[dukmahsik]

Electronics giant Sony has seen a 46 per cent slump in its profit for the three months ended September 30th, with the enormous cost of developing the PlayStation 3 console fingered as a key factor in the decline.

http://www.gamesindustry.biz/content_page.php?aid=12563

because of this I don't think PS3 will debut anything lower if not higher than 360's price.

[Carl B]

This is for that:

Link

...The games division, however, posted a 79% increase in revenue over the year-ago period, lifted by strong sales of the company's new PSP handheld and it's software (games and movies). In spite of costs associated with the launch of the PSP and large R&D costs associated with the PS3, the games division reported a profit of $73 million for the quarter. This contrasts with the slight loss experienced a year ago. PS2 sales were also strong, seeing an increase from 1.99 million units a year ago to 5.01 million units shipped in the most recent quarter...

[Xenus]

God you people are hopeless. R&D costs are just a drop in the buckect compared to what they stand to gain if the PS3 and Cell see broad acceptance. Oh and SCE's revenues are up 79%. The money being lost is from the other divisions.

[dukmahsik]

sony's overall profit is down

[EndR]

Yup.. the initial investments on PS3 will put some pressure on the finances but they are longtime investments. With time, Sony will be able to push prices and have more controll over margins etc etc...

but initially, PS3 will make some dents on Sonys financial situation..

[one]

Yeah the interpretation in that GI.biz article is questionable on the PS3 R&D (and dukmahsik's remark on the PS3 price too)

http://www.gamasutra.com/php-bin/new...php?story=6975

With notable losses for Sony's movie division due to disappointing theatrical revenues for movies such as Stealth, game division Sony Computer Entertainment (SCE) emerged as one of the company’s bright spots for the quarter, despite the enormous sums being spent on research & development for the PlayStation 3. The company has reported sales for SCE overall as increasing by 79.1 percent from the previous year. An operating income of ¥8.2 billion ($71.3m) compares well to a small operating loss in 2004.

Strong sales of the PSP in particular were cited, with the company increasing its worldwide shipment target for the handheld for this current business year from 13 million to 14 million. PlayStation 2 console shipment forecasts were also increased marginally, from 13 million to 14 million, though no comment was made on a possible release date or price for Sony's next-gen console, the PlayStation 3.

[Xenus]

Because they are restructuring there suppossed to reeport a loss for the year but SCE which is responsible for the PS3 had an increase of 79% which means this news doesn't reaaly effect the PS3 pricing unless you think they need to recoup losses from all divisions using the PS3.

[BlueTsunami]

Originally Posted by EndR

Yup.. the initial investments on PS3 will put some pressure on the finances but they are longtime investments. With time, Sony will be able to push prices and have more controll over margins etc etc...

but initially, PS3 will make some dents on Sonys financial situation..

Which is logical. They won't be able to reap the benifits of the R&D until the product itself is released and does good.

[Shifty Geezer]

Originally Posted by Xenus

unless you think they need to recoup losses from all divisions using the PS3.

Which is, more or less, true. After all if every other Sony division losses money, the company will be reliant on SCE to make enough profit to keep the company as a whole going. If the movie and CE divisions continually lose money, without the PS brand Sony would disappear. Hence it's the success of PS3 that'll the company going if they can't fix their other problems, and if they can sell the PS3 for more money without negatively impacting the sales and growth of PS3, they'll do it to fill the coffers.

With Harrison's talk it's unlikely divisions will be doing whatever they want regardless of impact on other Sony divisions, and will act in supprt of the greater good of the company.

[drpepper]

I'm surprised the PS2 console is selling so well. You'd think everybody who'd want a ps2 has one already. What I'm interested in is the next quarterly results. It would be interesting to see how the 360 affect sales, or how well the software will sell seeing as how a lot of anticipted games for the PS2 will be well into release for the holiday season.

You have to spend money to make money I guess. And i think they're banking on Cell and Blu-Ray to be their cash cow, the PS3 only being a vessel to introduce the tech.

[AlStrong]

How was Sony doing 6 years ago when they were developing the PS2?

