Sony financial report Q2 2008

[eastmen]

ShadowRunner-


The 360 high end sku has been $400 since holiday 2005. It is still $400 in 2008. Its true the arcade is sitting now at $200 which is $100 less than at launch. However for many that is still not a good deal as getting a hardrive would set u back another $100 to reach the premium sku.

The other problem is that as nintendo and ms hit lower price points first it will take away consumers that will only own one system before sony even has a chance at those price points. Also the wii is very diffrent than either the 360 or ps3 and the 360 offers many of the same experiances as the ps3 and then more of its own. Currently you can own both of those systems for a price inbetween the two ps3 skus and it would give you by far the largest library of games. Also for those who want to buy a system at a $200 price point or a system this year period (perhaps there are now enough games they need to play to justify it) the 360 would net u a system and 2 new release titles and another 2-4 older quality games before you even reach the price of the ps3. Today you can get a 360 plus gears 1 , halo 3 , dead rising , cod 4 and still be at or under the ps3 price. Those are some great quality games.

I think by staying at a higher price point longer they will risk selling to market segments that have been already mined by nintendo and ms.

The only thing that can save the ps3 imo is that sony will most likely keep it going for 10 years. HOwever thats with the assumption that the x360 will have its plug pulled early. There is nothing stopping ms this gen from selling the 360 at $100 till it hits 10 years old. The 360 itself can have many more ways of artificaly lengthening its life. They can add bluray into the sku thus taking away an advantage with the ps3 (at some point before the 360 is phased out the bluray drive will most likely be cost comptetive with the dvd drive) they can also shrink the system and sell a threesixty model.

As for the wii and price drops. I'm not so sure. Nintendo can continue to sell wiis at a lower price point $100 or $150 even while a wii hd is out at $250 or so. Nintendo can just have two verisons of most games out for both systems. Would a Wii sports hd really need a full dvd worth of space? The wii has already sold through more units than the gamecube and thus a wii hd will have a bigger audiance at launch to sell through

Same with ms . Why would they stop selling the 360 if they are making money off it. It seems to me that they are already now consistantly making a profit on the 360 and as costs go down for it they should be able to make more profit. MS still has a 45nm/32nm drop for the cpu and a 65nm/45nm/32nm drop for the gpu. I don't know at what point they can put the gpu/edram and cpu on one die but by transistor counts it should happen before sony can do it. Perhaps at 32nm we will see a 360 on a chip. Then of course an xbox next will sell to a larger audiance at launch than the original xbox considering the 360 has already pass the total life time sales of the xbox 1 in all markets and will only continue to reach out to new buyers.

 

[AzBat]

Actually the Elite shipped 4/29/2007 at $479 and then dropped to $449 on 8/8/2007 and then finally to $399 on 9/5/2008

Tommy McClain

 

[catisfit]

The predictions from that analyst seem to be based on Sony being aggressive with price (chasing marketshare over profitability), which is the opposite of their current approach.

The elephant in the room is the PS2 still selling more than the PS3 and 360 last quarter. The scale, direction and timescale of the PS2->"this gen" conversion will have a lot to say in the years to come.

 

[Shifty Geezer]

Just mentioning Dress to the female contingent of all ages generates a lot of interest. I still feel PS3 offers the best overall appeal to the masses. Whether Sony will successfully educate everyone to what the system does and convince them to pony up is another matter, but the potential is still there. Sadly, potential is what Sony does best. Realising potential, they're pretty lacking at.

 

[ShadowRunner]

...

I do agree with your points, but i think there is something extra in play that isnt/cant be taken into account. The PS3 is at a pricepoint that generally everyone agrees is too high yet it has still sold more than the 360 the last 2 quarters despite this fact despite not being any better in any meaningful way (i realy dont consider bluray as a big factor with regards to demand personally.). By all accounts the PS3 should really be in a much worse position than it already is, why is this? While this seams to be a stupid point to a lot of people i realy do believe there are a whole lot of people that are just waiting till the ps3 is a good price for them, not realy careing what pricepoint the competion is at or what they offer. For people that do not keep up with gaming and whats hot Playstation still means quality and will cater for you no matter your tastes, it is the no-brainer option for a console if you are not up to speed. The Playstation brand counts for a lot more than people give it credit it is a big factor in where PS3 is now (it should be dead really if you ask me) and will be a big factor on where the console is in the future.

