Can Sony afford to have the most powerful console next-gen? *spawn
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If your burning through $6 billion a year in losses that will last you about 3 years.
It doesnt really seem so much now does it?
Japan earthquake and Thailand flood. It doesn't happen every year.
Sony's revenue is actually up. They just need to trim down the expenses and they're back to profitability. Lay-off employees (especially on TV department), streamline R&D by combining different departments (Walkman, Xperia, and Vaio engineers), sell shares on unprofitable joint ventures (samsung, sharp), sell unprofitable (chemical division) or soon to be unprofitable (battery department).
Sony has just bought Gaikai, Ericsson's share on mobile, and EMI Music. Point is, they have money.
Will they invest big on PS4? Sure it's a genuine question. Sony may take a conservative approach this time. But it's not a question of whether they can or not.
No but constant errosion of your core businesses is exactly what has hapened to Sony over the past fifteen years. Walkman is in my opinion a worthless brand, ask teenagers here in Spain and most have never heard of it. Trinitron is dead. Only an idiot would buy a Viao Laptop. In consumer electronics they have PS and Xeperia smartphones and having played with cheap Mediatek powered chinese Android phones over the last few weeks I cant see anyone making much money on anything other than very high end Android phones since the chinese are producing stunning phones for next to nothing.
That's why they need to invest into businesses 'they think' (1) they can get huge returns, or (2) they can build brand image thus mind share.
They can do either. Money is no object.
But which is smarter? That's the question.
Edit: By the way, Kaz Hirai has previously identified Sony's core business into three. Mobile, Imaging, and Gaming.
They are trimming down their other divisions especially the TV division in order for them not to drag the company down. Walkman I believe is profitable, so they don't need to trim it down yet, they just need to integrate it to their mobile division. I don't know whether Vaio is profitable or not. But please, only an idiot would buy a Vaio. Have you heard of Vaio Z? Premium build.
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That's a different story. I believe the reason Sony did not trim their TV operation early on even though it was bleeding the company a lot of money is because they are trying to save employees from being laid-off in Japan.
Stringer was so ready to abandon the TV business or at least trim it down to a profitable level, but there are influential people at Sony that doesn't want that to happen.
Edit: I don't believe we will see a repeat of PS3 where Sony took huge losses. The reason for that was mainly the expensive blu-ray. But I don't think we can rule out a take no prisoners approach on the PS4.
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No, you were arguing Sony would be the strongest console because that's their MO. Then when challenged with how Sony were supposed to accomplish that having far less to invest and far more to risk than MS, you suggested hardware efficiences. There's nothing Sony can do that MS can't, exactly, which is why the deciding factor has to be choices and budget. And given Sony have less capital and are sourcing from the same supplier as MS, the probability of Sony outperforming MS, certainly enough that they can use extra performance as a marketing lever, I consider about nil. IMO, given rumours, either both machines will be pretty similar or MS will have an advantage in power because MS are in a position to sink more into it.I would ask you the same question regarding microsoft, and I can also use your words : "and so can sony".of course I agree that each company can produce better hardware than the other, but thats my own whole point defended in the last pages, a lot of posters in this topic seem to believe that SONY CANT compete with microsoft hardware wise, because they are BROKE. and I tried to argue with many arguments that thats not necessarly the case (efficiency of silicon budget, importance of ps4 project for sony's strategy, Microsoft not necessarily shooting for a very powerful hardware this time around,...etc).
DoctorFouad
Newcomer
thats how it began : I suggested my own personal opinion that sony for historical and marketing image reasons would produce technologically the most advanced console, or else they would have huge problems convincing their fan base and consumers buying a technologically inferior product, compared to relatively always superior products in the past.
Than you brought, with others, the argument of the impossibility (or high level of improbability to be more precise) of this happening due to the finanncial problems of sony. So I tried in the last pages to show that this is not at all impossible even if sony has financial problems. hopefully, and apparently, at least I succeeded in that.
honestly I still dont understand why a lot of posters in this thread seem to regard a more powerful sony hardware as a very unlikely scenario, having as an argument a financial contextual one...that is very strange, I remember the debates of the sega dreamcast, ps2, game cube...and no one said at that time : sega is broke they cant release a powerful console, or nintendo is broke they cant compete with microsoft....that is a very strange position....it is not as if microsoft is deciding to put ALL of their RESOURCES onto xboxnext project, and Sony is deciding to put all its resources too....
