Ken Kutaragi:" I can produce the PS3 anytime"

[Nesh]

The reason I think that's BS is that if he could, he should do it now.

Once PS3 is out on the market, XB360 sales will slow down heavily. Obviously there is something stopping him from releasing now, be it the state of software, manufacturing limitations, cost, whatever.

The only reason XB360 will do well (better than the original XBox, anyway) is timing. Sony has too powerful of a brand in Playstation, regardless of how good XB360 actually is.

I think what he was trying to say is that the PS3 hardware is finalised and ready for production(only the hardware).

 

[weaksauce]

The reason I think that's BS is that if he could, he should do it now.

Once PS3 is out on the market, XB360 sales will slow down heavily. Obviously there is something stopping him from releasing now, be it the state of software, manufacturing limitations, cost, whatever.

Maybe they want some good games at launch too?

 

[fulcizombie]

Microsoft is in this business for only one reason, and that's to prevent other companies from eroding it's OS monopoly. They see a threat, that consoles are getting more powerful, and thus one day, can be your personal computer also. Most people on this forum, don't think the PS3 is a threat in that area, as they will always claim it's a game console, and will have limited appeal as a computer. That maybe so, but with each succeeding generation, a game console will be a little bit redefined, and Microsoft has help bring that about, by including a HD with each console sold.

Now MS will not release a keyboard, mouse, and browser for the 360, because they live in mortal fear, that a person will then not buy an OS for a PC. Sony has no worries in that regard, and so are in a position to offer consumers more choices.

Microsoft believes they can dominate this business in time, given they have the reserves to buy marketshare. Only problem with that plan, is that if Sony continues to make a profit, they will continue to be in this business. If Sony makes a mistake, MS will be there to capitalize on it, but Sony has done everything right so far. The company is making enormous profits off of the PS2, that will pay for the factories to manufacturer the PS3.

Sony engineers are very good at reducing die sizes, so the initial cost of the PS3 chipset is a very poor reflection on what it will cost to produce in three to five years time, and that is the important time when Sony makes it's massive profits off of the hardware. There is no question that Sony makes massive profits off of the PS2, as the cost estimate at this time for the PS2 is around $50 US.

Sony is a position going from strength to strength. The PS2 sales are not low at all, as matter of fact last December Sony outsold the original Xbox by almost 4:1, when Sony usually out sells it 2:1 or 3:1 each month. Microsoft main advantage this generation was in being the more powerful of the two consoles, and thus attracted a certain segment of the market. The perception with the PS3 is that it not the weaker of the next generation consoles, but the strongest, with the perception surrounding CELL helping that. Microsoft failure in Japan will be very telling on Japanese software houses, and thus Sony is in a position to repeat it's market dominance. I don't see anything to change that. Of course Blu-ray will just strengthen's Sony position even more, and that's why Microsoft is throwing it's full weight in trying to stop it. They know Blu-ray is important to this fight, or they would not have been so vocal in their HD-DVD support.

All these arguments now being said about Sony will be said again in 5 years time. Nothing will change, and people will still believe that Sony will fail simply because MS has practically unlimited money to lose. Microsoft frustration will be completely born by the fact, that as long as Sony continues to do everything right, they will continue to dominate this business.

Well at least it's not MS that has to lay off 10000 people,has to hire an english executive to save them from the gutter and has some billions of $$ in debt.

Sony has to do everything right cause the whole company is at stake right now.One mistake and the results could be dramatic for that fledging company.

 

[Titanio]

Well at least it's not MS that has to lay off 10000 people

Yet Sony still employs well over twice as many people as MS. But I guess you might then think that makes them "fat"? Hence, you might trim some away, as Stringer is doing.

has to hire an english executive to save them

He's Welsh, actually. And what's wrong with a Welsh executive? And he wasn't taken in from outside, he's been at Sony for nearly 10 years now.

Sony has to do everything right cause the whole company is at stake right now.One mistake and the results could be dramatic for that fledging company.

