Sony Posts Q2 Loss, As PS3 Sales Rise On Price Cut

Pinoy · 11-03-2009, 04:32 PM

Quote:

Originally Posted by Cygnus

I guess it depends on if there is a PS3 price drop next year, and to what extent the price drop will be. If its price is dropped by $100, it is doubtful the die shrink, cooling, etc cost reductions will justify that much of a price drop without incurring some additional loss on each PS3 sold.

Excellent point, I suppose saying that they will further reduce their manufacturing costs would have been more appropriate!

MikeRox · 11-03-2009, 05:09 PM

Quote:

Originally Posted by Cygnus

If $ is no longer world currency, its value will really plummet. Those talks have been going on for a while now. Yeah UK economy is supposed to be just as bad as US, if not worse. UK may get bailed out if it switches to euro...

If it hits parity with the Pound (its 1.1 atm when a year ago it was a stable 1.4-1.5) I can see us joining the Euro becoming extremely likely. We poured billions into it when the currency first launched as it was initially plummeting in value and very nearly sent the whole Eurozone into chaos.

I believe there are a fair few countries trying to get out of the Euro now though, as it's benefiting some countries, while leaving others economically crippled due to them having no control over interest rates etc.

**kamspy** · 11-03-2009, 05:25 PM

Don't own any stock in Sony but I will own this

Cygnus · 11-03-2009, 05:36 PM

Quote:

Originally Posted by MikeRox

If it hits parity with the Pound (its 1.1 atm when a year ago it was a stable 1.4-1.5) I can see us joining the Euro becoming extremely likely.

Yeah, if it happens, that will be interesting how that plays out: cath. area (euro) and protstnt nation like UK coexisting... I never understood why uk was worth so much (with all due respect of course

). Amazing it has fallen that much so fast...

Quote:

Originally Posted by MikeRox

We poured billions into it when the currency first launched as it was initially plummeting in value and very nearly sent the whole Eurozone into chaos.

I didn't know that. Why did UK invest in euro...because it was cheap?

Quote:

Originally Posted by MikeRox

I believe there are a fair few countries trying to get out of the Euro now though, as it's benefiting some countries, while leaving others economically crippled due to them having no control over interest rates etc.

Which countries trying to get out of euro? First time I heard of that. Which are the top 10 strong nations using euro: france, germany, luxemberg, spain?

**kamspy** · 11-03-2009, 05:37 PM

Quote:

Originally Posted by Cygnus

)

MikeRox · 11-04-2009, 09:30 AM

Quote:

Originally Posted by Cygnus

Yeah, if it happens, that will be interesting how that plays out: cath. area (euro) and protstnt nation like UK coexisting... I never understood why uk was worth so much (with all due respect of course

). Amazing it has fallen that much so fast...

I didn't know that. Why did UK invest in euro...because it was cheap?

Which countries trying to get out of euro? First time I heard of that. Which are the top 10 strong nations using euro: france, germany, luxemberg, spain?

Germany in particular wanted a return to the doitch mark not so long ago. (some parts are prosporing, others are falling on their arse)

The reason the UK economy was so strong was simply because we owned half the world at the turn of last century, "British" meant quality, and we had a very heavy manufacturing industry. Britain was also at the forefront of almost everything technologywise. Heck, this forum is purely down to a British invention. The humble Television

World War 2 was the begining of the end for the UK as a major player in the world IMO and with a now global economy and manufacturing being no where near as specialised (you don't need the trained workforces the same) Britain's best selling point to companies around the world became moot and our economy turned to the financial sector.

This last recession was the financial sector going into meltdown, the UK no longer has much else to tap into as manufacturing is on it's arse and has been for the last decade, I'm really struggling to see anything that can be used for any substantial recovery (which is probably why Britain is one of the few left in Europe that is still officially in recession). It's actually pretty bleak over here right now, but I always knew 3 terms with Labour in power would fuck this country up the arse, I just didn't realise it would be so bad.

Britain although not in the Euro, is still a major part of the EU (80% of our trade is with EU countries and so it was in our interest for the Euro to succeed as a currency), which is the reason for buying into the Euro to prop it up as a currency. It certainly wasn't bought to profit on, they sold most of our gold reserves to buy the Euros and announced to the whole sodding world they were gonna sell the gold (yes, labour are that retarded) meaning gold prices plummeted and they sold while Gold was undervalued.

Anyway political/economical rant over ;p

Chris Gerhard · 11-04-2009, 10:36 AM

Quote:

Originally Posted by MikeRox

The original PS3 losses were actually quite a lot higher than $150 according to a lot of reports they were costing in excess of $800 to manufacture initially.

It was much larger in the beginning but historically, the total is about 30 million sold at about a $4 billion total loss is what I am guessing. That is where my estimate per console comes from and I believe there is no way in hell a PS3 can be sold at $300 retail profitably, not now, not ever.

Chris

Cygnus · 11-04-2009, 10:40 AM

Oh OK, thanx for the history lesson. Yes UK was indeed a super power back in the day; main reason why English is the dominant language around the world. Speaking of financial sector, isn’t UK’s RBS in trouble or something? IMHO switching from the gold standard to the current credit (bonds) based system is a reason of US downfall as well. Interesting that both UK and US are having similar economic issues now with no easy solution…

Mase · 11-04-2009, 10:50 AM

Quote:

Originally Posted by Chris Gerhard

It was much larger in the beginning but historically, the total is about 30 million sold at about a $4 billion total loss is what I am guessing. That is where my estimate per console comes from and I believe there is no way in hell a PS3 can be sold at $300 retail profitably, not now, not ever.