 

[zed]

This $379 loss from sony, is further evidence of my assertion that the xbox360 lost about $500 million in the last quarter.
I dont see how anyone can credibly argue that isnt the case

 

[eastmen]

I do agree with your points, but i think there is something extra in play that isnt/cant be taken into account. The PS3 is at a pricepoint that generally everyone agrees is too high yet it has still sold more than the 360 the last 2 quarters despite this fact despite not being any better in any meaningful way (i realy dont consider bluray as a big factor with regards to demand personally.). By all accounts the PS3 should really be in a much worse position than it already is, why is this? While this seams to be a stupid point to a lot of people i realy do believe there are a whole lot of people that are just waiting till the ps3 is a good price for them, not realy careing what pricepoint the competion is at or what they offer. For people that do not keep up with gaming and whats hot Playstation still means quality and will cater for you no matter your tastes, it is the no-brainer option for a console if you are not up to speed. The Playstation brand counts for a lot more than people give it credit it is a big factor in where PS3 is now (it should be dead really if you ask me) and will be a big factor on where the console is in the future.

There may be a whole lot of people waiting for the ps3 to come down in price , however I think each day that passes there are less of those people. The 360 contiues to offer more reasons to jump ship and with the nxe and new price point it will take more people away during these harsh times. The ps3 has sold more than the 360 for a few reasons . The major one is price points and another large one is game releases . The 360 had no major game releases untill sept while the ps3 had one of its largest back in april / june with mgs4 (was it earlier than this ?) and also the 360 stayed at 280/350/480. These prices were largely what the system launched at. I think this holiday season you will see the 360 wipe out any in roads the ps3 has made so far this year. Also if you look the 360 has about the same lead as it had before the ps3 even launched.

 

[ShadowRunner]

Again i agree with what you are saying. The point i am making, in a bad way i admit, is that without the playstation brand attatched to the PS3 it would be dead. The fact that it is still in the fight proves that the brand is still strong, once the main barrier (price of entry) is broken it could start selling like hotcakes. Thus the PS3 does have the potential to gain 50% marketshare, it all depends on how much effect the brand has. It seems to me it has huge effect as it seems like the only reason a more expensive console can compete with a cheap and arguably better alternative (for the record i prefer my ps3 but i can see why some prefer 360).

Im certain many people will be drawn away from PS3 but how many is unknown as is the number who are simply waiting for the PS3 to be a price thier satisfied with. Realy all im pointing to is that there are too many unknowns either way, i think it would be foolish to write off the PS3 completely but at the same time i wouldnt be overly confident at it gaining 50% market share either.

 

[eastmen]

Again i agree with what you are saying. The point i am making, in a bad way i admit, is that without the playstation brand attatched to the PS3 it would be dead. The fact that it is still in the fight proves that the brand is still strong, once the main barrier (price of entry) is broken it could start selling like hotcakes. Thus the PS3 does have the potential to gain 50% marketshare, it all depends on how much effect the brand has. It seems to me it has huge effect as it seems like the only reason a more expensive console can compete with a cheap and arguably better alternative (for the record i prefer my ps3 but i can see why some prefer 360).

Im certain many people will be drawn away from PS3 but how many is unknown as is the number who are simply waiting for the PS3 to be a price thier satisfied with. Realy all im pointing to is that there are too many unknowns either way, i think it would be foolish to write off the PS3 completely but at the same time i wouldnt be overly confident at it gaining 50% market share either.

Oh I can certianly agree with taht . The ps3 would have been dead if it wasn't for the ps1 and ps2. I think sony would also be dead if it didn't have the ps2 and psp keeping them up and running.