Do you know the meaning of the world fledgling?

 

[-tkf-]

Good post Ben-Nice, but only investers will be asking if the Xbox 360 will be profitable. Consumers really don't care. But I see what you are saying.

Yeah, makes me afraid to think how Microsoft is going to earn back that money when they are done bleeding their competition to death....

XBOX LIVE, pay pr second you play! ?

 

[expletive]

MS has a history with flopped products that they didn't abandon straight out, everyone knew they were in this for the long run (except maybe Ken).
That said, XBox Did flop in Japan, Korea, and most of Europe - and this would still be the case even if MS sold it at a profit.

I dont think you can say the original xbox flopped in EU without taking into account the succes of the 360 there. Since establishing the brand for this gen was obvisouly a criteria for success with the first one.

 

[Gerry]

Well at least it's not MS that has to lay off 10000 people,has to hire an english executive to save them from the gutter and has some billions of $$ in debt.

AHEM

He's Welsh.

Boyo.

 

[one]

I dont think you can say the original xbox flopped in EU without taking into account the succes of the 360 there. Since establishing the brand for this gen was obvisouly a criteria for success with the first one.

Do you have any numbers for the 360 sales in EU? I think I've seen some UK launch numbers, but not sure for others.

 

[blakjedi]

Well at least it's not MS that has to lay off 10000 people,has to hire an english executive to save them from the gutter and has some billions of $$ in debt.

Sony has to do everything right cause the whole company is at stake right now.One mistake and the results could be dramatic for that fledging company.

Exactly. PS brand is the division that has been sustaining Sony for the last ten years. They have lost market share in nearly every other division and have lost entire markets that they once singlehandedly created (walkman meet ipod!)

So Edge's and Nesh's whole rants boil down to this. Even with 4B in losses MS has no debt and is extremely profitable. MS is also bigger than Sony in nearly every way. Sony only beats MS in terms of sales.... but that actually works against Sony. Sony has nearly double the sales of MS (63 bil vs 34bil) yet only 11% of MS' profit (.98 bill versus 8.88 bil). If MS had not lost 1 billion on xbox brand last year (can anyone prove that these loss numbers being thrown around are true? ) the numbers would be skewed even more in MS's favor...

Sony's sales/profits ratio is more instructive about the perils of inefficiency, capital investment, shipping and assembly costs blah blah... 63 billion in sales to get 1 billion in profits is actually seriously terrible... Honestly Sony is at the razors edge of not being a profitable COMPANY in general... forget videogames... PS IS most of Sony's gameplan.

Now if through PS3 they get Blu ray to stick and then also get people to pick up their sxrd/bravia/qualia lines, then they get a free triple play that bolsters their other production lines which have lost their luster.... Sony has much more to lose than 4 billion dollars over 4 years...

EDIT: And for those that want to argue that Sony is a much bigger company because of sales... remember that there is no generally accepted measure of corporate size. Assets, market cap, profits and sales can be used and in the last five years assets, market cap, and profits have been recognized as being more valuable than sales as a valid measure.

 

[avaya]

I dont think you can say the original xbox flopped in EU without taking into account the succes of the 360 there. Since establishing the brand for this gen was obvisouly a criteria for success with the first one.

When you talk about a market of ~450m consumers success is all relative. PS2 took ~75% of the EU market this gen.

In Europe Xbox was not a failure but neither was it a success. In this sense Europe is much closer to Japan than the North American market, and in my opinion it is highly unlikely that the situation will change at all. Whether 360 is any different can only be realistically calculated after PS3 is launched.

 

[Nesh]

Exactly. PS brand is the division that has been sustaining Sony for the last ten years. They have lost market share in nearly every other division and have lost entire markets that they once singlehandedly created (walkman meet ipod!)