[wireframe]

Originally Posted by dukmahsik

sony's overall profit is down

The trend has been going on for a while now. Sony is in a reverse situation to Microsoft in the sense that the Playstation is Sony's goose, laying golden eggs, while the rest of the company (consumer electronics) is becoming a money pit. Microsoft, on the other hand, is raking in cash from its Windows and Office products and the Xbox is the money pit (so far).

Overall, Microsoft is in a better position, but it looks like Microsoft is not done filling the video game console hole it opened with money from its coffers.

I think the idea here is that when "Playstation" needs more money invested in itself, for growth, money is taken away that could otherwise help patch up other, less performant divisions of the company. It is healthy that Sony is investing into Playstation instead of trying to balance itself. It's better to let the wounded parts bleed properly and lose a foot instead of risking having to amputate a whole leg.

I wonder how difficult it will be for Sony to regain favor in basic consumer electronics. I don't think it can be that difficult. There are so many brands out there that seem to get by, I don't see a reason why Sony cannot also.

[nelg]

Does anyone know if the PS3 cost have been expended exclusively to the games division?

[Carl B]

The semiconductor division is it's own division - aka Cell. I'm not sure when it split off or if it was formed that way from the beginning, but that is something to keep in mind. Of course a lot of SCE's costs will be wrapped up in that as well, but there is a measure of seperation between the two. The games division isn't paying for all these fab build-outs, for example.

FYI, until recently, Kutaragi was head of the semiconductor division as well. It was during the recent exec-shuffle that that post was reassigned. Chubachi (Sony president) has since assumed the head of semiconductors role, and they continue to press on with Cell investment.

[Shifty Geezer]

Originally Posted by xbdestroya

Chubachi

Big hairy guy. Roars and pulls people's arms off if they beat him at chess...

[Mmmkay]

Originally Posted by xbdestroya

The semiconductor division is it's own division - aka Cell. I'm not sure when it split off or if it was formed that way from the beginning, but that is something to keep in mind. Of course a lot of SCE's costs will be wrapped up in that as well, but there is a measure of seperation between the two. The games division isn't paying for all these fab build-outs, for example.

FYI, until recently, Kutaragi was head of the semiconductor division as well. It was during the recent exec-shuffle that that post was reassigned. Chubachi (Sony president) has since assumed the head of semiconductors role, and they continue to press on with Cell investment.

Further to your post, I don't think one of these 'doom and gloom' threads would be right without this:


I can't possibly imagine what people were saying on the internet in 98/99 about Sony's financials.

[mckmas8808]

Honestly I know some people hate to hear it but, I think if Sony's next quater goes this well then we probably will see a PS3 lower than $400. I mean think about it. If SCE can turn a 73 million dollar profit while launching the PSP and having PS3 R&D wrapped in, then what will they do two years from now?

Two years from now Sony hopes that downloading music, TV shows, and movies will be happening from your PS3 and PSP earning them more dollars. Sony hopes that people keep buying UMDs (which are making them a TON of money) and hopes that they will buy Blu-ray disc too. They also hope more companies buy the CELL processor to do super fast calculations that are shown with PS3 demos, Toshiba demos, and IBM demos.

And I hope people here realize that now for the first time in history Sony will have 2 hardware systems that will sell 2 different fronts on software. The PSP will have games and UMD movies, while the PS3 will have games and Blu-ray movies. People will be crazy not to realize the possibilities that Sony has in their hands. Things can only get better from here. Oh and don't forget that Sony also is selling their own memory sticks that more people are buying due to the PSP. Now that we know the PS3 will accept Pro Duo sticks expect Sony only to make more money on that too.

If UMDs keep selling great and Blu-ray wins a quick victory over HD-DVD then expect the Sony to actually take over the world in 10 more years.

[BlueTsunami]

Originally Posted by Mmmkay

Further to your post, I don't think one of these 'doom and gloom' threads would be right without this:


I can't possibly imagine what people were saying on the internet in 98/99 about Sony's financials.

Great post! Theres alot of tech that Sony seemed to have invested in. The money that was invested does not magically come back to their pockets. Also, as has been already stated, the PS3 is big for SCEE. Not just for the gaming sector but for the Movie sector also. Blu-Ray is probably where its at, PS3 is the trojan horse.