I still can't see it having the potential to gain 50% of the market share even with the ps brand behind it. Last gen if you wanted Final Fantasy or GTA or niche games you'd have to buy the Playstation line. But now MS and Nintendo offer those Niche titles and for the other ones The 360 offers them at the same time now or with added content via DLC.

I don't discount the ps3 at all. I think in the end it will sell more than the 360 will worldwide , but not so much so that it will suddenly have half the market. I would right now think the 360 can hit 40-50m units (depending on how long its sold for) with the ps3 hitting 60-70m and nintendo getting way above 100m. However I don't see how that would put sony at 50% market share and I just can't see the 360 suddenly stop selling well and nintendo stop selling well for the ps3 to make up ground. I think we can see the 360 hit just shy of 30m with perhaps 28 or 29m units LTD by this febuary. So I really do see 50m as a possiblity esp as it drops further and further down in price. The wii will most likely sell another 8 or so million this holiday also if nintendo can supply it.


Like i said , i can't see the 40-50% market share. That would mean nintendo and ms would suddenly have to drop down under %25 each or ms in this case would have to end up with much less than %25. Consider last gen 150m ps2s , 25m xbox and 25m gamecubes give or take and we are looking at 200m console sales. This gen we already have 22m 360s , 16m ps3s and 33m wiis we already have 71m of the 200m most likely sold this gen. And sony is sitting at perhaps 22% market share.

What I think it comes down too is killzone 2. Its one of the most hyped ps3 games left and most likely sony will push it with a price drop. If the ps3 doesn't move well then I don't think it will ever move. The main problem for them is the finiancel trouble of the western world and the strength of the yen. The ps3 will be expensive in other parts of the country now.

 

[dobwal]

This $379 loss from sony, is further evidence of my assertion that the xbox360 lost about $500 million in the last quarter.
I dont see how anyone can credibly argue that isnt the case

I can't see how you can make a credible argument for it.

You made that assertion in MS earning thread. EDD handles the retail marketing and sales for Windows and Office, but MS doesn't record retail windows and office (exception being the Apple version)sales under EDD as revenue. EDD receives an intersegment comission for its responsibilites.

 

[ShadowRunner]

Your figures are all guesswork though. Its entirely feasable that the PS3 goes on to outsell the wii in my opinion. Also because wii is so unpredictable its even harder to determine. If a large majority of the wiis sales are to those new to gaming then is possible that much more of your 200m 'core' sales is up for grabs. Not that its going to happen but if ps3 sells 130 wii 100 and 360 sells 70 thats over 40%. I dont predict them figures, i make a point of never even bothering to predict, but looking at them it wouldnt shock me if it ended up like that.

 

[dobwal]

Your figures are all guesswork though. Its entirely feasable that the PS3 goes on to outsell the wii in my opinion. Also because wii is so unpredictable its even harder to determine. If a large majority of the wiis sales are to those new to gaming then is possible that much more of your 200m 'core' sales is up for grabs. Not that its going to happen but if ps3 sells 130 wii 100 and 360 sells 70 thats over 40%. I dont predict them figures, i make a point of never even bothering to predict, but looking at them it wouldnt shock me if it ended up like that.

I would highly surprised as would a lot of people here. The PS1 and PS2 were able to reach 100 million+ in sales by completely dominating sales throughout a generation while having enough momentum to garner respectable level of sales in during a new generation of consoles.

This generation will be three years old within the next three weeks and the PS3 is sitting at 15-16 million in console sales. Explain how the PS3 is suppose to generate 115 million in console sales while;

1.) sitting at $399.00 with a price cut supposely months away.

2.) dealing with next gen consoles slated to be released within the next two to three years.

3.) competing against the Wii, which despite sitting at its original launch price and falling price points of its competitors is selling at a break neck pace and at a rate thats growing.

 

[zed]

I can't see how you can make a credible argument for it.

how much more is it costing sony to make a ps3 than MS a xbox360?
now the average price of the ps3>360 is equal or more than that shortfall, thus they roughly cancel each other out, or do u disagree? if u do give reasons

now sony lost $380million(*) MS made ~$150million
thus we have a difference >$500million between the two.
do u now see why theres something else in the EED that is covering up the difference?

