Sony loses $3.3 Billion, Xbox Price Drop Imminent?

[admin]

While Sony has lost an estimated $3.3 billion on its PS3 console sales, that isn't all that surprising. Consoles routinely lose money at the beginning of their life. Software sales and eventual reduction in production costs are supposed to make up for it. But with Sony's Chief Executive Howard Stringer promising not to lose money this year on the PS3, the stage seems set for an Xbox 360 price drop. But will they when Microsoft has lost around a billion dollars (and counting) on the "Red Ring of Death" fiasco?

Discuss "Sony loses $3.3 Billion, Xbox Price Drop Imminent?" here. Read the article.

 

[MinusTheBear]

I read about this the other day on another website, it really does not surprise me. Even though the PS3 sales are slow up to this point, Sony has offered a very high value product to its consumers. I think if Sony's marketing department did a better job as to educating consumers a bit more about all the really good features that are available on certain models of the PS3 like Blu-Ray, Wi-fi, SACD support. Even though the apparent cost seems high to the average consumer, if these people realized what they get with this machine, it is an absolute steal in my opinion. Since sony is offering a high value product and losing money on it, they should take adavantage of this in their marketing campaign educating consumers about blu-ray and how cheap this product actually is for the features you get with it.

What is more surprising is how Microsoft is making money on the xbox 360 even after the 1billion dollar recall. Wow!

 

[aarond]

at least now i know why its the best bd player in its price range. its also going to be harder for sony to make up for the loss with software sales being that everyone that i know who owns one its a bd player only!

 

[crashkelly]

I think if Sony's marketing department did a better job as to educating consumers a bit more about all the really good features that are available on certain models of the PS3 like Blu-Ray, Wi-fi, SACD support. Even though the apparent cost seems high to the average consumer, if these people realized what they get with this machine, it is an absolute steal in my opinion.

I agree that the PS3 is a good value at its price point. I myself bought the 40GB as I did not need the other features. What I saw was a game machine and an easily updatable BD machine for $399. At that price it worked for me.

However, for J6P, they only see it as a game console that costs a minimum of $399. Most do not look at the feature set that you mentioned and see it as a must have. If you have SACD's you more than likely have something to play them already, most do not see it's Blu-Ray capabilities, they know it can do it, but when they walk into an electronics store and say they want Blu-Ray how many salesmen are going to show and sell them the PS3. Very few I would imagine as they can off-load a more expensive one to them and make a higher commision.

If thay are looking for a game console they can pick up the XBOX 360 aracade for $279.99CDN (probaly cheaper if you hunted) and only lose out on a few exclusive titles. That would leave $120 for games.

Please do not get me wrong, I agree with you that the PS3 is an excellent machine at a good price, but only a small percentage of people will do the research to figure that out. IMO Sony really needs to ramp up its marketing of the PS3 as a "home entertainment system", not just a game console that plays blu-rays.

Cheers
Michael

 

[MinusTheBear]

I

Please do not get me wrong, I agree with you that the PS3 is an excellent machine at a good price, but only a small percentage of people will do the research to figure that out. IMO Sony really needs to ramp up its marketing of the PS3 as a "home entertainment system", not just a game console that plays blu-rays.

Cheers
Michael

I agree, I think they should take that exact approach in their future marketing of the PS3. It could be marketed as exactly that, a home entertainment system provided you will all your audio/video and gaming needs. Its not like the PS3 hardware is cheap either, it is actually very good hardware. I think this type of advertising can appeal to the masses because the PS3 can do so much, just not a lot of people either understand or know a great deal about its capabilities.

 

[crashkelly]

I agree, I think they should take that exact approach in their future marketing of the PS3. It could be marketed as exactly that, a home entertainment system provided you will all your audio/video and gaming needs. Its not like the PS3 hardware is cheap either, it is actually very good hardware. I think this type of advertising can appeal to the masses because the PS3 can do so much, just not a lot of people either understand or know a great deal about its capabilities.

I think we should both go sit by the phone and wait for the call from the Sony marketing department

Not trying to tout it, the PS3, too much, but really, if you get the right model, the only other thing you need for your home theatre system is an AVR and some speakers (sub included). You have gaming, blu-ray, SACD, DVD, CD, memory card slots, ....... I mean what else do you really need....

A bit of a stretch I know, but for most consumers it is true. for $499 for the 80GB model you get all of the above and more..... and as an offer limited to this broadcast, and if you call right now with your credit card, we will give you the long awaited MGS4 PS3 in a beautiful ceramic white....

Watch out Billy Mays cause here i come.....

