Analyst: Sony shakeup means no PS4 [update 1]
by Kyle Orland 
{ Dec 1st 2006 at 10:05AM }
Most analysts and journalists correctly read the recent management shake-up at Sony as a sign of the problems the company has encountered with the PS3 launch. But at least one analyst thinks the reshuffling is a sign of a larger, long-term direction shift for the company
Nomura Securities analyst Yuta Sakurai told the Financial Times that replacing the hardware-focused Kutaragi with the more software-focused Hirai as head of Sony Computer Entertainment is a sign that the company is planning on changing its focus from hardware to software. "I cannot now imagine a PlayStation 4," Sakurai told the paper.
Our take? The PlayStation is too large a part of Sony's business for them to give up on it so easily. While the PS3 launch has had its fair share of problems, it's extremely premature to predict it will be such a failure that Sony will be forced to pull a Sega. Even in the worst-case scenario, name-recognition and big-name exclusives will carry Sony to a respectable enough market position to continue in the hardware game.
[Thanks to everyone who sent this in.]
[Update: Eurogamer has a follow up story in which SCEA's Dave Karraker calls Sakurai's statement "short-sighted." Wedbush analyst Michael Pachter is also quoted as saying Sakurai's comments are "foolish" and "embarassing." Thanks Blammo]
Reader Comments (Page 1 of 3)
MosquitoControl @ Dec 1st 2006 10:24AM
Just an analyst looking to make a name for himself.
As mentioned, the PS division is too enormous a chunk of Sony's income to be given up on. Even if the PS3 crashes and burns we'll see a PS4.
nick @ Dec 1st 2006 10:12AM
maybe Sony realizes that they need better software to back up their hardware? I mean I hate Sony for some of things they do, but what the hell is up with everyone jumping the gun saying that Sony is Doomed. From what i remember didn't a bunch of analysts and journalists say that Nintendo was going the way of Sega a few years ago?
But yeah hopefully This helps the software side of the PS3 and the PSP, it would be nice to play some games other then a FPS that isn't even that amazing.
crono141 @ Dec 1st 2006 10:12AM
Yipes!
Not even I"M enough of a fanboy to think this is likely. Unless PS3 is a complete and utter failure, which I don't think is very likely, there will indeed be a PS4.
saboola @ Dec 1st 2006 10:31AM
As much as Sony has done a pretty piss poor job with the PS3, I would really hate to see them leave the game. Competition is a great thing, and less of it would mean more crappy games.
clo1_2000 @ Dec 1st 2006 12:00PM
Sony has a lot of problems, and it also has a lot of loyal customers. I see them having no problem in selling the first 2 million units or so here in the states and probably the same in Japan. However, in order to capture the non-hardcore gamer, Sony will definitely needs to reduce pricing, probably around the $400 mark for the 60 GB system. Sony also needs to get the production costs of the PS3 down.
Once these two things occur, Sony's 1st and 2nd Party IPs will definitely get the console back in the black. They need to figure out a way to sell the PS3 to 20-30 million people, and at its current price point, I don't see that happening. If they can't turn this around in the next year, the could take big losses in their gaming division, and if stock holders start selling-off, you could see a shift from them in the gaming arena.
Jonah Falcon @ Dec 1st 2006 10:15AM
Hey, I submitted the Financial Times news. Some credit, please. :p
werk @ Dec 1st 2006 10:14AM
Sony is a much, much worse software company than hardware company. I can't imagine anyone thinking focusing on software would be a good business move for them. Wow.
Jonah Falcon @ Dec 1st 2006 10:15AM
By the way, "name recognition"? Atari and Sega both wave "hello"! "Name recognition" makes it EASIER to become software only, not harder.
Blammo @ Dec 1st 2006 10:46AM
Sorry but this is bullshit (so no wonder it turns up at joystiq, the folks over here are really acting like a shit magnet since about a year, lol).
Just because an attention seeking whore like that analyst write something doesnt mean anything about it is valid.
Also if I ever read another topic title beginning with "Analyst: ...." I throw up.
For more on that topic:
http://www.eurogamer.net/article.php?article_id=70606
joey @ Dec 1st 2006 10:34AM
I actually agree with him. Given how far advanced Microsoft is in the "entertainment" system software area for the 360 it stands to reason that the next xbox will be a masterpiece of multimedia integration.
It will interface with Vista in ways that Sony cannot hope to replicate. It will offer online services that Sony can only dream about.
Not only will Microsoft do all of this but they will do it even further ahead any development Sony might theoretically attempt.
In all likelihood, they will just bow out of that fight alltogether.
Saneless @ Dec 1st 2006 10:23AM
Sony loves its proprietary BS, they'll never not have another system.
However, right now they see EXACTLY what they did wrong. They see Nintendo focus more on launch availability and fun gaming without having gobs of processing power. Plus developers love it.
Microsoft focused on having good, powerful, SENSIBLE hardware. They focused on developers - good tools, good install base, they did everything right.
Sony did what they did for the PS2 but made it even worse. Even harder hardware to code for, even more limited availability, and even more costly to develop on. Krazy Ken just got too cocky
BlindsideDork @ Dec 1st 2006 10:40AM
Big name exclusives...wasn't there a rumor that MGS4 was not going to be an exclusive?
Jonah Falcon @ Dec 1st 2006 10:29AM
I'm more willing to believe the Financial Times than gamer sites. Keep in mind, the PS3 was intended to sell the Blu-Ray format. Their PS3 shipping went from 2M to 400K to 200K in the US. They've lost 3rd party exclusives and delayed 1st party. They don't have the luxury of taking losses that Microsoft does with the Xbox 360 (can you say Vista?). The fact is, Sony is bleeding money, their stock is plummeting, and the non-launch of the PS3 -- which has still FOUR MONTHS before the European launch, which means they'll have to cut into whatever production they were doing for the US and Japan -- reminds me of Coleco and the ADAM, and the only thing that saved Coleco from outright dissolution was the Cabbage Patch Kid, and the PSP ain't no Cabbage Patch Kid in terms of sales.
tommy @ Dec 2nd 2006 10:12PM
IF it does somehow fail, sony would be determined to bring out another successful console.