[Mefisutoferesu]

<Literally stares with jaw gaping open>

3000 Oku... HOLY FREAKING!!! That's like 2.5 BILLION US!! On the PS2!?!?!?!

[avaya]

Originally Posted by Mefisutoferesu

<Literally stares with jaw gaping open>

3000 Oku... HOLY FREAKING!!! That's like 2.5 BILLION US!! On the PS2!?!?!?!

Childs play.

Mostly on fabs though.

[Shifty Geezer]

In the long term, how much profit did PS2 actually make (forgetting for a moment it's still going?). 2-3 billion I guess. Nowhere near as profitable as content like...I dunno, and operating system and office software.

[mckmas8808]

Originally Posted by Mefisutoferesu

<Literally stares with jaw gaping open>

3000 Oku... HOLY FREAKING!!! That's like 2.5 BILLION US!! On the PS2!?!?!?!

DAAYYUUM!! I didn't know the US dollar amount. And they only lost money for 1 and a half years? Well that should speak volumes for what Sony can do with PS3 pricing.

[<nu>faust]

Originally Posted by mckmas8808

Honestly I know some people hate to hear it but, I think if Sony's next quater goes this well then we probably will see a PS3 lower than $400. I mean think about it. If SCE can turn a 73 million dollar profit while launching the PSP and having PS3 R&D wrapped in, then what will they do two years from now?

Two years from now Sony hopes that downloading music, TV shows, and movies will be happening from your PS3 and PSP earning them more dollars. Sony hopes that people keep buying UMDs (which are making them a TON of money) and hopes that they will buy Blu-ray disc too. They also hope more companies buy the CELL processor to do super fast calculations that are shown with PS3 demos, Toshiba demos, and IBM demos.

And I hope people here realize that now for the first time in history Sony will have 2 hardware systems that will sell 2 different fronts on software. The PSP will have games and UMD movies, while the PS3 will have games and Blu-ray movies. People will be crazy not to realize the possibilities that Sony has in their hands. Things can only get like most pplbetter from here. Oh and don't forget that Sony also is selling their own memory sticks that more people are buying due to the PSP. Now that we know the PS3 will accept Pro Duo sticks expect Sony only to make more money on that too.

If UMDs keep selling great and Blu-ray wins a quick victory over HD-DVD then expect the Sony to actually take over the world in 10 more years.

many industry analysts and insiders agree that next-gen are going to be a much closer race than current gen's no matter who is going to be the market leader,so there is a high chance of sony's golden egg laying goose starting lay some silver ones instead.

i do think blu-ray will be the "winner" format but expecting it to be as popular as dvd in just couple of years is just nor realistic .(due to factors such as current format war, low hd-tv penetration in the world..etc)

and even if psp has been a l success so far no one can lets not forget that nintendo still controls %90 of handheld console market(they arehavent released the "true" successor of gameboy yet) ,also companies like apple decided to enter the portable video market so competion is heating up on that front too.

[mckmas8808]

Originally Posted by <nu>faust

many industry analysts and insiders agree that next-gen are going to be a much closer race than current gen's no matter who is going to be the market leader,so there is a high chance of sony's golden egg laying goose starting lay some silver ones instead.

i do think blu-ray will be the "winner" format but expecting it to be as popular as dvd in just couple of years is just nor realistic .(due to factors such as current format war, low hd-tv penetration in the world..etc)

and even if psp has been a l success so far no one can lets not forget that nintendo still controls %90 of handheld console market(they arehavent released the "true" successor of gameboy yet) ,also companies like apple decided to enter the portable video market so competion is heating up on that front too.

Perfectly correct statements but lets not forget that analysts got the retail price of the PS2 and PSP horribly wrong. And could any analysts see in 10 years Sony selling damn near 200 million consoles, while every other console in life including MS, Nintendo, Sega, and the weird others combined sold about the same amount in a 20 year timespan. But your comment is basically correct though.

[Nesh]

Some people tend to interpret reduction of profits as losses.

They are still making a profit.Losses are generated below average cost.They are still making profits so things arent that bad.