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PSP, profitable yet?
- Thread starter Mook1e
- Start date
Probably not hardware per unit, given the costliest components are outsourced (screen, memory, WiFi setup) and so aren't subject to Sony's usual accelerated internal economies of scale for PlayStations. It's probably close though, and thanks to software the entire PSP business is definitely in the black.
jarrod said:
I'm not sure, I could see it being pretty profitable at the moment. The NAND flash and wifi are probably a couple dollars and ~12-15, respectively. The screen is what ~$50? The CPU/GPU are a single chip solution (a little smaller than the PS2 chipset, I think). The battery should add 5-10 or so (not really sure how much batteries cost, to be honest), I imagine. It has a ~100 price over the PS2, and the PS2, from everything I've heard, cost less than 100 to make, so even considering the cost of the screen and other small things on the PSP, I imagine it's profitable.
I believe KK hinted it would start becoming profitable at around the 3 million mark, and we're well past that.
I dunno, I think if PSP were at the point of making any profit per unit in the past year, we'd have seen a price cut by now. As is, I think they may be getting close, though the "value pack" may well be turning a profit (thanks to bundling low cost extras for a ~$50 premium). I'm not sure if Sony's putting together PSP's for under 19800 yen yet though.
jarrod said:
I don't think we'll see a price cut until Sony thinks it's a good idea -- Sony has rarely related the price directly to their costs (at least not immediately). Since DS and PSP are pretty much seperate markets (in that they can both thrive rather successfully in the market place), I don't think they really see a reason for a price cut now... I think we'll see one this year, but not because it has any relation to when it was/is profitable. PSP is in a rather nice position at the moment because of it being only one of two portables on the market, so it can 'gouge' the market longer without completely hindering sales. I imagine we'll hear about price drop around E3 or maybe this summer... who knows.
Look at the PS2 -- that's been more or less the same price as the GC to make (quite possibly even cheaper) for a long time now, and it's still 150.
Stepping outside of how this forum likes to depict the DS/PSP situation, Sony has been hitting the shipping targets they've set for the PSP regardless of whether "everybody" overestimated the PSP as having the ability to take over the handheld gaming market overnight. As long as Sony think they can hit the shipping targets they want to achieve at the current price, that's probably going to have a lot more impact on pricing than how much they've managed to drive down costs.jarrod said:
soundwave05
Member
I think Sony probably made a profit on the PSP precisely because they *didn't* drop the price for Christmas.
They added the Gigapak, but it probably doesn't cost them $50 to make a 1 GB Memory Stick, so they probably actually enjoyed a fatter return on Gigapak's over even the regular Value Pak.
Their profit margin on the PS2 must be ridiculous at this point. It wouldn't surprise me if it costs Sony $60-$70 to make a PS2 ... you really have to think about the huge numbers at which they mass produce them at.
They added the Gigapak, but it probably doesn't cost them $50 to make a 1 GB Memory Stick, so they probably actually enjoyed a fatter return on Gigapak's over even the regular Value Pak.
Their profit margin on the PS2 must be ridiculous at this point. It wouldn't surprise me if it costs Sony $60-$70 to make a PS2 ... you really have to think about the huge numbers at which they mass produce them at.
soundwave05
Member
Well the other thing to consider is the PSP is actually over a year old now since it first went into mass production.
Yet they haven't really dropped the price anywhere.
So they could be turning a profit off the hardware itself, the tech isn't quite as "new" as it was.
Yet they haven't really dropped the price anywhere.
So they could be turning a profit off the hardware itself, the tech isn't quite as "new" as it was.
Kurosaki Ichigo
Member
Sure they're making profit.
European PSP = 250 = 34.391 JPY
¬¬
European PSP = 250 = 34.391 JPY
¬¬
HomerSimpson-Man
Member
zou said:
Yeah, Sony was planning for a loss for the first time in how many years, but the sales of PSP helped the company post a profit instead.
mckmas8808
Mckmaster uses MasterCard to buy Slave drives
kaching said:
Best quote in this thread.
Kobun Heat
Member
Uh, I sincerely doubt it. Considering what we were hearing around launch from people who knew (it was costing Sony around 40,000 yen to make one), I don't see how they could be making money. Thanks to the weak yen, they might be barely breaking even on those Giga Packs at point of purchase if somebody buys a game, but even then...
jarrod said:
How could the GC be profitable when it was revealed that Nintendo was taking a $180 million per year loss on the GC??
