Sony is making profit out of the PS3 now? That's very good news actually, but wait is it making profit as in offsetting the losses overall or just made profit for a specific year?
Wii U Community Thread
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Sony is making profit out of the PS3 now? That's very good news actually, but wait is it making profit as in offsetting the losses overall or just made profit for a specific year?
Dreamwriter
Member
Well, in terms of retail graphics card prices, $50 is about the difference between a 1GB Radeon 7750 and 1GB 6870 - the 6870 is a very nice step up from the 7750. And Nintendo of course would pay a lot less than retail for their parts. And if that were $90? Well that bumps up your 1GB 7750 to a 2GB 7850, which doubles the framerate in many games.
So yes, if Nintendo took all the money going into the Gamepad and applied it to improving their hardware, it would make for a nice improvement indeed. But then it would be a pure war against specs, which is about as red-ocean as you can get. It would make the console an HD Wii and nothing more.
Profit in offsetting losses, specifically on the Ps3. However, In terms of the company as a whole on their balance sheet theyre at record losses.
But an HD Wii with awesome graphics and Nintendo games
. I wouldn't in a zillion years want them to forgo the GamePad, I was just curious.One thing I haven't seen revisited since E3, was when John Harker popped in after a GDC behind the scenes sneak-peek and said "Wow!" to what he'd seen of the Wii U. What happened to the wow and John, is there still some wow anywhere?
If that really is the case then both Sony and MS can go into next gen without much problems. They have both the userbase and profit to sustain them. A 2013 release from both of them seems logical.
I just dont have your secret decoder ring. So I take the post at face valueAnd he put true in quotes.
I'm seeing a trend of not taking posts in their full or proper context.
This coming from a favorite gaf insider. Iherre. Op was in spanish.
Now I don't have b decoder ring he can help us out.
Father_Brain
Banned
This could well be true in theory (hypothetical downward scalability of PS4/Durango engines) while not being true in practice (actual support from third parties).
I just dont have your secret decoder ring. So I take the post at face value
This coming from a favorite gaf insider. Iherre. Op was in spanish.
Now I don't have b decoder ring he can help us out.
Yup, according to Iherre, the difference could be bigger than dreamcast Vs Xbox. I remember him saying something like that before.
anchorman128
Member
These games look a lot worse in motion, thank you for confirming earlier predictions
bgassassin
Member
Including accessories the max I would guess is $550. I think it will be under that though as I'm trying to think from a "how much of a loss would they take on a console retailing for $399". I see them taking a loss that's more like $100-$130. They seemed to have targeted a base architecture that will have plenty of time to come down in cost by the time PS4 releases.
Yeah $50 is something we've been looking at since the first thread. Since I can only go buy my estimated power range and estimated controller cost, it would depend on where the money was spent. $40-$50 extra for Nintendo hardware wouldn't be the same as it would be for the others due to Nintendo's philosophy IMO. In other words it would go much further in Wii U than it would for the other two IMO. So it we were working from the max end of my Wii U power range, I think that extra would at least put it within the raw power range of the other two. Other than that, no.
Ignoring the quotes devalues it.
Haha. Just to help people out his name is LHERRE.
Did dreamcast have only 1/3-1/4 the power of the ps2?
You are asking the wrong guy here. I have no clue.
I know the Dreamcast was only a little bit weaker than the PS2, they're are some ways though that the Dreamcast had the advantage over the PS2.
I doubt you're going to find any areas where the wii u has an advantage over the ps4 but these dreamcast comparisons are pretty out there.
Take a pc game on low and compare it to a pc game on high. Simplified as hell but it works better than asinine multipliers and comparisons between systems from 2 generations ago.
lwilliams3
Member
Are talking about the difference in visuals or the actual specs between the systems? The issue with that comparison is that the dreamcast ended up faring better against the ps2 (early years) in visuals compared to their specs due to several factors.
shinra-bansho
Member
I suppose it depends on one's definition of any of the three as well; it's all relative I guess.