(*)and thats including profits of ps2/psp (prolly without those it would be $500m loss)

 

[Squilliam]

how much more is it costing sony to make a ps3 than MS a xbox360?
now the average price of the ps3>360 is equal or more than that shortfall, thus they roughly cancel each other out, or do u disagree? if u do give reasons

now sony lost $380million(*) MS made ~$150million
thus we have a difference >$500million between the two.
do u now see why theres something else in the EED that is covering up the difference?

(*)and thats including profits of ps2/psp (prolly without those it would be $500m loss)

If you take Vgchartz software numbers as gospel they sold 3 million units of software and 180k hardware last week.

If the royalty per game is $6.50 they made $19.5 Million.

19,500,000 / 180,000 or roughly $100 per console for the sake of a round number and conservatism.

 

[Mintmaster]

I do agree with your points, but i think there is something extra in play that isnt/cant be taken into account. The PS3 is at a pricepoint that generally everyone agrees is too high yet it has still sold more than the 360 the last 2 quarters despite this fact despite not being any better in any meaningful way (i realy dont consider bluray as a big factor with regards to demand personally.). By all accounts the PS3 should really be in a much worse position than it already is, why is this?

I've always considered the $400 model as the "real" launch of the PS3. That's when sales went up because that's when PS3 stopped looking ludicrously expensive for a toy (I know it's more than just a toy, but you get my drift). It's still expensive, but not obscenely so.

Much of the surge in the first half of the year was, IMO, from loyal Sony fans that were just waiting for a lower price and larger install base. If 360 had ample supply in 2005, I think its 2006 would look similar to PS3's 2008.

 

[eastmen]

how much more is it costing sony to make a ps3 than MS a xbox360?
now the average price of the ps3>360 is equal or more than that shortfall, thus they roughly cancel each other out, or do u disagree? if u do give reasons

now sony lost $380million(*) MS made ~$150million
thus we have a difference >$500million between the two.
do u now see why theres something else in the EED that is covering up the difference?

(*)and thats including profits of ps2/psp (prolly without those it would be $500m loss)

When you look at the two consoles its obvious that th 360 is cheaper. The only question is how much.

The 360 has less tranistors , 1 less memory bus , 1 less pool of memory , 1 type of memory (thus cheaper bulk deals) , dvd instead of bluray , and its been in production for longer which will help decrease prices.

Edit - I forgot the hardrive . I'd wager the hardrive is $50 ish for the 80 gig on the ps3 . The bluray drive most likely still has a $50 price premium on a dvd drive. So your looking at $100 right there. Take sonys comment of a $400 breakin even ps3 and you peg the 360 at $300 bucks. Add in the other things i've mentioned and your at sub $300 pricing. Consider also that for much of the year the 360 has had only one sku selling at under $300 (the arcade at $280) while we had one at $350 and one at $420 and you can see why the 360 made money while the ps3 didn't

 

[Crossbar]

Depends on what happens to bluray prices over the next year i'd wager. We may see bluray players as low as $100 next holiday which would only be a drop of a $150 from the current lowest price.

Maybe, but if that´s the case you only have to punt up an extra $200 to get a HD console with plenty of storage.

I am somewhat surprised of the poor imagination to find reasons to why the PS3 have been outselling the 360 so far this year.
I can suggest a few reasons, such as.

• The 360 core (as in hardcore) market is starting to get saturated and the casual market has not taken off yet, it may this holiday if Microsofts PR work as intended. Sony already have a strong brand in the caual market through the PS2. The PS3 still hasn´t reached an attractive price point for that group but some may still be motivated to take the cost, my guess it is probably people with a HD TV set that are attracted by the BD function.
• Some people prefer the Playstation first party games such as GT5 Prologue, Wipeout, SOCOM, Buzz etc. and exlusives such as MGS4 that have materialised this year.
• Some people see potential in the blu-ray media, not just for movies as some seem to suggest.
• Some people value free online play and prefer taking the cost upfront instead of having to pay an annual subscription fee for years to come.
• Built in functions such as WiFi connection, web browser etc. and a broader range of third party peripherals: racing wheels, wireless keyboards etc. may also be features that people take in to account when they purchase a PS3.

