Sony could lose it's shirt over the PS3
A reported 9.6 million laptop batteries have been recalled by the manufacturer dropping net profit to a mere 1.7bn yen (compared to the 28.5bn of the previous year). While Sony have officially said that they can cope with this and I'm sure their financial forecasts are sufficient to keep their heads above water, a 94% drop in profits isn't going to put the company in the best financial position when my favourite "loss-maker" the PS3 is launched.
Loss Maker
Indeed, the reason why I refer to it as a loss maker is because Sony are making a loss on every single PS3 they sell - because of the technology involved it costs a LOT more to produce than it does to sell, but if the purchase price reflected the manufacture price it would limit the market dramatically. Therefore Sony has made the financial decision to sell each PS3 at a loss to itself under the provision that profit can be made on the games and accessories. Which as I've said before is all well and good provided you don't have too many customers buy your console because it's the cheapest Blu-ray player available. Which I'm sure will happen.
Blu-Ray players have appeared on the market with an asking price towards ?1,000, whereas the PS3 is likely to be around ?500. Not exactly difficult economics to work out that people would favour the multi-talented PS3 for half the price of a conventional player. This could be trouble for Sony of course who can only make profit if the customers purchase games as well.
Predicted Sales FiguresBefore the PS3 delay was confirmed Forbes.com reported that the end of March will total 4.13 mln units for the PS3 and 5.47 mln for the Wii. Although the report went on to state that the PS3 would outsell the Wii by the end of 2007 I actually agree with that, the PS2 has such a dominance in the gaming market currently that the brand is so established the majority of gamers will assume that the PS3 will automatically be the winner. The PS3 does do more but it also costs a LOT more.
Awards for Innovation
As far as I'm concerned Nintendo are fronting the innovation angle by making gaming more interactive - tilt sensor controllers and the like, whereas Sony as just throwing as much cutting edge technology at the PS3 that they (can't) afford. this is going to be an interesting fight between what gamers really want... Do we want the best looking games or do we want original *fun*. Nintendo make fun, pure and simple. I like the idea of being active while playing games - using my upper body to play ping pong etc, rather than remaining glued to the PS3 in a heap on the sofa.
I would like a PS3 don't get me wrong, but I am not paying that much for one - the Wii wins for me as I'm sure it will others - but not just on financial terms
It just looks to me like Sony are going to be in trouble, their numbers don't look right to me. I think they're happy to make a loss on this under the assumption that the PS2 dominance will be directly translated into the PS3 but I'm not sure that's right... The PS2 wasn't *that* expensive. NOTE how Microsoft are just out of the picture altogether, the XBOX360 was just out at the wrong time altogether. The 360 was a flawed product with appalling availability so that by the time working consoles were available in the shops, the advertising campaigns were over and no one wanted them anymore. It's now outdated and nobody cares. Microsoft aren't cool anyway, and that's the same reason why the Zune will fail - it's just not fashionable.
So, in conclusion will Sony be in serious financial trouble? Probably not because they're uber-rich, but there's something about their predictions that don't add up to me... I also think the Wii is too good a product to go up against (despite a stupid name).
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