You can tell from the Vita that Sony is starting to slowly move away from that business model. A powerful piece of hardware that doesn't bleed them a whole lot of money and can get manufacturing costs down quickly.
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Sony Reports Q3 FY12 Results - $2 Billion Loss, 6.5 M PS3's Shipped [Shares up 13%]
- Thread starter Parmenides
- Start date
You can tell from the Vita that Sony is starting to slowly move away from that business model. A powerful piece of hardware that doesn't bleed them a whole lot of money and can get manufacturing costs down quickly.
Sho_Nuff82
Member
I think at some point you have to put your foot down and accept a loss of marketshare if it means keeping your head above water financially. If MS/Nintendo drop to $199/$99 this year, I think Sony is going to have to grin and bear it, the PS3 is never going to be in 1st place.
CrytothePrinceofPeace
Banned
Yeah I think the PS4 will have to be a modest upgrade to be profitable day 1. However Sony's fanbase seems to like high end hardware so that could be an issue for Sony. I think they may need a compelling 'hook' to differentiate itself sort of like what the Wii had this generation.
The PS3 was a financial disaster for Sony because Sony is far too large a company with its many divisions pulling strings to influence other divisions.
If Sony hadjust pushed Blu Ray Independently of the PS3 it may have taken off slower but the PS3 would have been a hell of alot cheaper. Sony basically took its one bright spot division and ran it through a steaming pile of shit just so another division could push its format.
If Sony hadjust pushed Blu Ray Independently of the PS3 it may have taken off slower but the PS3 would have been a hell of alot cheaper. Sony basically took its one bright spot division and ran it through a steaming pile of shit just so another division could push its format.
ThisWreckage
Banned
I'm pretty sure that the gaming division is making a profit. Their other divisions are black holes.
There have been conflicting statements from different Sony people about the profit/loss state of Vita.
It may very well be just as you said, but any potential sizable losses (if they exist) wouldn't show up until they are actually selling significant quantities of the thing. With only 500k shipped for the quarter - the Vita had a negligible impact on the division one way or the other. If the Vita is sold at a fairly significant loss, then those losses won't start to show up until they are shipping multiple millions of units.
bigtroyjon
Member
why would you be sure of that?
Zero reason to be sure of that after seeing these results.
Auto_aim1
MeisaMcCaffrey
Well the PS2 situation is different as it didnt really have much competition. Best example would be the Wii as it has tapered down a lot. They are taking a loss on Vita too, but I think they break even when you factor-in the memory cards and software sales. Unless they push some unproven tech like Cell and BR, they will break even really fast with PS4.
Yeah, but even if they wanted to take a loss with PS4, they probably can't seeing the overall state of the compny.
The Vita model is not working at all in Japan, they try to break even but the price is way too high in this market. The platform needs a severe price cut to start selling and build a future. This break even dream is past us at this point.
One thing that concerns me more is their camera division. I love Sony alphas/lenses, bought thousands of dollars on it and that's one division I hope will always succeed.
BrokenEchelon
Banned
It may very well be the last game to receive such funding from Sony.
If it ever comes out.
That is true wrt the profitability (or not) of the business on an ongoing basis, but I was also referring to r&d expenses in the run-up to launch. I think it was notable that they weren't so massive as to drop the games business in the red for most of the last several quarters. Vita's development seems to have been run as a pretty tight ship. I think PS4 r&d will be more expensive than that, but I think they'll also be trying to keep it lean. Speaking of which, we should be seeing the start of the impact of those investments any time from now really, if we haven't already. In a previous quarter they citing rising r&d expenses for a future platform, but not sure it was clear whether they were talking about vita or ps4...
If they price cut, obviously Vita will not be breaking even for a while again...but I'm not sure they'll do that.
In terms of the vita model working - whether the target price is wrong or not, I mean the model of lean r&d and modest loss per hardware unit is 'good' and a likely model for PS4. Within those constraints they'll want to target a price that's attractive to the market, obviously.
Dreams-Visions
Member
Everybody? Apple, Microsoft, Facebook, IBM, Google and others are having a good ol' time.
#winning
Sucks for Sony. But hey...I've done my part. I now own 2 PS3's...and I don't even play the damn thing.
fabricated backlash
Member
Just like the Walkman brand blew away the Ipod thanks to mindshare...
You should add the right time as one of the most important factors as well, and Sony seems to become more incompetent by the day to judge when to release a product.
Auto_aim1
MeisaMcCaffrey
He meant Japanese companies obviously, due to the strong Yen.
titiklabingapat
Member
You gotta factor marketing and advertising costs too, so barely breaking even might not even be enough.