Am I reading this correctly in that you think the loss per unit will be lower than your estimate range, by the time the product is release ready - or is it your opinion that at launch they'll be taking ~$100-130 loss per unit.
That still seems too much for me, from a business model standpoint.
A loss lead should be recouped by associated purchases - i.e. software platform royalties, both physical and digital, positive margins on accessories.
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Assuming they expect to sell an average of ~8 physical retail games per unit over the lifetime - that'd amount to about ~$50-60 in royalties. Not sure what they'd make on an extra controller and XBLA/PSN sales; but for the sake of argument let's say together that amounts to about $30.
Assuming a slim retailer margin on launch HW, let's say 5% - wholesaling for $380 - they'd want to target a cost per unit all-up of ~$460, for a loss of ~$80. Actually lower due to other production and distribution costs.
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So does ~$450 worth of tech buy you Durango or Orbis?
Probably not?
lostinblue
Banned
Do these comparisons really matter?
The 128 bit generation was pretty much out there when it came to hardware parity of features, it was pretty much a matter of pros and cons of each architecture really, although GC and Xbox were in a class of their own. PS2 was an alien system with the vector units and a really atypical GPU that didn't support on-silicon acceleration of certain effects and techniques like DC did.
DC had a GPU with some performance advantages over PS2's custom GPU, namely the fact it could render in tile-based form (meaning only the visible pixels in the frame were textured saving calculations and texture-bandwidth) and it had texture compression which PS2 lacked so textures for games like Shenmue are actually really good for the time, unlike most texture work you'll see on the PS2 which by comparison was plagued by low res and low color depth on it's textures. I mean most of it's games stuck to 16 color textures, at most. (GTA's being really good if you want to be able to count the exact amount of colors per texture because they were so clearly unoptimized)
DC was a texturing beast, meaning texturing (also because of the tile-rendering) for a whole scene would take little hit compared to PS2, that was it's advantage.
The disadvantage? Well, it's specs claimed 3 million polygons real time; because of the low hit texturing had they were able to pull as much as 4.5/5 million polygons per second in Test Drive Le Mans; PS2 on it's turn did manage to pull the 10 million polygon mark on some games (Jak and Daxter, Virtua Fighter 4) which was the max polygon throughput in real-world really. If we're talking at straight Raw figures then DC was roughly 1/4 of the PS2 in total Gigaflops, but it was really efficient with it, so it closed the difference a little bit to 1/2, as polygon throughput figures put it, and it actually humiliated PS2 on texturing. Because of that, PS2 spent most of it's life pushing far more polygons than the DC could muster and ridiculously bad textures to go with it.
One thing I haven't seen revisited since E3, was when John Harker popped in after a GDC behind the scenes sneak-peek and said "Wow!" to what he'd seen of the Wii U. What happened to the wow and John, is there still some wow anywhere?
I've been wondering about that myself. I don't know what that was about, never heard of any similar reports, and no one(including Harker himself) ever mentioned it since. I hope he wasn't simply teasing for the sake of it. That'd be cruel. After his "the sticks are clickable" revelation, I got the impression that he prefers the hit-n-run style info sharing, throwing a bone every once in a while, and probably wouldn't pull a prank like that.
But if he did... *dangles noose*
LOL, funny how everyone let that one slide, but were ready to hang Ideaman on several occasions. Nothing against anyone...just saying.
bgassassin
Member
The latter is correct. I believe it will be less than my max of $150 by the time it launches and in that range of $100-$130. I'm also factoring in that the hardware cost should scale down much, much better than PS3. I could see them at breakeven or even making a slight profit at a $399 price point before they consider a price drop. Ignoring the possibility of low sales forcing a need to consider a drop sooner. By then software is "pure profit". I put that in quotes because of the need to cover any necessary operating expenses.
I'm not saying that they won't go down that route, but that would be a pretty horrible business strategy for Sony. The games division was highlighted recently to be one of Sony's primary expected profit centers in the short-term, with a BIG expected jump in profit margins for the division.