Nintendo's Profits Fall On Gamecube Sales
http://games.slashdot.org/article.pl?sid=05/11/25/154217
Nintendo Hardware Losses Revealed
http://www.gamasutra.com/php-bin/news_index.php?story=4178
The newspaper also notes that Nintendo is currently losing ¥20 billion ($180.8m) each year on Nintendo hardware, but that this loss will be reduced by reusing the production plants for next generation hardware.
The moral of the story is that the GC was NEVER profitable for Nintendo from the start.
"sub-$50-70 area"? So basically $69.99 or less per unit?Andrew2 said:
Hey, I like how you take 2 unrelated news articles and magically merge the "revelations".Andrew2 said:
Can you link me to any media outlet where "it was revealed that Nintendo was taking a $180 million per year loss on the GC"?
Those costs would include R&D, promotion and other investments (like the NEC plant Nintendo helped fund). If you want to use that logic though, DCharlie's theories on PS2 never really bringing in a profit start to make some sense...Andrew2 said:
And I don't believe that for a second. Projecting a break even within 6-8 months of launching a product at nearly half of it's cost (more so for the Core pack) at retail is laughable. A loss leader that significant would require capital investment in the area of 18-24 months at the very least, especially when a portion of your components have notoriously low depreciation values.Kobun Heat said:
The difficulty with projecting costs within Sony is that they have very seldom released their internal manufacturing capabilities, and more often than not an analyst will over project.
Uh, you do know the Yen has climbed over 12% since December 2004 right?Kobun Heat said:
Kobun Heat
Member
Heian-kyo said:
Random message board poster on the internet versus trustworthy people deeply entrenched in the Japanese games industry! WHO WILL WIN THE BATTLE
And you do know that it's still weak vs. the dollar, on a timeline longer than fourteen months, right?
soundwave05
Member
I could see Sony keeping the price of the PSP and PS2 static right through 2006.
The PSP is catering to a more upscale market that isn't interested in a Game Boy/DS type handheld to begin with, so its really not competing against anything specifically.
The PSP is catering to a more upscale market that isn't interested in a Game Boy/DS type handheld to begin with, so its really not competing against anything specifically.
What are you even refering to? Weak how...? :lolKobun Heat said:
'Up 12%' is in relation to the USD, which is the entire basis behind foreign currency exchange. And if fourteen months isn't long enough for you, than know that the Yen has been strengthening against the USD since the beginning of 2004, and is at it's highest monthly levels since the middle of 2003.
I can say with full certainty the current market value of the Yen has had no negative bearing on manufacturing costs of the PSP. It's the exact opposite in fact, as producing a PSP right now is cheaper than it was a year ago based on currency value alone; nevermind component cost depreciation.
There is no way in hell the PSP cost 40,000Yen and sold for under 20,000Yen. That is absolutely ludicrous. Hasn't it been agreed that the early estimates were plain fucking wrong already? The machine is expensive already, and the Gigapack moreso. They're still selling. Why would they eat $200 on hardware alone? They never lost even close to that on the PS2, and that was a surefire hit with a greater tie-ratio than the PSP can ever dream of achieving. I call shenanigans. PEACE.
Mook1e
Member
This is what I was refering to when I talked about KK mentioning profitability.
http://psp.ign.com/articles/561/561772p1.html
"Surprisingly quickly" compared to a five year profit model could mean just about anything, though.
http://psp.ign.com/articles/561/561772p1.html
"Surprisingly quickly" compared to a five year profit model could mean just about anything, though.
DCharlie
And even i am moderately surprised
lets be even clearer, the figure was 48,000 yen.
all people need to figure out is if the return from the software sales/licensing/machines (i'm still guessing its negative for machines?) outweighs the costs to create the machines, the cost to market etc etc...
yes, Sony posted a profit this last quarter - but that's from the whole game department, which of course the PSP is part of - so it obviously helped.
But , there is a difference between the PSP bringing in profit and the PSP project being profitable overall.
all people need to figure out is if the return from the software sales/licensing/machines (i'm still guessing its negative for machines?) outweighs the costs to create the machines, the cost to market etc etc...
yes, Sony posted a profit this last quarter - but that's from the whole game department, which of course the PSP is part of - so it obviously helped.
