaky start of its long-awaited PlayStation 3 game console.

The games division posted a quarterly operating loss of 54.2 billion yen ($446 million), in contrast to a profit of 67.8 billion yen in the quarter a year earlier. Sony said the decline was a result of a decision to set the price of the PlayStation 3 below the cost of production as a way to bolster market share. It also pointed to one-time start-up costs for PlayStation 3, which was released in Japan and the United States in November

 

[GavinMannion]

Well I can't speak for Diabolus, but perhaps he meant to say "MS are selling units at a PROFIT now, Sony are making a huge loss."

Cause they are...... now.

While the only thing Sony can do now is drop backward compatibility to save some cash in the long run.

No he did say it right. He was not talking about anything in the past and was trying to explain the article that was posted.

M$ are selling units at a PROFIT, Sony are making a huge loss.

Sony will have to battle this problem for a long time still due to the 360 getting into the market first.

If Sony can do some fancy hardware changes they can bring the console down to a break even point. By that time M$ can drop the price of the 360 by $100 - $150 and then be making a small loss on each but how many do you think they would sell if they cost $250 for the premium. Sony would have to respond and would then be back to making a huge loss.

The ball is in M$'s court now. I think they will drop the price right in the beginning of April to steal the thunder from the PS3 launch.

 

[doobiwan]

No retro, just acknowledge when you're wrong please.

You're looking Sony is running $200 down against two competitors that are profitable in their own right, that's going to hurt - See 360's selling in the UK for £200 (I know MS says it's just the retailer, but I guarantee they've got a hand in it)

The $290million was totally calculated, and actually a lot less than they were expecting. MS's plan, since the launch of the Xbox 1 was only to hit profitability by 2008.

 

[curiouswanderer]

by the way....I'm not a X360 fanboy. I dont own any consoles. The only console I've owned was the first Nintendo Famicom. I'm in the market for one and just doing some research to see which one is the better. At first it was PS3 for a few months then they announced the pricing and pushing of blu-ray. Then got swayed onto the Wii but the Wii is a diff type of console than X360 and PS3 and now I'm swayed towards X360 because it has a much better all round package.

The fact is at the moment MS is making money off the xbox and sony is taking a big loss...Sony have indicated that they are willing to take a $3Bn hit just to push PS3 to the mass...That is very desperate I must add.

 

[doobiwan]

@derek,

I was in exactly the same position in December. I was all set to get a Wii, I was on first name basis with the Nintendo guy at Futronic Then my wife actually suggested I get a 360 because I was still impressed with it. I don't regret the decision in the slightest.

I'll still definitely ge ta Wii when they're available locally and the price drops a bit, in the mean time I've gt all the fantastic, deep rich content the 360 has to offer

 

[Retro]

The fact is at the moment MS is making money off the xbox and sony is taking a big loss...Sony have indicated that they are willing to take a $3Bn hit just to push PS3 to the mass...That is very desperate I must add.

But it was the same with Microsoft. They also took huge losses selling the 360 at a loss, just to get it sold.

I don't know why there's this double standard when people compare the 360 with the PS3. When MS sells their console at a loss, it's good business cause they're getting their console out there, but when Sony does the same, they're desperate?

 

[GavinMannion]

But it was the same with Microsoft. They also took huge losses selling the 360 at a loss, just to get it sold.

I don't know why there's this double standard when people compare the 360 with the PS3. When MS sells their console at a loss, it's good business cause they're getting their console out there, but when Sony does the same, they're desperate?

I don't know if someone else said that but I know I didn't.

We were discussing the possible "Death Spiral" that Sony may be in due them being late to market and the Xbox 360 doing very well before they entered.

They have lined themselves up to compete directly with the 360 only to find out that M$ has altered the playing field and are currently in the best position.

It's not the fact that Sony is making a loss on the consoles which is bad it's the low attachment rate of games and that the 360 is already making a profit on the console. Giving M$ the ability to enter a price war without losing much. Sony can not enter a price war now and are slightly at the mercy of how greedy the M$ execs are.

It's not a nice position to be in.

 

[Retro]

I don't know if someone else said that but I know I didn't.

We were discussing the possible "Death Spiral" that Sony may be in due them being late to market and the Xbox 360 doing very well before they entered.

They have lined themselves up to compete directly with the 360 only to find out that M$ has altered the playing field and are currently in the best position.

It's not the fact that Sony is making a loss on the consoles which is bad it's the low attachment rate of games and that the 360 is already making a profit on the console. Giving M$ the ability to enter a price war without losing much. Sony can not enter a price war now and are slightly at the mercy of how greedy the M$ execs are.

It's not a nice position to be in.

I agree 100% with you there. The 360 is definitely in the lead at the moment. Lots of quality games, cheaper and a great online system.