Selling the PS4 at a loss of $100 out of the gate (which results in a loss per system, even after accounting for software sales years down the road), and then as you suggest - once the hardware finally gets back to break-even at $399 after a year or two, they drop the price and go right back into loss-leading mode again. So the PS4 is now looking like a drag on the gaming division for what, 3+ years? With Vita being the fallback option?
Ugh. Doesn't seem remotely feasible in terms of matching their expected profit margin surge in gaming in the coming years.
bgassassin
Member
Who said they would drop the price at that point though? All I said was it would hit that point before they would consider a price drop. And because they seem to be already planning on the console lasting at least seven years before a successor is released.
But if the hardware costs do scale well, they could turn an operating profit after the first year. And that's just from software sales.
The same things as always. Yes. Soon.
God I hope so too. I hope that September conference drops bombs like never before. It sold certainly solve my apathy problem towards the Wii U since E3.
NOOOOOOOOOO! Not another one!snesfreak
Banned
(Today, 06:28 PM)
Nintendo will stop making games when they stop making hardware. I think they'll keep their word on this. But that's a long time away, hopefully. And the landscape may remarkably improve for them in one way or another. This industry is unpredictable and fascinating.
And snes.. damn. What was the offending post? One by one, the Nintendo fanmen around here are going kaput. Juniors, you have large, large shoes to fill. Many fallen friends..
Monthly unit sales?
Under your scenario, they basically have to hope for a slow start to sales. Strong hardware sales out of the gate means BIG losses in the first year, which takes a big giant shit all over their profit margin forecasts for the gaming division in the coming years.
And if they have a tepid start to hardware sales with a $100-$130 loss per unit out of the gate, then why are hardware sales suddenly going to spike a year or two out if they haven't dropped the price and people weren't all that interested when it launched at $399? It may happen, but I certainly wouldn't want to be banking my entire 8-year plan on that happening.
Taking a big loss (and $100+ loss per unit is a big loss) upfront is just a bad strategy for a division that is supposed to be seeing short-term growth in profit margins. It can work out to be a decent long-term strategy if you don't mind taking the hit in the short-term, but everything Sony has been saying in their financial statements suggests that they want the gaming division to show profitability growth in the short-term.
Again - I'm not even saying that they won't go this route. I wouldn't be surprised at all if they did. But that's only because Sony has made so many other horrible business decisions in the recent past.
Haha I know. I'm just joking. I was being sarcastic. I just find it funny how people cn say Nintendo is doomed and shit when they are the only one if the 3 who's gaming division doesn't bleed billions.Nintendo will stop making games when they stop making hardware. I think they'll keep their word on this. But that's a long time away, hopefully. And the landscape may remarkably improve for them in one way or another. This industry is unpredictable and fascinating.
And snes.. damn. What was the offending post? One by one, the Nintendo fanmen around here are going kaput. Juniors, you have large, large shoes to fill. Many fallen friends..
I should give that thread a look then!
btw snesfreak told me what happened on twitter. I could update for you guys.
shinra-bansho
Member
I don't dispute that what you're saying may be the case, but it really doesn't seem a recipe for profitability as the other poster points out, which they seem to be aiming for apparently.
Sony should be targeting a cost per unit of no more than ~$450 really, while Microsoft with the buffer of Live fees can probably go for a BoM of ~$500.
So the question becomes what can $450-500 buy you; what kind of silicon budget does that give you when things like HDD/SSD, BD drive, controller etc. are taken out.
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Query for anyone: Based on the rumored specs, what would be the expected BoM/COGS on a Wii U?
No, Nintendo traditionally don't loss lead, as far as I'm aware. They apparently did for a brief while with the GCN.
I think the Wii U console itself probably costs about $180 in parts. Factor in labour, assembly, packaging, pAinting, shipping, etc and that's about $200 total.
