Sony - Kaboom - Financial Meltdown etc

[Matt]

A couple of shrinks on the silicon, and the continued reduction of BluRay components, will eventually allow Sony to make money per unit sold - although they may well not overcome the deficit and the PS3 may ultimately not turn a true profit. Ironically it may well end up being the HDD that hurts them the most, like it did with MS last gen. Next gen I'd think SSDs may be order of the day, as Sony makes them itself. The latest Arcade 360s with built in memory show signs of this move away from HDDs.

Despite what some folks would have you believe, BR is a great success, outpacing DVD at the same stage in its lifetime. Maybe to Sony that's enough to justify the PS3 - even if the licensing fee per BR (player and disc) is too low to get the PS3 truly in the black, remember it was imperative for Sony as a company to win that particular format war.

Ultimately if the PS3 does have a true ten year cycle (anything is possible with this current financial climate, no-one would release a new console right now!) they may get in the black I suppose. A sway in public perception is sometimes all it takes to get people buying.

[Dirty Sanchez]

These figures of losing/making money on hardware are variable in crediblity to say the least.

360 down from £300 making a huge loss to £100 breaking even/profit. Now that's some saving PER UNIT.

[Matt]

These figures of losing/making money on hardware are variable in crediblity to say the least.

360 down from ?300 making a huge loss to ?100 breaking even/profit. Now that's some saving PER UNIT.

Particularly as the GPU shrink has only just occurred. I don't know the new surface areas to compare costs though.

[belmondo]

These figures of losing/making money on hardware are variable in crediblity to say the least.

360 down from ?300 making a huge loss to ?100 breaking even/profit. Now that's some saving PER UNIT.

Well the Magicbox PS3 figures came from Business Week (based on iSuppli research):

http://www.businessweek.com/technology/content/dec2008/tc20081222_257990.htm?chan=top+news_top+news+index+-+temp_technology

I'm sure the 360 has gone through the same process (and is of course 3 years old now).

[Brats]

The cost of components drop regardless of shrinking dies and single chip solutions. The common belief is that with the original XBox the cost never changed at all, but this isn't true. The cost to MS of the last XBox ever made was a lot less than the first one. Just not low enough to stop them from losing billions.

The 360 is using fairly standard components that would have dropped naturally. And I don't think it was making that much of a loss at launch anyway. Sony has more specialist components that it has to find ways to reduce in price and it was losing loads on each unit at alunch (although I think they have done a lot to reduce this in only two years).

Regarding Blu Ray, this could still be Sony's trump card imo. A lot of people are saying 2009 is the key year. It is at the same stage as DVD now, but DVD didn't have an global recession to deal with nor the competition of downloads. Plus satisfaction with DVD is still high - DVD sales now are much, much higher than VHS sales were when DVD was where Blu ray is now (if that makes sense).

However Blu Ray has just had it's equivalent of The Matrix with The Dark Knight which has sold tonnes on Blu Ray. After The Matrix, DVD sales went bananas. If Blu ray sales do the same, that could be a major advantage for the PS3. Even though it sells more than the cheapest Blu Ray player now, if you want a console and suddenly are very interested in this new Blu Ray thing that is taking off, the PS3 could look very attractive.

Maybe Sony should just sit tight with the price and hope that happens.

[Brats]

The problem with the 'waggle' option is not just the technology. Before the Wii launched, Sony either had no idea about what Nintendo were doing, or knew but didn't see it as a threat. Once the appeal of the Wii became clear, it would have taken a significant amount of time to develop a new controller and software for the PS2, during which time many PS2s would have been relegated to the loft/kid's bedroom as people bought Wiis (and 360s). Plus I imagine that Sony still had confidence that the PS3 would be a big success at launch.

As they already had the sixaxis and they have teams like Sony London who are used to working on the Eye Toy, I honestly don't believe it would have taken them that long to develop an alternative (even not an exact replica) to the Wii for the PS2. Even it had taken them a year, they would have had a competition to the Wii for Christmas 2007 and 2008.

The survey that Charles linked to shows that even now a significant number of PS2's are still in use - more than all the 360s sold (assuming most 360s are still in use).

I agree with your last point - I think Sony were very confident of the PS3. Probably over confident.

[MattyD]

PS2 sold a lot in its later years because it was cheap and ubiquitous, the exact opposite of the PS3. I can't see the sort of people who are attracted by WAGGLE opting to spend the not insignificant amount extra on a PS3 simply because they gave it motion controls.

The biggest challenge facing the PS3 IMO is not just its price and the fact it's underperforming with multiplatform titles, but the fact that Japanese developers really haven't gotten to grips with the current gen consoles either technically or in terms of design. With Western developers focussing their efforts on the 360 and PC the machine really needs some killer titles from Japanese studios, so that it at least has some marketable difference to its rivals.

Unfortunately, whilst Western studios were busy releasing groundbreaking titles like Bioshock, Portal, Braid, Gears of War, Little Big Planet etc, the Japanese were still cranking out ****e like more Gundamn, Dynasty Warriors and Sonic titles. They need to get their shizzle together or they'll end up becoming basically irrelevant like the PS3 is.

[Ady]

Similar to what I was saying to someone the other day. The Japanese have become very conservative this gen.

[Brats]

PS2 sold a lot in its later years because it was cheap and ubiquitous, the exact opposite of the PS3. I can't see the sort of people who are attracted by WAGGLE opting to spend the not insignificant amount extra on a PS3 simply because they gave it motion controls.

I said they should have given motion controls to the PS2 as an add on to compete with the Wii, not the PS3.

I agree broadly about the Japanese developer thing, although some of these rubbish titles sell loads in Japan.

[Flabio]

Similar to what I was saying to someone the other day. The Japanese have become very conservative this gen.