So Edge's and Nesh's whole rants boil down to this. Even with 4B in losses MS has no debt and is extremely profitable. MS is also bigger than Sony in nearly every way. Sony only beats MS in terms of sales.... but that actually works against Sony. Sony has nearly double the sales of MS (63 bil vs 34bil) yet only 11% of MS' profit (.98 bill versus 8.88 bil). If MS had not lost 1 billion on xbox brand last year (can anyone prove that these loss numbers being thrown around are true? ) the numbers would be skewed even more in MS's favor...

Sony's sales/profits ratio is more instructive about the perils of inefficiency, capital investment, shipping and assembly costs blah blah... 63 billion in sales to get 1 billion in profits is actually seriously terrible... Honestly Sony is at the razors edge of not being a profitable COMPANY in general... forget videogames... PS IS most of Sony's gameplan.

I think you lost both Edge's and my point.First of all you do the big mistake to take each company as a whole while I and Edge described the console market and how they both act in that market.If you want to talk about Sony's ineficiency in other pdoducts this is not the place.This is a console forum and we talk about PS2 and XBOX and how well these are doing.

Also the second mistake you are doing(second paragraph) is that you are comparing a competitive company that sells hardware devices(Sony) to a monopolistic company(MS) that relys its revenues on OS/software sales and has no real competition to face at all. They are different players, facing different circumstances, with different profit oportunities.Efficiency of those two can be compared in common markets only which is the console market.They are common players only there.

Third mistake:Sony didnt make losses as a company in general.It's profits decreased and that doesnt equal to making losses.Ofcourse that again is irrelevant.We are refering to console divisions not to other divisions and no one doubted MS ability at making profits from the OS division.

Now if through PS3 they get Blu ray to stick and then also get people to pick up their sxrd/bravia/qualia lines, then they get a free triple play that bolsters their other production lines which have lost their luster.... Sony has much more to lose than 4 billion dollars over 4 years...


EDIT: And for those that want to argue that Sony is a much bigger company because of sales... remember that there is no generally accepted measure of corporate size. Assets, market cap, profits and sales can be used and in the last five years assets, market cap, and profits have been recognized as being more valuable than sales as a valid measure.

Totally irrelevant

 

[DuckThor Evil]

In Europe Xbox was not a failure but neither was it a success. In this sense Europe is much closer to Japan than the North American market.

I don't agree with that. Xbox did ok in Europe and surely much better than in Japan, so much better than I would say it is closer to US than Japan.

 

[zifnab]

I think its important to keep in mind that Sony and MS have two different goals in mind with their consoles. The PS3 is an essential source of income for Sony and they need to make money from it. MS on the other hand are not in the console business to make money (strange as it may sound) but are protecting their lucrative OS monopoly from future potential threats (as consoles become more multifunctional and aimed at the living room).

No doubt that MS wants to make money off the xbox and sooner or later they need to have a fair degree of success, but even if all goes exceptionally well for them, it's still peanuts compared to the cash they are raking in from their OS/software releases. As long as they more or less break even in the long run I think they will be satisfied.

 

[Tap In]

Exactly. PS brand is the division that has been sustaining Sony for the last ten years. They have lost market share in nearly every other division and have lost entire markets that they once singlehandedly created (walkman meet ipod!)

So Edge's and Nesh's whole rants boil down to this. Even with 4B in losses MS has no debt and is extremely profitable. MS is also bigger than Sony in nearly every way. Sony only beats MS in terms of sales.... but that actually works against Sony. Sony has nearly double the sales of MS (63 bil vs 34bil) yet only 11% of MS' profit (.98 bill versus 8.88 bil). If MS had not lost 1 billion on xbox brand last year (can anyone prove that these loss numbers being thrown around are true? ) the numbers would be skewed even more in MS's favor...

Sony's sales/profits ratio is more instructive about the perils of inefficiency, capital investment, shipping and assembly costs blah blah... 63 billion in sales to get 1 billion in profits is actually seriously terrible... Honestly Sony is at the razors edge of not being a profitable COMPANY in general... forget videogames... PS IS most of Sony's gameplan.