BrokenEchelon
Banned
They have about $155~ billion in total assets. They're not exactly devoid of resources, but selling off equity and the like would be quite a severe thing to resort to.
I also wonder if these lackluster sales, and the PS3's first decline year-over-year will push them to release the PS4 any sooner.
bigtroyjon
Member
You take financial services out of the picture and they lost $2.42 billion in the last 3 months.
This company is in a severe amount of trouble at the moment.
People need to get the idea of your heads that they are going to release a PS4 that is a bleeding edge piece of tech. It would bankrupt them if them went that direction and failed.
This company is in a severe amount of trouble at the moment.
People need to get the idea of your heads that they are going to release a PS4 that is a bleeding edge piece of tech. It would bankrupt them if them went that direction and failed.
Dreams-Visions
Member
No, it's not obvious. It was not implicit in this particular comment. I'm sure he can explain himself, but I'll be sure to let him know you came to his rescue.
it wouldn't bankrupt them. but your conclusion is correct: they won't do it because they need to make profits...and producing systems that require a year or more before turning a profit on the hardware itself is probably out of the cards.
both HD consoles should be around £150/$150 right now.
MS must be making gangbusters on each 360! That's where Sony went wrong, seems the PS3 was harder to streamline?
PS4 is going to be a beast. This was Sony's N64, it is clear from the PSP Vita that they did learn from their mistakes.
MS must be making gangbusters on each 360! That's where Sony went wrong, seems the PS3 was harder to streamline?
PS4 is going to be a beast. This was Sony's N64, it is clear from the PSP Vita that they did learn from their mistakes.
Auto_aim1
MeisaMcCaffrey
It's unlikely that they were talking about the Vita, as R&D expenses are noticeable when the product is at an early stage.
mysteriousmage09
Member
Thanks for the insult. no problem with comparisons on marketing standpoints on why MS is selling more 360's then Sony is with PS3's, however, the comments in this thread are nothing more then stupid statements that do nothing but go "lol MS is better then Sony!".
Yep, those are great comparisons open up to lots of discussion.
Now for the actual matter at hand, Sony needs to take a good look at the overall consumer base as it is now. Doing stuff like throwing tons of money towards the 3D TV's wasn't a smart decision and their marketing for other products like PC's is basically non-existent and are going up against a huge market in which they are just playing with fire. The gaming division is really their only consistent division, the P3S is selling at an acceptable rate, the PS2 is still selling (lol), and the PSP is selling as well. The Vita will be interesting to see what happens. Will it sell at an acceptable rate or will it be another 3DS situation where people refuse to pay that much money for a gaming handheld?
Their TV division is good, but as others have said, they need an overhaul in marketing and priorities. Gaming division is good and just needs to keep up with the good marketing ideas like the Kevin Butler commercials as well as keeping the games flowing. Other divisions, eh... really don't know, but it's stuff that needs fixing obviously either in not focusing on them as much or complete overhauls in marketing.
Also, which has also been mentioned, Sony isn't to fully blame for all the losses (but obviously are for a large portion of it) due to the strong Yen and the natural disasters that have been plaguing Japanese companies as a whole for the past year, which hopefully is done for the sake of everyone.
bigtroyjon
Member
No, they have around 166 billion in assets along with 131 billion in debt.
They have 35 billion in net assets, which shrinks every year as they lose more money and have more debt service to pay.
If the downward trend continues (and despite spikes here and there, it has been a downward trend for the Playstation brand since 2006), PS4 will be their last, maybe even a premature death mid-next gen.
But I certainly wouldn't make any predictions. So many variables, who knows what happens. The PS4 might hit a sweet spot in price vs. features that make it compelling compared to the others. I do know the Playstation brand name is at its lowest point ever, and that's a large boulder they have to push up the hill right now.
But I certainly wouldn't make any predictions. So many variables, who knows what happens. The PS4 might hit a sweet spot in price vs. features that make it compelling compared to the others. I do know the Playstation brand name is at its lowest point ever, and that's a large boulder they have to push up the hill right now.
Are you crazy? A PS3 without Bluray? How would that even work, in retrospect.
What kind of technology should they have used instead, DVD? Lol look at the 360, the DVD drive backfired hard on them
Haunted
Member
DCharlie lives in Japan, it's easy to make the connection that he's talking about the domestic market. I immediately assumed he was talking about Japanese companies and the Yen.
Seriously, this has been such a clusterfuck twice in a row now for Sony, and going by all the rumours so far, it actually seems like they will launch last again. Unbelievable...
Giving MS a year head-start with 360 gave MS all the time they needed to deal with the RROD issues, and allowed MS to capture many brands that were formerly Playstation exclusive.
