Good find. I only looked at the heavy sales periods and I think it was only NA but this region does account for around half of the industry so I figured a pretty good barometer.
{going back to read the other 4 pages}
NPD February 2007
- Thread starter Rangers
- Start date
Good find. I only looked at the heavy sales periods and I think it was only NA but this region does account for around half of the industry so I figured a pretty good barometer.
{going back to read the other 4 pages}
I'm no expert in the financial or manufacturing aspects of when a console maker is able to drop prices, but I think Sony is in BIG trouble if Microsoft is able to match or outdo any price cuts that Sony may plan. Does anyone know know which of the two is in a better position to drop prices and remain financially stable? I think Microsoft can get their install base way up if they were able to get their prices down, because they have enough software available that the average gamer would become interested.
I don't have hard numbers and have looked over the past few months.
Some say xb360 is turning a profit others say it is still making a small loss. I believe they are making a profit at least on the $400 unit at this point.
PS3 according to Isupply is taking a $200-$250 loss per unit. I have found no other reliable source for costs.
Seems from the numbers I've found that in a bubble, MS is able to match any drop Sony does at this point. Add in other business ventures and it gets less clear but needless to say neither one want's to lose money this gen.
Does anyone know if either is going to be a position to reduce manufacturing costs?
Here's the situation - Sony is going to take some heat from the sales figures on the PR side anyway, so although I would agree stuffing the channel is not any sort of achievement, it does allow them to meet (or get close to) their shipment target at least.
Better one front of PR mess rather than two.
You know if it ended up far off it'd be Kotaku and Inq fodder for the next three/four months.Scott and Chef, the 360 is definitely still a money losing product - if it weren't, there'd be no reason for the division itself to be in the red. Well there *is* Zune... but either way there would have been a statement of 360's profitable contribution to the company; ie it'd be a huge deal in terms of PR worth.
All the price reductions so far able to be implemented in 360 have been minor minor, nothing on the order of a process shrink or anything. iSuppli's been schizo in its evaluation of both consoles' costs, and I would only trust it insofar as a very loose framework. PS3 is definitely in the position to cost-reduce faster, as it'll be on 65nm shortly and BD is something that is going to continue to cheapen in a progressive manner. That said, 360 is obviously at a lower absolute manufacturing cost and will be for some time - perhaps/possibly/probably always.
By the end of the year Sony will have some more room to play with in terms of their books, but since they're trying to get back into neutral income territory by March '08, I would be surprised if they price dropped. Especially with this Stringer/Kutaragi tension presently in play via Kaz's COO appointment. KK I'm sure would go ahead with a global drop similar to his Japan thrust and differ profits until later, but Kaz was put in the COO role specifically to help gaming hold the line on costs this year.
Long story short, I think MS is much more in the position to drop their price this year without rocking the boat of their longterm planning. And that of course will put pressure on Sony via the rock/hard place situation I describe above.
All the price reductions so far able to be implemented in 360 have been minor minor, nothing on the order of a process shrink or anything. iSuppli's been schizo in its evaluation of both consoles' costs, and I would only trust it insofar as a very loose framework. PS3 is definitely in the position to cost-reduce faster, as it'll be on 65nm shortly and BD is something that is going to continue to cheapen in a progressive manner. That said, 360 is obviously at a lower absolute manufacturing cost and will be for some time - perhaps/possibly/probably always.
By the end of the year Sony will have some more room to play with in terms of their books, but since they're trying to get back into neutral income territory by March '08, I would be surprised if they price dropped. Especially with this Stringer/Kutaragi tension presently in play via Kaz's COO appointment. KK I'm sure would go ahead with a global drop similar to his Japan thrust and differ profits until later, but Kaz was put in the COO role specifically to help gaming hold the line on costs this year.
Long story short, I think MS is much more in the position to drop their price this year without rocking the boat of their longterm planning. And that of course will put pressure on Sony via the rock/hard place situation I describe above.
scooby_dooby
Legend
Here's the situation - Sony is going to take some heat from the sales figures on the PR side anyway, so although I would agree stuffing the channel is not any sort of achievement, it does allow them to meet (or get close to) their shipment target at least.
Better one front of PR mess rather than two.
But I think you have to look at who the PR is really intended to influence. Consumers don't care about shipped LTD's, this PR is aimed at publishers and developers, initially way back when, it was meant as a statement that they will be catching up to the 360 extremely quickly.
Stuffing the shipping lane with 3million excess units may allow them to claim a small victory in their PR, but publishers and developers will see right through it. They'll see a system that continues to fall further and further behind.