Chris

Well the PS3 (360 as well) may never profit as a whole but it could get to the point where its no longer technically sold for a loss (per console).. Although I bet both consoles will see another price drop around the same time next year if our economy does not change, so that wipes away the profit per console argument...

MikeRox · 11-05-2009, 04:04 AM

Quote:

Originally Posted by Cygnus

Oh OK, thanx for the history lesson. Yes UK was indeed a super power back in the day; main reason why English is the dominant language around the world. Speaking of financial sector, isn’t UK’s RBS in trouble or something? IMHO switching from the gold standard to the current credit (bonds) based system is a reason of US downfall as well. Interesting that both UK and US are having similar economic issues now with no easy solution…

It was, I own a stake in it now, I think it's 70% tax payer owned atm. Lloyds (my bank incidentally) are also about 40% tax payer owned, but they were pressured into merging with HBOS last year, and now the EC is splitting it all up again

. The HBOS merger was a really bad plan for Lloyds shareholders who apparently didn't really get a say on the thing, it was just agreed with the government.

Chris Gerhard · 11-05-2009, 05:11 AM

Quote:

Originally Posted by Mase

Well the PS3 (360 as well) may never profit as a whole but it could get to the point where its no longer technically sold for a loss (per console).. Although I bet both consoles will see another price drop around the same time next year if our economy does not change, so that wipes away the profit per console argument...

I don't know whether there will be another price drop or not but I don't believe the PS3 can be sold profitably for $300, much less $250 or $200. Keep in mind retailer profit, packaging, warranty coverage, shipping, and any other cost in addition to manufacturing cost. This media player just can't be made inexpensively enough to compete based on price with less expensive designs. There is of course absolutely no way to breakeven on the PS3 in total, even if there was some way to make a nominal profit on each console going forward.

Historically the business model for game consoles is to sell the hardware for a loss and make it up on games and associated services but the PS3 broke the bank in that regard. I suspect the XBox 360 is a money loser for Microsoft but only a fraction of losses have been realized compared to the Sony results.

Chris

Pinoy · 11-05-2009, 05:27 AM

Quote:

Originally Posted by Chris Gerhard

I don't know whether there will be another price drop or not but I don't believe the PS3 can be sold profitably for $300, much less $250 or $200. Keep in mind retailer profit, packaging, warranty coverage, shipping, and any other cost in addition to manufacturing cost. This media player just can't be made inexpensively enough to compete based on price with less expensive designs. There is of course absolutely no way to breakeven on the PS3 in total, even if there was some way to make a nominal profit on each console going forward.

If it stays at $299 they'll be at the break even point soon.

Quote:

We're only bringing this up because it looks like the losses are gong to disappear shortly. Sony Chief Financial Officer Nobuyuki Oneda told a press conference in Tokyo today that Sony has managed to get its PS3 losses down to somewhere between 10% and 20% of the system's retail price. It expects that figure to fall into the single digits before the end of the year, then turn into a profit some time during the next fiscal year.

10-20% of the retail price would mean they are losing between $29-$58 on each console sold at $299.

Chris Gerhard · 11-05-2009, 12:09 PM

Quote:

Originally Posted by Pinoy

If it stays at $299 they'll be at the break even point soon.

10-20% of the retail price would mean they are losing between $29-$58 on each console sold at $299.

I am not buying it, Sony has been overly optimistic on the PS3 for a long time. I also don't know what he is using to indicate a loss of 10% to 20% but if it is excluding warrany coverage cost or any other direct costs associated with selling the console, the figure is bogus. I say hogwash, that console can't be made and sold profitably at $300, not now, not ever. Sony has done a great job getting the costs down but the big cost reductions are already realized and anything further is going to be much smaller. Assuming retail margins of 10%, Sony would have to be able to build it, provide accessories, packing, shipment to retailers, warranty coverage and other costs and receive $270 for each less any returns that Sony must eat.

You can say Sony will start to make a profit on each console at some future point, I will look at the cost of the processor, other parts, accessories, manufacturing, licensing, packaging, shipping, warranty and other direct costs and say it will never happen. Of course neither of us will ever get to look at Sony's books but if I was permitted, I do know what to look for and what questions to ask. The financial statements indicating $ billions of losses the last few years tell the story and Sony executives promising great PS3 results for the last few years are dreamers, out of touch with reality.

The PS3 is a technological marvel and financial disaster. There is no market willing to pay what it should cost.

Chris

11-04-2009, 10:40 AM	#23
Cygnus The Bringer of Balance Join Date: Dec 2004 Posts: 6,838	Oh OK, thanx for the history lesson. Yes UK was indeed a super power back in the day; main reason why English is the dominant language around the world. Speaking of financial sector, isn’t UK’s RBS in trouble or something? IMHO switching from the gold standard to the current credit (bonds) based system is a reason of US downfall as well. Interesting that both UK and US are having similar economic issues now with no easy solution… __________________ Toshiba 57H81 Kenwood VR-616 Comcast DCT6412 III XBox 360 GamerTag Sec0nd2N0n3

11-03-2009, 05:25 PM	#18
kamspy Esteban Moderatoro Join Date: Dec 2007 Location: Cincinnati,OH Good Posts: 12 Posts: 13,058	Don't own any stock in Sony but I will own this