Indeed, I've played quite a few Japanese developed titles for the 360 and PS3 that are just technically years behind what's being done in the west. Not every Japanese developer is suffering, Capcom in particular seem to have got a handle on the hardware pretty well, but when you compare something like Last Remnant with Fallout3 it's clear that some developers out east are really struggling on the tech front.

[Brats]

I don't know if it's the tech. Look at stuff like GT5, Lost Planet, FFXIII and MGS4. The Japanese developers just seem very slooow at getting games out the door - there just seems to be a lot less of the big titles to look forward to being released.

FFXIII will finally see a release towards the end of next year. That's nearly four years into this generation! In the PS1 and PS2 generations we saw three Final fantasy games apiece.

Even prolific publishers like Capcom have been relatively light. On the 360 we've had Dead Rising, Lost Planet, DMC 4 and we're getting Street Fighter 4 and Resi 5 this year. Again that's not much in four years, especially compared to their output on the DC when it seemed like they were churning out a decent title every few months.

Maybe it is the tech that's causing the delays, but something seems amiss with Japan at the moment. Maybe it's because they don't know which console or region to support.

[nightstalker100]

The cost of components drop regardless of shrinking dies and single chip solutions. The common belief is that with the original XBox the cost never changed at all, but this isn't true. The cost to MS of the last XBox ever made was a lot less than the first one. Just not low enough to stop them from losing billions.

The 360 is using fairly standard components that would have dropped naturally. And I don't think it was making that much of a loss at launch anyway. Sony has more specialist components that it has to find ways to reduce in price and it was losing loads on each unit at alunch (although I think they have done a lot to reduce this in only two years).

Regarding Blu Ray, this could still be Sony's trump card imo. A lot of people are saying 2009 is the key year. It is at the same stage as DVD now, but DVD didn't have an global recession to deal with nor the competition of downloads. Plus satisfaction with DVD is still high - DVD sales now are much, much higher than VHS sales were when DVD was where Blu ray is now (if that makes sense).

However Blu Ray has just had it's equivalent of The Matrix with The Dark Knight which has sold tonnes on Blu Ray. After The Matrix, DVD sales went bananas. If Blu ray sales do the same, that could be a major advantage for the PS3. Even though it sells more than the cheapest Blu Ray player now, if you want a console and suddenly are very interested in this new Blu Ray thing that is taking off, the PS3 could look very attractive.

Maybe Sony should just sit tight with the price and hope that happens.

But you still need software support to convince people - no one ever bought a ps2 because it could play dvds. It had a great software library to back it up, jam packed with exclusives. Something the ps3 doesnt. I think even if blu ray does take off i can't see the ps3 following suite with its current price and dearth of system exclusives

And one if the initial selling points of the ps3 was that comparatively speaking it was a cheap blu ray player. This is not the case now where you can get them sub £200 and probably a lot less in the following months

I just think the ps3 can't find its identity in the current market.

I find it a shame because its a very polished piece of technology and is in stark contrast to the shoddiness of the ps1 and ps2

[Holio]

But you still need software support to convince people - no one ever bought a ps2 because it could play dvds.

That's exactly the reason why the PS2 flew off the shelves in Japan and beyond, because at launch it was a cheap DVD player that could play games, and it done it straight out of the box.

[nightstalker100]

Sorry, perhaps i should have phrased it "no one bought it soley for its dvd capabilities". PS2 had the games to back it up too.

Wasnt it around 300 quid at launch. That wasn't that cheap back then was it for a dvd player?

[CMcK]

The cost of components drop regardless of shrinking dies and single chip solutions. The common belief is that with the original XBox the cost never changed at all, but this isn't true. The cost to MS of the last XBox ever made was a lot less than the first one. Just not low enough to stop them from losing billions.

The big problem for MS with the Xbox was the component costs. nVidia never passed on any savings in the cost of manufacturing so MS made a loss on the machine until it was droppped. Note how quickly they dropped the Xbox after the 360 appeared. And that was as the Xbox had it's best year ever and the "Xbox is no.2" mindshare had set in.

The 360 is using fairly standard components that would have dropped naturally. And I don't think it was making that much of a loss at launch anyway. Sony has more specialist components that it has to find ways to reduce in price and it was losing loads on each unit at alunch (although I think they have done a lot to reduce this in only two years).

The 360 is, like the PS3, full of custom components as well. And MS doesn't have access to fabs like Sony / Toshiba / IBM does.

Regarding Blu Ray, this could still be Sony's trump card imo. A lot of people are saying 2009 is the key year. It is at the same stage as DVD now, but DVD didn't have an global recession to deal with nor the competition of downloads. Plus satisfaction with DVD is still high - DVD sales now are much, much higher than VHS sales were when DVD was where Blu ray is now (if that makes sense).

However Blu Ray has just had it's equivalent of The Matrix with The Dark Knight which has sold tonnes on Blu Ray. After The Matrix, DVD sales went bananas. If Blu ray sales do the same, that could be a major advantage for the PS3. Even though it sells more than the cheapest Blu Ray player now, if you want a console and suddenly are very interested in this new Blu Ray thing that is taking off, the PS3 could look very attractive.

Maybe Sony should just sit tight with the price and hope that happens.

As much as I would like to see Blu-ray take off I don't think it'll ever succeed like DVD did. Blu-ray players and disc prices need to keep dropping and there needs to be greater awareness of the format.
The high price of the PS3 will make it's Blu-ray compatibility less of a buying point soon as more budget Blu-ray decks appear on the market.

Also 20 somethings and younger are now so used to not buying physical media or even paying for music they will take some convincing that Blu-ray is worthwhile.

The success of compressed audio formats, video codecs like DivX, mkv etc and crappy camera phones shows that people don't give a toss about quality only price.