Not to sure on this.
There's a lot to consider:
Marketing/Advertising
R&D
Moneyhats
xb1 losses
repair costs (+shipping)
Zune + misc other items in the division)
FWIR the 360 premium was thought to be losing roughly $50/ at launch. Given the components it sounds reasonable. Word was last summer they renegotiated many of their deals to lower their costs. At that point is when I heard they were making a small profit on the premium. Fast forward 9 months and I imagine cost reductions have continued.
We agree overall though that xb360 is able to answer/match any price moves Sony may come up with.
btw - you never replied with your predition for monthly sales this year:
http://forum.beyond3d.com/showpost.php?p=947869&postcount=24
scooby_dooby
Legend
I don't know about iSuppli's breakdown for PS3, it's questionable, but the one for 360 seems very straightforward, is probably fairly close to reality.
According to them, MS was making a profit of $75 on the premium back in Nov. Seems they are certainly in a position to drop prices easier.
Sony will surely be able to cost reduce at a faster rate, but that's been known forever, they are starting at a much higher point. However, if the 360 is already in the black, then they are in a better position to price drop sooner.
Scooby all I'm saying is, if you were Sony - would you look to ship 6 million consoles this year, or would you not? There's no *downside* to doing it, but IMO additional PR downside to not doing it - since it's an issue in terms of manufacturing prowess the investment community will be watching, and another one of the 'promises' that is always held up under microsope.
scooby_dooby
Legend
I would, but I would expect astute bench-analysts like ourselves to scoff at the effectiveness of such a move!
That is a large profit margin. IMO I don't believe it is that much but If so MS is in great shape.
(!) This is flat out not true. Wii is more than just a motion sensing stick. It may look simple and "cheap", but that's the beauty/point of it. It is extremely difficult to clone Wii's momentum today (with Sony's and MS's positioning).
We should be able to see more interesting Wii software throughout the year, but they don't get a lot of "publicity" in flora though.
scooby_dooby said:
...but it's part of the process of bringing down and control the cost (sign bulk deals and plan ahead in terms of logistics). The units will move once Sony brings out the software and introduces promotions (They haven't done so). Remember Xbox 360 has a lot of bundling and discounts ?
In short, it will solve half of the equation, the other half (demand side) are being addressed now.
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Well, I conrtest all the estimates for 360 profitability up until this point, so the losing $50 per console, I think was too low, the making $75 per console now - certainly way too high. I don't know, I might be wrong, but MS is certainly not acting like a company whose console is profitable as yet.
Indeed.
Ok, well here goes (like I said I'll revamp after the firmware 1.6 upgrade to regauge for 'awesomeness' as well - but right now I'm assuming awesomeness):
1) I'm going to firstly venture that the Feb numbers we just got will be the lowest of the year. (I know that's a low bar)
2) March I'm putting above 200k
3) April will outperform March
4) May and June with a stall relative to April
5) July with a boost (I'll arbitrarily put July at 250k for a marker)
6) August with a stall relative to July
7) September similar to August
8) October with a boost (arbitrarily I'll put 250k again)
9) November selling more consoles than any previous month
10) December even more still, and arbitrarily I'm going to say 750k
You can tell I don't like to commit to the unknown; I prefer to absorb information rather than try to predict it. As information gets absorbed as the year goes on, the accuracy of the prediction can improve. But, I don't think I'm far off here, so for now I feel decent about these guesses.
All the above took serious engineer effort at the time. Wii took next to no effort. Perhaps something like 1% as much effort as it's competitors did. Wii sports and Wii play are class-demos in terms of difficulty. Not to mention the history of motion detection devices is full of failures.
Say all you will, but I'm totally convinced that there's nothing behind the Wii. There's no logical or historical argument that I can come up with to justify it.
So you're around 2.5-3.0M for the rest of the year (March thru December)? I think that's going to be low, even if they don't price cut, and I'm more optimistic that they will than you are.
Or wait. . .was that just NA? And with those numbers is there any month for the rest of 2007 where they outsell XB360?
That's because you only look at the technical side of things... just like people who see Home only as a 3D shell. Most of the work is in the content, marketing and business side. It takes a lot of time (and difficult too) to make everything simple and fun, plus profitable. In this regard, Wii is like no other (Home is still non-existent and a big question mark as far as we are concerned).
Nintendo should stand tall and proud today because of this statement:
"The history of motion detection devices is full of failures"
They have a run-away success... the challenge is to sustain it. They can take their own time to improve things. It's a very admirable position.