In all cases, its just a fraction of their operating expenses....richer companies donot always choose to produce technically superior products if they could do it, it depends on their strategy...
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If you use MO as basis, MS has always had by far the most powerful console when they've launched. Does that mean they plan to do so again? IF MS and Sony launch in a similar time frame with the same supplier it is unlikely one will have a large performance advantage barring an unforseen willingness to lose a lot of money on each box.
It's a long shot, but there are factors that could help Sony be a little more powerful. Both MS and Sony will spend the amount of money that makes business sense. The amount of money is not the issue.
Some analysts are saying MS have pressure from stockholder to stop sinking money on gaming, this wasn't the case when the 360 launched. The question isn't whether they can survive the money loss, they are super rich and profitable, it's that other divisions are more profitable and have more growth potential, money should go there because there's a lot more to lose. Windows desktop is slowly losing to Apple and Android tablets, and windows tablets and phones are failing. LibreOffice and GoogleDocs are gaining in enterprises, Samba4 is out and linux is gaining in enterprise again. Money should go to these areas in priority, while gaming is seen as a market that cannot grow, and is risky. OTOH, for Sony the gaming market is critical, simply because they don't have anything better. If their TV division was ultra profitable, the playstation would have been dropped already.
Sony and MS are sourcing from the same suppliers for Memory, CPU and GPU, but where will MS source their Bluray drive? And who will get money when they have to pay for some of the bluray licensing? Sony makes their own bluray drive, including the lasers, they don't have to pay for licensing the bluray tech AND they will even get some revenue from Nintendo and MS consoles, they even press their own discs. They also make their own passive parts, the Move has their own sensors, controllers have their own lithium batteries, and the camera(s) will be their own. They have fabs, and are considered among the pioneers of interposers, stacking and integration. They have an edge in production cost and expertise compared to MS.
If MS needs one or two additional GB reserved to run Windows in the background, there goes another expense that can't be used for games, and if the storage needs to be 10GB higher to run Windows, same thing. It's money that can't go into a better GPU.
One obvious angle is that if MS comes out in 2013, and Sony in 2014, PS4 will be more powerful.
Another possibility is that PS4 would be more expensive than 720. The PS3 was a lot more expensive than the 360 for it's entire life, and despite that the PS3 has been consistently outselling the 360 every year since it came out.
We all know none of this will happen, but I maintain it's not impossible and the money issue is overblown FUD.
Some analysts are saying MS have pressure from stockholder to stop sinking money on gaming, this wasn't the case when the 360 launched. The question isn't whether they can survive the money loss, they are super rich and profitable, it's that other divisions are more profitable and have more growth potential, money should go there because there's a lot more to lose. Windows desktop is slowly losing to Apple and Android tablets, and windows tablets and phones are failing. LibreOffice and GoogleDocs are gaining in enterprises, Samba4 is out and linux is gaining in enterprise again. Money should go to these areas in priority, while gaming is seen as a market that cannot grow, and is risky. OTOH, for Sony the gaming market is critical, simply because they don't have anything better. If their TV division was ultra profitable, the playstation would have been dropped already.
Sony and MS are sourcing from the same suppliers for Memory, CPU and GPU, but where will MS source their Bluray drive? And who will get money when they have to pay for some of the bluray licensing? Sony makes their own bluray drive, including the lasers, they don't have to pay for licensing the bluray tech AND they will even get some revenue from Nintendo and MS consoles, they even press their own discs. They also make their own passive parts, the Move has their own sensors, controllers have their own lithium batteries, and the camera(s) will be their own. They have fabs, and are considered among the pioneers of interposers, stacking and integration. They have an edge in production cost and expertise compared to MS.
If MS needs one or two additional GB reserved to run Windows in the background, there goes another expense that can't be used for games, and if the storage needs to be 10GB higher to run Windows, same thing. It's money that can't go into a better GPU.
One obvious angle is that if MS comes out in 2013, and Sony in 2014, PS4 will be more powerful.
Another possibility is that PS4 would be more expensive than 720. The PS3 was a lot more expensive than the 360 for it's entire life, and despite that the PS3 has been consistently outselling the 360 every year since it came out.
We all know none of this will happen, but I maintain it's not impossible and the money issue is overblown FUD.
The problem with adding DSPs and FPGAs and other cores is that devs rarely use them, when you're on a time and money budget, you're going to code to the lowest common denominator, which is usually the main CPU and GPU.
The original XBox had full hardware offload for 256 voices. Almost no one used it.
The original XBox had full hardware offload for 256 voices. Almost no one used it.