The GamePad probably costs $40-50 in parts and assembly, etc. So $200 for console + $50 for GamePad = $250. I think in all the Each Wii U unit will cost Nintendo about $250 to make. And since they want profit at day 1 they will sell at $300 (I was hoping for $350 for more powerful tech). All of this is speculation though.
medicalmidget
Banned
Correct me if I'm wrong, but doesn't Nintendo usually decide to take a loss on hardware and make it up with software? I think they will continue to go that route after trying to make a profit on the 3DS. It isn't a great strategy your right, but neither is pricing high and acquiring abysmal sales. Though you could be right considering investors want to see Nintendo make a profit and soon. It will be interesting to see their strategy in the coming months.
Actually, the 3DS is the first system in Nintendo's history they've taken a loss on after the price cut. They always make money off their hardware day 1.
Something to do with IRC. Got into a heated debate. Things happened.
Also, I meant to say manufactured cost will be around $250 but after retail markup the Wii U will be around $300 and Nintendo will make maybe $5 profit on each unit sold.
Nintendo has never sold hardware at a loss until the August 2011 price cut of the 3DS. Even the GameCube, a console with only 21 million units sold globally, made Nintendo's profit margins rise. It sold 3 million less than the Xbox but was profitable from day 1 unlike the Xbox (which was never profitable in its 4 year life span).
Exactly.
medicalmidget
Banned
My mistake, thanks for the correction. Well if that is the case then lets hope Nintendo found the right price balance for the Wii U. I believe that NintendoLand will be a pack-in game. It seems like it has to because the 360 and PS3 have pack-in games (sometimes more than one) for $300. Not everyone will buy NintendoLand if it isn't a pack-in, and Nintendo needs to have that game, as they say, that "shows off the Wii U features."
I was never disappointed by it. I knew it was a bad conference for the gaf audience, but it had enough good games for me to get day 1. Pikmin/ZombiU/NSMB/P-100 and even Nintendoland will do nicely, thankyouverymuch. Trine 2 was a good surprise and batman is batman which may be worth a double dip at the right price.
I didnt expect the world from the conference. No Retro basically suggests to me that they are making the game that will be going up alongside the PS4/720 launch or reveals. Same with the mario galaxy team.
If you operate under the assumption that nintendo never announces games long way out from release, your expectations are kept in check.
I do understand why others were disappointed though, but I dont share their sentiment.
TheNamesPlissken
Neo Member
If Sony really needs profitability in short term following PS4 launch, they may require subscription fee a la Xbox Live. If they continue to ignore Nintendo as a direct competitor (and having recently attended a speaker series session featuring Jack Tretton, that is absolutely the case as he didn't reference them a single time while talking about Microsoft at least five times) then they could see that requirement as being on parity without worrying about nintendos online stance (free).
They could also be pushing for an upfront + monthly fee like MS is testing out with their online service included.
They could also be pushing for an upfront + monthly fee like MS is testing out with their online service included.
I'm still disappointed, but it hasn't deterred me one bit in my desire to grab one of these consoles on Launch Day. Oddly enough, details of the games on the show floor after the conference reinforced my resolve.
While Nintendo's PR and media relations may leave something to be desired at times, so long as they bring the games, I can easily get over that issue.
In.credible.
Should be very interesting to see if such a gamble pays-off..
Nintendo historically tries to sell new hardware at break-even or at a profit. IIRC, they sold Gamecube at a very small loss at launch, but we're talking a few bucks, and that was offset within a few months. They also sold Gamecube at a small loss again when they dropped the price to $99, but again only a few bucks per unit. The 3DS is the only other example that I can recall where they sold a system at a loss, but that was due to the price drop which was needed due to slower than expected unit sales. (which is the exact same scenario I see happening if Sony tries to keep PS4 at $399 for an extended period of time).