Giving Nintendo a year head-start with 3DS gave Nintendo all the time they needed to fix the price and software drought that dogged the platform, and allowed Nintendo to build up a 15 million unit lead and capture brands that were formerly big deals for the PSP.
Sony was unable to take advantage of MS and Nintendo's mistakes because they weren't at the party. If Sony is serious about reclaiming their dominance with PS4, it seems like being there on time would be an important step. But so far, it looks like they'll miss the party again.
For what it's worth, Vita is profitable hardware. And with Kaz at the top I don't think they will change what worked for them in the past. PS4 will be powerful. If there's one thing Sony needs to think about it is their online strategy. Microsoft makes about 1 billion a year just from Xbox Live subscriptions. Sony can't afford to keep PSN (or multiplayer gaming, to be exact) free.
Spent more than they earned.
Their TV division is not good. It hasn't been good for 7-8 years now. It's probably one of the, if not biggest, money sinks the company have right now. Their TV business is unsustainable. There's a reason they took an $800 million hit on selling their part of the S-LCD venture with Samsung. It probably would have cost them more money to keep the partnership going than to take that hit. I also read somewhere that selling off that venture will help save them a lot of money immediately, which they desperately need.
Monocle
Member
? It was still TOO expensive for the PS3.
The nVidia Chip was too expensive, the CELL Chip was too expensive, the Blu-Ray drive was to expensive.
All three parts had to cost a lot less.... but they didn't.
Wont't happen again -> see VITA
DVD has not backfired on 360 at all. Sure its forced some multi disc issues but it certainly hasnt done harm to the console.
Blu Ray on the other hands took a profitable division and erased 2 console generations worth of profits alone.
For what it's worth, Vita is profitable hardware. And with Kaz at the top I don't think they will change what worked for them in the past. PS4 will be powerful. If there's one thing Sony needs to think about it is their online strategy. Microsoft makes about 1 billion a year just from Xbox Live subscriptions. Sony can't afford to keep PSN (or multiplayer gaming, to be exact) free.
Spent more than they earned.
Oh? I thought Vita made a loss and it was going to take them a long time to make a profit on it. I assumed they were talking about the hardware because they said the Vita ecosystem as a whole was break even (SW, Accessories, ect) I might have that wrong though.
This post acts like Sony was in any position to take advantage of the 360 situation to begin with. There's far bigger mistakes that Sony made this gen, $599 obviously included, that caused them to let those chances pass them by. Sony launching earlier would have just ended up with them in the same pit ultimately. Probably even more-so, because who knows how much they would have been losing on PS3 if they launched it even earlier than they did.
I do agree on the Vita situation. There was no reason to wait as long as they did, considering the PSP was dead everywhere but Japan. The year head-start let Nintendo take their lumps and ultimately do everything they needed to do to eviscerate the Vita before it even launched.
Basileus777
Member
DVD has not backfired on the 360 at all, while the PS3's bluray drive has helped cost Sony billions.
bigtroyjon
Member
This is why Sony loses money like no other company loses money.
For what it's worth, Vita is profitable hardware. And with Kaz at the top I don't think they will change what worked for them in the past. PS4 will be powerful. If there's one thing Sony needs to think about it is their online strategy. Microsoft makes about 1 billion a year just from Xbox Live subscriptions. Sony can't afford to keep PSN (or multiplayer gaming, to be exact) free.
Spent more than they earned.
I kinda doubt that. On the hardware alone, the WiFi unit is likely taking a mild loss, and the 3G unit is likely taking a small loss or breaking even. When you add the memory cards--which are damn near a requirement--the Vita business overall should be slightly profitable.
It's just the only choice they have. Having a bunch of exclusives is what made them keep up with Microsoft. If they had less 360 would be much farther ahead because it is the multiplatform gaming console of this generation. Kinda what PS2 was last gen. 360 versions of games are almost always superior. If Sony were to abandon their first party strategy they'd probably be at 40 million worldwide right now and not at 60. Why buy the more expensive console when the games look the same on both platforms?
I agree with everything you said. MS jumped the gun with 360, and Sony just wasn't in a position to counter. But even so, when Sony looks back on the situation in retrospect and analysis - they have to conclude that the year head-start paid huge dividends for the 360 all generation long.
The same analysis yields the exact same conclusion with the 3DS. And yet, as you said, there was no possible excuse for launching late with Vita. The PSP/DS were launched in 2004, and the PSP had been dead for multiple years in the west. How on earth they gave 3DS a year head-start just defies logic.
And yet, now with these two clear examples of being hurt by launching late, all indications seem to be that the PS4 will be last to the party as well.