Cheers
Michael

 

[brulaha]

While the PS3 offeres a lot for the money, it doesn't necessarily offer a good value to John Q Consumer. Please bear in mind, the majority of households don't own a high def TV. Most households don't own SACD's. Most households are not interested in the streaming capabilities of a PS3. That is why Nintendo hit a home run with the Wii. It offers a new experience that the public is interested in, and they only need have a traditional TV to take advantage of it.

Of those people who have bought a High def TV, most of them are not looking to get all they can out of it. DVD's look immensly better on a high def TV then they ever did on a traditional TV. Further, they are more than satisfied with compressed HDTV feeds. Better yet, look at all the people who have bought an HDTV only to have it hooked up wrong and are not receiving a true high def signal.

I have to tell you, I'm not even all that interested in blu ray for the picture quaility. DVD's look fantastic upconverted on my high def display. What I am interested in is the new uncompressed sound formats that Blu Ray and HD-DVD offer. But how many people are even interested in sound. It's a very small percentage of the public. I tend to think that the sound is more important than the video. It's what creates an immersive experience. However most people only care about video. All you have to do is look at how many people have a high def TV and only use the TV speakers.

We have to remember here, that by viritue of posting on this board, we fall in the minority. Most consumers are not like us, and as such, the PS3 does not offer all that much value to most people.

 

[MinusTheBear]

We have to remember here, that by viritue of posting on this board, we fall in the minority. Most consumers are not like us, and as such, the PS3 does not offer all that much value to most people.

This is why Sony should educate the consumers more, through heavy marketing campaigns that are down to earth to bring more more hype and interest to these features. In essence I think this could allow the PS3 to reach a broader demographic.

 

[brulaha]

But your talking about educating them on things they don't want or care to know about.

 

[MinusTheBear]

But your talking about educating them on things they don't want or care to know about.

Isn't the essence of advertising to make consumers believe in a product. Effective marketing can make them care and want them to know more about a product. Otherwise what would be the point of advertising.

 

[ned]

PS3 has been "profitable" to Sony in some ways:

- it coveted the next generation format : BLU RAY. Without PS3 blu ray would still be struggling with HD DVD. That in itself Sony hopes to bring $ in terms of royalties and support to make up for the lost in actual PS3 sales.

- face saving. Though not monetary, by wining the next gen format Sony somewhat had avenge their lost in the beta vs VHS and now against Toshiba.

What more can you ask for?

 

[MinusTheBear]

PS3 has been "profitable" to Sony in some ways:

- it coveted the next generation format : BLU RAY. Without PS3 blu ray would still be struggling with HD DVD. That in itself Sony hopes to bring $ in terms of royalties and support to make up for the lost in actual PS3 sales.

- face saving. Though not monetary, by wining the next gen format Sony somewhat had avenge their lost in the beta vs VHS and now against Toshiba.

What more can you ask for?

You have a point here. Sony losing 3.3 billion on the ps3 will not sink the company, neither would it Microsoft. The xbox was not profitable for microsoft the first time around but Microsoft even made it public that they didnt care that they lost money with their first console all they wanted to do was to establish themselves in the market with Nintendo and Sony and they succeded. When it comes to Blu-Ray, Sony has triumphed in a sense that it has won the market for the hi-defintion format. Maybe sony is thinking that they have already established a market for gaming, lets focus on establishing Blu-Ray. This brings me back to my previous point that Sony should take a different approach to marketing the PS3.

 

[abboudc]

Sony has a few challenges facing it:

1. Adoption of blu-ray. It's not like the giant leap from VHS to DVD. Many, many people with upscaling DVD players deem the quality just fine and see no reason to upgrade.

2. "the download era" is upon us. Netflix, OnDemand, Apple TV, 360, and even PS3 have downloadable movies. The disc drive is becoming less and less important.

3. price. PS3 models cost more than the 360, and $400 is way too much to spend on a "movie player".

4. games. up to this point, the games have been better on the 360. Even games that are multiplatform (ahem, EA) played much better on the 360.

Is it too late? Nope. The games are coming. Sony should start touting the superior sound quality and video quality of blu-ray instead of just saying "high definition". The price on the players needs to hit the $200 mark. They still have a window, but it's quickly slipping by...we're already 2 years into this console gen, and *everyone* is jumping on the downloadable movie bus...

 

[jonnythan]

Beginning of its life?

The PS3 has been out over a year and a half and they are still bleeding money on every sale.

 

[Panjsheri]

Well just like the beginning of the DVD standard all the money will be made on the BD Discs and the licensing fees like the money that was and is being made by DVD. Also eventual price drops in the BD Disc itself will help offset the loses into profits. I am sure now that the HD war is over things will get better for Sony and Blu Ray I am sure with all the money, R&D and people they have in Sony they might have thought of the worst outcomes before coming out with BD Disc and PS3. You can say they didnt make many games at first because they were threatened by HD DVD but now that is over and more games will come Im sure of it