However, I just don't get the PS3 bashing going on. It's like I said before, MS and Sony did a lot of things the same. Both sold at a loss, both had limited launch titles, both had supply problems etc. Why are only the PS3 getting bashed. It even sold more units at launch that the 360, but still people are saying it's the end of Sony.

 

[GavinMannion]

I agree 100% with you there. The 360 is definitely in the lead at the moment. Lots of quality games, cheaper and a great online system.

SAY IT's NOT SO

However, I just don't get the PS3 bashing going on. It's like I said before, MS and Sony did a lot of things the same. Both sold at a loss, both had limited launch titles, both had supply problems etc. Why are only the PS3 getting bashed. It even sold more units at launch that the 360, but still people are saying it's the end of Sony.

There are a lot of disgruntled gamers out there due to Sony's arrogance about the PS3.

The PS3 is not a game machine “
But we want a games machine

“Beating us for a short moment is like accidentally winning a point from a Shihan (Karate master), and Microsoft is still not a black belt. Just like with their operating systems, they might come out with something good around the third generation of their release.”
How about beating you for years?

“I believe we made the most beautiful thing in the world. Nobody would criticize a renowned architect’s blueprint that the position of a gate is wrong. It’s the same as that.”
So just because you did something good once we must not criticise?

“Microsoft shoots for the moon. Sony shoots for the sun.”
idiotic

"This time, Microsoft has stated clearly that it is going after PlayStation. However, they're going not after the PlayStation 3, but the PlayStation 2. They were looking at 2, and that's why Xbox 360 became like that."
It must hurt that they are kicking your @ss now

PS3 is “for consumers to think to themselves ‘I will work more hours to buy one’. We want people to feel that they want it, irrespective of anything else.”
? why is it overpriced

“The PS3 will instill discipline in our children and adults alike. Everyone will know discipline.” I don't want to Sony to discipline my kids

 

[Retro]

There are a lot of disgruntled gamers out there due to Sony's arrogance about the PS3.

Then by all means, make fun of them for anything they say that you don't agree with. But why something like... "Sony must be desperate cause they're selling the PS3 at a loss, that's why the 360 is better", when MS did the exact same?

 

[GavinMannion]

Then by all means, make fun of them for anything they say that you don't agree with. But why something like... "Sony must be desperate cause they're selling the PS3 at a loss, that's why the 360 is better", when MS did the exact same?

Please show me where anyone said that? I can't find it.

I think you misread something.

 

[Retro]

Please show me where anyone said that? I can't find it.

I think you misread something.

Posted by DerekC

The fact is at the moment MS is making money off the xbox and sony is taking a big loss...Sony have indicated that they are willing to take a $3Bn hit just to push PS3 to the mass...That is very desperate I must add.

 

[GavinMannion]

Ah I see ..

I took that as saying that he thinks Sony is desperate by betting a $3Bn loss just to get the console out... at least we have that cleared up and we are both talking about a different thing.

I don't think they are desperate for losing money on a console that is standard practice really.

What I personally thought was a desperate (if not smart) move was changing the hardware specs 5 months into it's launch. How did they get it so wrong?

 

[curiouswanderer]

AS per above...what we're trying to get at was that Sony never thought that the 360 was gonna do well. The biggest impact was Sony's decision to delay the PS3 which game MS room to get into the market. Yes MS were taking losses, this is normal for consoles. Sony didn't think much of it and thought their PS3 will be much better and would kill the 360.

The delay has put Sony in a precarious situation. One which they never foresaw. Their execs are arrogant about it and didn't put much though on how to compete with the 360 now. Just remember that we are talking about now. The competition now...not from 1 and a half years ago.

 

[diabolus]

However, I just don't get the PS3 bashing going on.

There's a load of people who hate Sony as a 'corporate entity trying to monopolize' . It's clear Sony only got one thing on their minds: force people on to their products by allowing only their proprietary formats/mediums in it.

So PS3 is getting bashed almost 'blindly' , and logic and analysis isn't going to help much here. If you hate Sony [the company] you hate the PS3.

That said, BECAUSE of all the negative sentiment it's putting Sony in a bad spot automatically. Plain and simply put: Sony got greed written all over them.

People will now choose the "better or cheaper of two evils" for the sake of seeing Sony burn in hell for their idiotic arrogance. So from that angle it's an uphill battle and Sony WILL have to pull some "Additional" stunts [which Microsoft didn't need when they launched] . These "Additional" stunts can easily be perceived as "desperate" ....

Plus everyone WANTS Sony to look desperate [it's like wanting to see Telkom desperate].......

 

[Retro]

Ah I see ..

I took that as saying that he thinks Sony is desperate by betting a $3Bn loss just to get the console out... at least we have that cleared up and we are both talking about a different thing.

They're taking that loss by selling the PS3 at a loss, how are we talking about different things???