[ska///235i]

Sony has lost over $3 billion on the PS3 (of course...my money went to Xbox)

http://videogames.yahoo.com/feature/...he-ps3/1223467

Mario and Master Chief seen hi-fiving.
By Ben Silverman
Think you paid too much for your Playstation 3? Don't expect any sympathy from Sony.

In the company's fiscal 2008 annual report, Sony revealed that they've now lost roughly $3.3 billion (that's billion with a B) on the Playstation 3 since its launch. That breaks down to $2.16 billion in 2007, followed by a notably smaller but equally daunting $1.16 billion loss in 2008.

The reason? Pricing the console below its production cost. That's right - that hefty $599 you paid for the PS3 back when it first launched was significantly cheaper than the cost of producing it in the first place, and while the retail price has come down some, the losses keep piling up.

Investors have reason to sweat. In a statement, Sony claimed "the large-scale investment required during the development and introductory period of a new gaming platform may not be fully recovered." They went on to note that they've invested a great deal of money into R&D for the console, a sum they might not be able to recoup if the PS3 "fails to achieve such favorable market penetration."

Sony fanboys should take heart, however. Losing money on hardware is relatively common in the video game biz, as companies routinely lower prices to sell more units and thus stimulate software sales. Sony's game division saw a 26% sales spike last quarter, a trend they expect will continue on the strength of strong exclusives like the recently released Metal Gear Solid 4 and the upcoming sequel Resistance 2.

But will it be enough?

[ADHD]

NO,,, my money went to xbox 360!!!

[DOCTOR 3VIL]

The only reason worth buying a PS3 is GT 5, and that is probably going to be late for another 2 or 3 years and be dissapointing. Good job Sony you suck!!

[LEA69]

I dont like game consoles..

[ChaneRZ]

socom confrontation!

[Hawkeye]

BlueRay is the only reason I'd buy it.

[bling_singh]

It's a huge loss but you've got to look at competing business models. Man I hate sounding like a Sony fanboy -- especially when I'm a Panasonic/Pioneer/Philips fanboy -- but again I did fair bit of research before buying the PS3.

One thing you have to consider is the installed base. The PS2 has an install base of 125million PS2s sold. I don't know if that's possible with the PS3, but I wouldn't discount it. for one thing, when you take inflation into consideration, the PS3 currently is not that much more expensive than the PS2 was at the same time along its life cycle. consider that the PS2 has a 10 year life cycle and Sony has said they expect the same from the PS3. That's a lot of time to climb out of the red, and as it stands right now they're on a path to profitability. The PS3's production continues to improve.....a few days ago Sony announced the GPU processor has been reduced to 65nm from 90nm, and the Cells are already being produced at 45nm. This means production costs are greatly reduced.

When the PS3 was first launched, 1 in every 10 Cells procuded was good enough for the PS3. That means 9 in every 10 Cells were either scrapped or used in lower tech appplications. That drove up the production cost a lot. Because Microsoft released the 360 a year ahead of time, Sony had to pull up their production and supply lines for an earlier release to prevent MS cutting into the marketshare. Now that means certain products weren't available, such as the Blue Laser Diode needed for the BluRay Drive (which was already expensive in the first place). Speeding up production when all the components aren't available meant Sony had to eat up even more costs. there are a coupla other things which really effected the production cost at the time, I can't recall at the moment. Needless to say, the cost to produce a PS3 at launch was $1000 while selling for $700. And Sony sold a lot of PS3s operating on that loss...Sony needed the PS3 to spearhead BluRay in home entertainment -- just like they did with DVD -- and had to pay more to speed up production to launch ahead of time.

The PS3 now costs roughly $450 per unit to produce, and with the 65nm and 45nm processors coming in, with Cell processor quality in production much improved (i think it's around 8 in 10 are good enough for the PS3 now) the production costs continue to fall.

The reason for the Playstation being a losing product right now has no bearing on what the end result will be. The PS3 will have a much global and cross-cutting appeal (over age groups and genders) than the 360 ever will. The 360 is geared towards english speaking males aged 12-28, and the only market where the 360 is selling well is the North American market. Everywhere else it is being outsold by the PS3 -- and of course the Wii. At 18-20million consoles sold at a reasonable price, the 360 is very quickly approaching high saturation in its very narrow, very precise target market.....and it is still operating at a loss. Don't forget the $1.5billion dollar product recall two years into the 360's 5-7 year lifecycle, and XBox quality assurance is still pisspoor.

The PS3 is entering the 2nd year of its 10 year life cycle. At 14million sold it has barely scratched the surface of market saturation, and its production costs will be below MSRP by the end of its second year. Entering its third year the PS3 will be moving towards profitability. The 360 is in its third year and is still a losing game. Pardon the pun.

ed - even then, as mentioned above the general business model has always been to sell the console as cheaply as possible and generate profits off games sales....except for the Wii.....which is a golden goose that lays golden geese. Pure license to print money.

[ska///235i]

is funny how ps3 owners always try to make themselves feel better about their purchase....lol

[bling_singh]

Originally Posted by ska

is funny how ps3 owners always try to make themselves feel better about their purchase....lol

i don't need to make myself feel better about anything postfact. Like i said I did my research before buying. I wanted an XBox originally and only had the money for one as a broke student. The 33% RROD failure rate was scaring the bejeebus out of me so I decided to dig deeper and make an informed choice.

The research ahead of my purchase determined the PS3 was the better console of the two, both in terms of hardware and software support.....particularly in the game genres and feature set that mattered most to me.

[ska///235i]

i c...i was just teasing you

but you sounded exactly like my brother (who also have the ps3)..aahahaha

[bling_singh]

Originally Posted by ska

i c...i was just teasing you

but you sounded exactly like my brother (who also have the ps3)..aahahaha

smart brother :P

[nusevad]

MGS 4 and Prologue should revive the PS3. Not to mention Blu-ray beat HD DVD

[Year's_End]

I only want like three games that are exclusive to the PS3: MGS4, GT5, and KZ2. That's pretty much it. Not a justification imo.

[gmazet]

I did a lot of research before buying the xbox 360, wii and PS3, same ammount of research I did before buying xbox, PS2, PS, N64, Saturn, Dreamcast, 3DO, countless computers, etc.. If it is a system that plays games, I buy it.. I could start a frikkin museum...

Ps3 is a dandy Blu-Ray player, upscales regular progressive DVD's so well you would swear it was native HD content (at least on my 52 inch xbr4)..

Sony/Nintendo/MS Fanboy