But , there is a difference between the PSP bringing in profit and the PSP project being profitable overall.
Mook1e
Member
Yeah, my initial question is are they (sony) making a profit on the hardware alone now.DCharlie said:lets be even clearer, the figure was 48,000 yen.
all people need to figure out is if the return from the software sales/licensing/machines (i'm still guessing its negative for machines?) outweighs the costs to create the machines, the cost to market etc etc...
yes, Sony posted a profit this last quarter - but that's from the whole game department, which of course the PSP is part of - so it obviously helped.
But , there is a difference between the PSP bringing in profit and the PSP project being profitable overall.
I would guess the PSP project overall is very profitable. Especially since UMD's cost jack squat to produce and despite the doom-and-gloom recently over crap UMD movies not selling, UMD sales (movies + games) overall have been great and probably huge money makers.
soundwave05
Member
I would also imagine when you mass produce 10 million of *anything* within about a year ... your price is going to go way down.
10 million shipments in a year is pretty insane in the world of consumer electronics. The DVD format for instance didn't hit 10 million until like its third year on the market.
10 million shipments in a year is pretty insane in the world of consumer electronics. The DVD format for instance didn't hit 10 million until like its third year on the market.
As a consumer, I couldn't care less, infact them losing money just helps me, so its a benefit.
Personally, I would figure they're certainly breaking even on unit costs now, still looking to recoup the costs of setting up fabrication lines.
Personally, I would figure they're certainly breaking even on unit costs now, still looking to recoup the costs of setting up fabrication lines.
Yep, and Sony shipped 15M, not 10soundwave05 said:
Mook1e
Member
As a gamer I don't really care if Sony profits either. It's just a curiosity of mine.Striek said:As a consumer, I couldn't care less, infact them losing money just helps me, so its a benefit.
Personally, I would figure they're certainly breaking even on unit costs now, still looking to recoup the costs of setting up fabrication lines.
Yep, and Sony shipped 15M, not 10
With the rumours flying about a new revision, I'm interested in if they would return to losing money on each PSP to make the PSP + connect package more appealing.
I'd love to see some facts about this topic. If anyone got links please share.
Just using common sense there hasn't been a major price pressure on PSP. Given that Sony started with no margins in Japan and had small margins in western territories they should be profitable by now.
Their software investment spike should be lower by now, marketing spike is also over. Inevitable expenses for ramping up PSP2 are likely to still be quite low this early in the game.
At the same time they should be through a few rounds of cost shrinks (anyone know what the current BOM for PSP is?) so it would be hard to see them not making money by now?
Just using common sense there hasn't been a major price pressure on PSP. Given that Sony started with no margins in Japan and had small margins in western territories they should be profitable by now.
Their software investment spike should be lower by now, marketing spike is also over. Inevitable expenses for ramping up PSP2 are likely to still be quite low this early in the game.
At the same time they should be through a few rounds of cost shrinks (anyone know what the current BOM for PSP is?) so it would be hard to see them not making money by now?
sonycowboy
Member
DCharlie said:lets be even clearer, the figure was 48,000 yen.
all people need to figure out is if the return from the software sales/licensing/machines (i'm still guessing its negative for machines?) outweighs the costs to create the machines, the cost to market etc etc...
yes, Sony posted a profit this last quarter - but that's from the whole game department, which of course the PSP is part of - so it obviously helped.
But , there is a difference between the PSP bringing in profit and the PSP project being profitable overall.
There's also the issue of if the total PSP cost has been made up by revenue vs this past quarter. I don't have any specific knowledge, but I'd bet that Sony is at best breakeven on the hardware and that in the first 6 months, they "lost" quite a bit on the hardware. It is probably profitable on a quarterly basis at this point, but life-to-date, not a chance.
But, it's only been 13 months, so that wouldn't be bad at all. I think the PSP has got a nice roadmap ahead of it that allows for a few hardware revisions, which should help cover the required price drop they need to have on the core system. Again, I'd think that the PSP is overdue for a price drop at this point, with the reason for it not happening yet being that it's relatively expensive to make and they don't want to lose big money on it and that it's selling well enough at the current price.