Even in Sony's case - they historically sell their systems for a loss at launch - but usually only a moderate loss. The PS3 is the only case where they took a $100+ loss on each unit at launch (and we all know what that did for their financials). And if bgassassin is correct, then the PS4 will soon join the PS3 in that special club.
medicalmidget
Banned
I don't know why I thought Nintendo sold at a loss for hardware, must be all the doom and gloom of companies fogging up my memory. As for Sony, they better not hope that the PS4 will be another PS3, because honestly, they can't allow it, not with their financial losses. I realize their gaming division wasn't the primary (or even a cause) for their financial situation currently, but it doesn't help matters when they are, as you said, selling at a $100+ loss for each PS4. Sony needs to, I believe, aim for a $400-450 price point, maybe max $500. Sony can't allow themselves to get drunk on power again, even if that is what they are well-known for.
shinra-bansho
Member
I've seen that Forbes citation...
But then I recall reading on here that there was an EDGE article in which Nintendo originally wanted to sell the Wii for $200 - but yielded to US retailers. And if that were true then that would imply Nintendo originally intended to sell for a significant loss.
That and a $6 launch margin doesn't seem to fit well with their third quarter earnings results for the launch period of the Wii. Net sales were roughly ¥415B; cost of sales around ¥250B, for gross margins of ~40% on their sales. Although I guess low HW launch margins may be hidden among older platforms and software revenue.
Teardown analyses at the time put the BoM at ~$160. Perhaps they gave retailers a ridiculously good margin for console hardware.
The story at the time was that Nintendo was initially planning on selling the Wii for $200 without Wii Sports, but then eventually decided to bump the price to $250 and include Wii Sports. In effect, they basically forced everyone to buy a $50 game with their system.
There's no doubt that Wii was profitable from the start. I suspect the system itself made a small profit at $200, and then the extra $50 from Wii Sports was pure profit (although the game would have sold ridiculously well if it wasn't packed in - so that $50 in Wii profit was coming at the expense of some of their other software revenue that they would have earned).
medicalmidget
Banned
So what does that mean for NintendoLand and Wii U? Should it be a pack-in game, though it possibly would bump the price up by fifty, or should it stay as a separate retail game and keep the hardware price low?
It's still the worst E3 ever. I didn't even care that 08 was bad because I was playing Brawl and Mario Kart. They earned the right to "sit a year out" imo. Not this time. They fucked up big.
Hopefully the Fall conference is good.
ShockingAlberto
Member
There was a brief period where they took a loss on the Gamecube.
I feel that as a whole this E3 was definitely the worst, but Nintendo's 2012 conference wasn't the worst Nintendo conference, Nintendo and Sony clearly have a problem every second E3 when they are showing they're new console/handheld again before or after it releases.
I agree I really hope they're Fall Conference is the E3 we wanted.
Dreamwriter
Member
BOM is only a tiny part of what the price has to pay for. They also need to pay for marketing (just those E3 booths cost millions of dollars), customer support, system development costs, shipping and storage, and other things. The XBox for example lost Microsoft over a billion dollars, and most of that was advertising (though they also lost money on each system sold). They were buying their way into the gaming industry.
At this point (just going by Youtube videos and such - I haven't played it), it seems like more of a Wii Play type of product than Wii Sports. Wii Play was a $10 game that was used to help sell the controllers.
If NintendoLand is the same type of product, then I could see it being included with the system as a way of helping sell the concept of the U-Pad to new owners. Until they can get the price of the pad down significantly, they don't really have any interest in selling extra pads to people - so NintendoLand doesn't make sense as a Wii-Play type of retail product.
But all the tie-ins to other Nintendo brands (Donkey Kong, Luigi's Mansion, Zelda, etc.) may encourage them to try to sell it as a standalone retail product. Hard to say at this point.
bgassassin
Member
Dalthien and shinra.
I posted my response here.
http://www.neogaf.com/forum/showthread.php?p=39432026#post39432026
I posted my response here.
http://www.neogaf.com/forum/showthread.php?p=39432026#post39432026
medicalmidget
Banned
I'm curious Assassin, lets hypothetically say that the Wii U vastly performs under Nintendo's expectations and is rapidly turning into a GameCube, 3DS scenario. Do you predict that Nintendo would take drastic measures like they did for the 3DS? Whether that is a hardware price drop, early AAA game announcements (most likely saved for E3 or Nintendo Direct later), or Wii Select game/Wiimote bundle or something.
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