I don't know about the sites you visiting during the DC days or the people you talked to, but Sega's financial situation was most definitely discussed back then. Everything from using GD-ROM instead of DVD, SH-4 instead of PowerPC, PVR vs 3DFX vs proprietary GPU, etc. At least on the sites and with the people I talked to in those days. You bring up Sega and Nintendo, but the fact is they weren't able to compete with MS in performance. However that was at a time when MS wanted to enter the console business, no matter the expense and I don't think it's like that these days. No one is talking about MS putting all of their resources into any project, just the possibility (and reality) that they can put more resources if they choose to do so.
I'm not sure why you're so bothered over the thought of Sony not having the most powerful console next gen when they have never had the most powerful console during any generation of consoles.
Agreed. Just because you can spend more than the competition, that doesn't mean you want to or even should. If Sony decided to play it conservatively, losing ~$50 per console, there's no need for MS to lose ~$200 per console. There's little chance either company will lose more money than they really need to get the job done IMO.
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Just under 11 billion at the end of last FY, apparently:
http://www.stock-analysis-on.net/NYSE/Company/Sony-Corp/Financial-Statement/Statement-of-Cash-Flows
ImaginaryInsider
Newcomer
Currently, the 360 is the only profitable part of the entertainment division, and has been for years. As you have pointed out, MS staple products are being eroded because the pc landscape is blurring... you are suggesting they circle the wagons, but given how proactive MS has been with Surface and Win 8 phones, does it really seem like they are cutting back? At this point MS needs to grow as much as possible while they still have Windows as backup.
I'm sure both next gen consoles will be within spitting distance of each other... and hopefully some more info leaks soon.
DoctorFouad
Newcomer
thanks for destroying the internet myth that sony is broke.
so can we now move on from the resulting myth that sony (a hardware company) cannot compete hardware wise with microsoft (a software company), just because the latter has more money than the former ?
microsoft was also a much more wealthier company than sony the days of development of the xbox360, but I remember that it was microsoft having troubles competing with sony hardware wise (CELL processor, Blu Ray, HDMI, WiFi, Hard Disk...) not the opposit
Totally missed your post until DoctorFouad quoted it.
Sony's $55 billion current liabilities say hi. Sony is a large company, they need a lot of cash in hand just to be able to pay their bills.
Except that he didn't. Sony has less cash on hand than they have debt coming due and accounts payable. They have to take on debt just to be able to cover their obligations. And their debt is already rated Baa3...
Sony's $55 billion current liabilities say hi. Sony is a large company, they need a lot of cash in hand just to be able to pay their bills.
thanks for destroying the internet myth that sony is broke.
Except that he didn't. Sony has less cash on hand than they have debt coming due and accounts payable. They have to take on debt just to be able to cover their obligations. And their debt is already rated Baa3...
upnorthsox
Veteran
Assuming the extremely hypothetical situation where we would get an arms race where both companies spare no expense to deliver the most powerful console, then we'd still have a very complicated situation where we'd have to figure out the relative cost for both companies to do something that we currently don't know how it would be done, because we have no idea what would be possible for that kind of money.
There is no need to discuss that silly hypothesis however, because the only relevant question currently is what package each company can deliver that is a total of hardware, software and services, and even for the hardware part 'most powerful' isn't as relevant as it used to be, as the Wii has shown last time, where motion control innovations were a much more important drive for the console's success than raw number crunching, and since then both MS and Sony have massively embraced motion controls.
Who knows what the next 'killer feature' will be, never mind whether it will be a hardware, software or services feature. For all we know (very hypothetical) it could be streaming gameplay from servers and all the box is good at is decoding an incoming signal.
There is no need to discuss that silly hypothesis however, because the only relevant question currently is what package each company can deliver that is a total of hardware, software and services, and even for the hardware part 'most powerful' isn't as relevant as it used to be, as the Wii has shown last time, where motion control innovations were a much more important drive for the console's success than raw number crunching, and since then both MS and Sony have massively embraced motion controls.
Who knows what the next 'killer feature' will be, never mind whether it will be a hardware, software or services feature. For all we know (very hypothetical) it could be streaming gameplay from servers and all the box is good at is decoding an incoming signal.
Are you being purposefully obtuse? Look at that balance sheet again. The crucial difference is that MS has $53B more current assets than it has current liabilities. This means that if effectively has $53B worth of money it could use on this fy without having to borrow money, sell long-term assets, or take other funding in.