Now if through PS3 they get Blu ray to stick and then also get people to pick up their sxrd/bravia/qualia lines, then they get a free triple play that bolsters their other production lines which have lost their luster.... Sony has much more to lose than 4 billion dollars over 4 years...

EDIT: And for those that want to argue that Sony is a much bigger company because of sales... remember that there is no generally accepted measure of corporate size. Assets, market cap, profits and sales can be used and in the last five years assets, market cap, and profits have been recognized as being more valuable than sales as a valid measure.

good post

MS can afford to invest in Xbox for several generations and even be in 2nd place for a few of them (as I'm sure is their plan regardles of all the false PR bravado).

sony can not afford to make any mistakes and may need to trim the fat in other areas where they are taking losses.

 

[3roxor]

good post

MS can afford to invest in Xbox for several generations and even be in 2nd place for a few of them (as I'm sure is their plan regardles of all the false PR bravado).

sony can not afford to make any mistakes and may need to trim the fat in other areas where they are taking losses.

Thats true but on the other hand you can argue that therefore (we the consumers) can benefit more from the Sony console product.

 

[Tap In]

Thats true but on the other hand you can argue that therefore (we the consumers) can benefit more from the Sony console product.

I don't see how you can deduce that from what I wrote.... unless you're saying that competition between the two (fighting over the 1&2 spots) is good for us as consumers, in which case I agree.

 

[mckmas8808]

I don't see how you can deduce that from what I wrote.... unless you're saying that competition between the two (fighting over the 1&2 spots) is good for us as consumers, in which case I agree.

He's saying that Sony fighting for their life to survive (that's how you made it sound for Sony) would fight harder, while making less mistakes would mean we as gamers would receive a better product.

 

[Tap In]

He's saying that Sony fighting for their life to survive (that's how you made it sound for Sony) would fight harder, while making less mistakes would mean we as gamers would receive a better product.

oh, I see.


however, that's not necessarily how business works.

 

[blakjedi]

I think you lost both Edge's and my point.First of all you do the big mistake to take each company as a whole while I and Edge described the console market and how they both act in that market.If you want to talk about Sony's ineficiency in other pdoducts this is not the place.This is a console forum and we talk about PS2 and XBOX and how well these are doing.

Actually Nesh I think YOU missed the point. Sony is NOT a videogame company. Its a hardware company first, that capitalizes on the videogame sector and licenses developers to make software for that hardware. Nintendo is a videogame company that has been making hardware for 20 years. MS is a software company that had virtually no experience in the hardware sector. Sony's hardware sales (and movie sale and music sales) subsidized the first playstation and it did well. They took technology they knew and helped develop and capitalized on it.

PS2 built off of the base of Sony's DVD expertise and most of the sales within the first year were driven off of its use as a primary DVD player - not even really as videogame system... PS2 hardware subsidized the lack of revenues of the other divisions within Sony to keep the company alive in GENERAL. If Sony the corporation died, then there would be no Sony, no PS3, nothing. MS used its software base and revenues to fund present and forward fund the xbox, xbox live infrastructure and the development of the 360 which meets THEIR goals of having a presence in the living room. Who knows what the breakdowns of MS losses were during that period (again I havent seen a direct quote from MS on how much and where that money was spent so ...)

Also the second mistake you are doing(second paragraph) is that you are comparing a competitive company that sells hardware devices(Sony) to a monopolistic company(MS) that relys its revenues on OS/software sales and has no real competition to face at all. They are different players, facing different circumstances, with different profit oportunities.Efficiency of those two can be compared in common markets only which is the console market.They are common players only there.