 

[eastmen]

Maybe, but if that´s the case you only have to punt up an extra $200 to get a HD console with plenty of storage.

I am somewhat surprised of the poor imagination to find reasons to why the PS3 have been outselling the 360 so far this year.
I can suggest a few reasons, such as.

• The 360 core (as in hardcore) market is starting to get saturated and the casual market has not taken off yet, it may this holiday if Microsofts PR work as intended. Sony already have a strong brand in the caual market through the PS2. The PS3 still hasn´t reached an attractive price point for that group but some may still be motivated to take the cost, my guess it is probably people with a HD TV set that are attracted by the BD function.
• Some people prefer the Playstation first party games such as GT5 Prologue, Wipeout, SOCOM, Buzz etc. and exlusives such as MGS4 that have materialised this year.
• Some people see potential in the blu-ray media, not just for movies as some seem to suggest.
• Some people value free online play and prefer taking the cost upfront instead of having to pay an annual subscription fee for years to come.
• Built in functions such as WiFi connection, web browser etc. and a broader range of third party peripherals: racing wheels, wireless keyboards etc. may also be features that people take in to account when they purchase a PS3.

An extra $200 doesn't sound like alot but it is double the price. Many people out there can justify buying the 360 for $200 and then at a later date or a diffrent pay check picking up the 60 gig hardrive package. Some may simply jump on that 20 gig drive with 3 months of live for $30 bucks and others may end up just buying a used 20 gig drive off ebay or game stop which ranges for $20-$50.

I also don't think having a good imagination has anything to do with reality. The reasons you go on to list were all there last year when the system was also $400. The only change is 40 gigs of hardrive space but that doesn't actually effect anything you mention above.

The only major changes this year was MGS4 and 40 gigs of extra space at the same price. None of what you listed were added to the system this year that would account for sales over last yer.

 

[Cheezdoodles]

This $379 loss from sony, is further evidence of my assertion that the xbox360 lost about $500 million in the last quarter.
I dont see how anyone can credibly argue that isnt the case

What kind of broken logic is this?

Seriously.

You have not made any credible argument for why the x360 lost 500 m last quarter. Just because Sony is posting huge losses doesn't mean that Microsoft is aswell. They have a much cheaper console and much stronger software sales.

Microsoft (Q1 Ended September 30, 2008)
Sales: $15,061
Profit: $4,373
Operating Income: $5,999
Entertainment and Devices Sales: $1,814
Entertainment and Devices Income: $178
Xbox 360 Consoles Sold: 2.2

Q2 will be higher income, guaranteed

 

[Crossbar]

An extra $200 doesn't sound like alot but it is double the price. .

Sure but you can also say that´s an extra $100 that buys you a first class BD-player and that is half the price. Anyway, I understand that if you do not have $299 you cannot buy a console at that price in cash.

I also don't think having a good imagination has anything to do with reality. The reasons you go on to list were all there last year when the system was also $400. The only change is 40 gigs of hardrive space but that doesn't actually effect anything you mention above.

The only major changes this year was MGS4 and 40 gigs of extra space at the same price. None of what you listed were added to the system this year that would account for sales over last yer.

Just because some of those reasons existed last year doesn´t mean people cannot still use them to motivate their purchase. People hardly buy a console for one single reason it´s the sum of them that ends up as the deciding factor.

What you see as the major changes (MGS4 and +40 GB) may not be what other people think are the major changes. Some may think trophies and ingame XMB were important, or GT5 Prologue, or DualShock 3, or Wipeout HD or whatever. In Japan the PS3 exist in a plethora of colours. In the end it may be the addition of some in your eyes tiny detail that finally make someone buy a console. There are a lot of those small details.

Some surges in the sales are easy to attribute to the release of new models or some high profile game title, but those are few and quite easy to spot, the reasons behind the steady stream of sales usually are more complex.