Monopoly company? Look for all intents and purposes Sony is a monopolistic company within the console space and the media space (Blu-ray or CD or DVD anyone?)... not because they do anything better than anyone else but rather because they were already large to begin with so people go with what they know. Same with operating sysytems. Just because they beat their competition soundly years ago and no one wants to switch (Linux? BeOS? OSX?) is not their fault... So the first generation, MS made bad deals that they should not have, so they did not have the ability to realize the efficiencies that they planned for that Sony and Nintendo could. Too bad for them, but within that market they still took second place (in terms of consoles sold) in a market dominated by veteran players. Some how or other they got those sales so it doesnt matter how efficient Ninetendo was it came in third in the marketplace.

Third mistake:Sony didnt make losses as a company in general.It's profits decreased and that doesnt equal to making losses.Of course that again is irrelevant.We are refering to console divisions not to other divisions and no one doubted MS ability at making profits from the OS division.

Um what? If you increase debt year over year versus profit, lose market share, and decrease profits in general THOSE ARE LOSSES.

Here try this: "Tokyo-based Sony forecast its first annual loss in 11 years as falling prices of televisions and DVD recorders dent profit margins and as the company is spending more to develop chips for its PlayStation 3 video game console. The electronics business, which accounts for almost 70 per cent of sales, has lost money in the past two years."

LINK: http://afr.com/articles/2005/12/08/1133829715568.html

Ok so lets start again. Now as far as their console division is concerned and I stated this before, if it werent for their console division Sony could very well be completely out of business. Thats relevent. No lets say we have MS Games, Sony Games and Nintendo games as seperate distinct standalone companies... Nintendo would be 1, Sony would be 2 and MS would be 3. Nintendo's money though came really from blockbuster gameboy sales... and Nintendo has no debt and 5 billion in the bank. They didnt lose money on GC but they sure didnt gain a bunch either.

Sony made money from the PS2 for sure but I am positive that their cash position would NOT have allowed them to fund the development of PS3 to date... They have anywhere from 21 to 62 billion dollars or debt (depending on how you assign long term debt such a factories equipment etc). they would be contracting out manufacturing assembly, etc because hey they just make games now right? No effficiencies to be had here in terms of engineering or manufacturing because there is no capacity now.... I hope you see where I'm getting here...

MS has no debt either and tens of billions in the bank...

Now if through PS3 they get Blu ray to stick and then also get people to pick up their sxrd/bravia/qualia lines, then they get a free triple play that bolsters their other production lines which have lost their luster.... Sony has much more to lose than 4 billion dollars over 4 years...

Totally irrelevant

How is Sony's own gameplan totally irrelevant? There is a reason why Kutaragi is NOT Sony President. Its because Sony wants to be relevant in more than just videogames and Stringer is supposed to be able to pull all the threads of Sony together to reach its formerly dominant stature. Much like the PS2, the PS3 is more important as a Trojan horse for devices like Bluray (more people watch and buy DVDs and TVs than videogames). Are you missing the big picture here or what?

The efficiency talk you give in your second spiel completely alludes to "MS the company" spiel I give. I wanted to point out how each company colludes with, supports, and plans along with the videogames division and they arent entities in and of themselves - ever.

Again Xbox sold more boxes than GC so they did second in videogames this past generation - period.

 

[one]

Monopoly company? Look for all intents and purposes Sony is a monopolistic company within the console space and the media space (Blu-ray or CD or DVD anyone?)

You should do some reality check before posting IMHO.

Sony made money from the PS2 for sure but I am positive that their cash position would NOT have allowed them to fund the development of PS3 to date... They have anywhere from 21 to 62 billion dollars or debt (depending on how you assign long term debt such a factories equipment etc). they would be contracting out manufacturing assembly, etc because hey they just make games now right? No effficiencies to be had here in terms of engineering or manufacturing because there is no capacity now.... I hope you see where I'm getting here...

Don't you know how the latest portable gaming hardware from SCEI/Sony is built?

MS has no debt either and tens of billions in the bank...

PS3 is the outcome of 5 years of R&D by STI + IBM/Toshiba funding + NVIDIA R&D. Even though MS have huge money they can't buy a time machine.