Big beN @ Dec 2nd 2006 9:32AM
END OF Playstation ? It make sense !
Even if you are a big brand that dosen't mean that you made a wrong move...
And clearly the PS3 is a wrong move, I mean :
- 500k games to sell for a publisher to make money
- 800+ $ to produce
- tons of exclusivity gone ( GTA, Assassin's Creed... )
- HD-DVD doing better than expected
Frankly, with the stuggle of the laptop batteries and overall cost of the PS3 project... it will be foolish to go for the PS4 !!! Spending billions without making money is not business is suicide !!!
Afterall, IBM gave up on consumer computers, leaving the way for Dell, HP & Gateway !
After kicking out of the business Atari, Sega and now Sony... WII just have to deal with Bill !!!
Avinash_Tyagi @ Dec 1st 2006 10:41AM
#8
Only if they don't lose a boatload of money on the PS3
John @ Dec 1st 2006 1:26PM
i could manage sony better than those clowns do lol
if i wer them id produce a range of desktop computers and laptops with different variations of the cell processor and coming with a special sony version of linux and take on microsoft and apple. then put bluetooth in these. then promote these as all around pc's with cheaper ones as office pcs and more expensive ones as high spec gaming pcs. then bring out a new range of walkmans with bluetooth and have their cool feature that you can transfer music to and from them without wires. then bring out a whole new range of electricals all with bluetooth and have the sony PC at the center of their range or products
but then im just one crazy rambling person
*crazy lafff*
http://www.petitiononline.com/ps3/petition.html
Matt_M @ Dec 1st 2006 1:22PM
There would be no PS4 if the PS3 totally crashed, but it's got a userbase of people who trip over themselves to buy new Final Fantasies and Dragon Quests, and of course the people that want to play the version of Madden that looks the best. So it looks like there will be significant adoption in both US and Japan territories. EU might be more interesting- can a console bomb in one territory but not the other two?
(Oh wait, I forgot the original Xbox.)
JimmyHACK @ Dec 1st 2006 10:48AM
nothing but silly guesses,
remember when it was, nintendo won't make another...
silly analyst
don't take this as anything more than a random thought
Jonah Falcon @ Dec 1st 2006 10:36AM
The other problem is that there's way too much overlap between the PS3 and the 360. Nintendo benefits from having a nice cheap system with a system-selling gimmick, and very little overlap with the 360/PS3.
jayntampa @ Dec 1st 2006 10:36AM
The hardware aspect of the company is no more a profit-maker for Sony than it was for Sega. You have to remember, this isn't a privately owned company. As a public company, if sentiment that the hardware business is bad for Sony permeates the business conciousness, their stocks will continue to drop forcing them to get out.
If the PS3 doesn't show a profit in an abbreviated timeframe, I wouldn't be surprised if this analyst is right. If software companies need to sell 500,000 units to make a profit on their next-gen games ... consider how long it will be before they can expect a profit on the PS3 -- so, they're going to be less likely to make games. The rumblings are becoming pretty evident.
Dux @ Dec 1st 2006 10:38AM
God save The Playstation brand!
Daryl @ Dec 1st 2006 10:57AM
"However, right now they see EXACTLY what they did wrong. They see Nintendo focus more on launch availability and fun gaming ...
Microsoft focused on having good, powerful, SENSIBLE hardware. They focused on developers - good tools, good install base, they did everything right.
Sony did what they did for the PS2 but made it even worse. Even harder hardware to code for, even more limited availability, and even more costly to develop on."
I couldn't agree with you more Saneless. Very nice post.
Ken @ Dec 1st 2006 10:41AM
I think it's a little early to make any predictions concerning what Sony is going to do next. The PS3 obviously isn't even widely available yet. We won't see the first wave of big software titles until next year. Let's see what everyone is saying about Sony after FFXIII, MGS4, White Knight Story, and the like are released.
Andrew F @ Dec 1st 2006 10:45AM
Look at it from the perspective of a Sony shareholder. That is, am I getting a good investment on Sony?
Key thing for shareholder to look at is not market share but whether PS3 is the best use of Sony's resources. They'll need a high attach rate to recoup costs and for Blu-Ray to take off. At best, this will take some time to happen. At worst, they don't and the PS3 is a net loss to Sony.
So as a shareholder, why should I keep investing in Sony when Nintendo makes a profit right out of the gate and Microsoft is already well on its way towards getting there? That's a lot of pressure to drop the PS4, or at the very least, shift to a different business model.
nootau @ Dec 1st 2006 11:10AM
This is pretty believable. If the PS3 is a success, there is no reason for a PS4, EVER. That was the point of the Cell, BluRay and a upgradeable HD, and giving away an $800+ machine for $599, right? I dont see a PS4...what could they do? add better graphics? put those two HDMI ports on it like they promised? Would a PS4 be worth it to gamers or to Sony?
If the PS3 is a failure, Sony really will have to rethink everything. All their money and technology is riding on the "success" of the PS3. They have no money whatsoever. If they fail to at least break even, they might as well pack up their entire company. They wont have any more money to invest in a PS4 or anything else for that matter. Failure isnt an option. (and by failure i mean they dont break even from their PS3...they dont have to "win" the so-called "console war", they need to turn a profit....same as microsoft does this time around).
> @ Dec 1st 2006 10:45AM
The problem is that most people are too shortsighted to see the larger picture and they have no perspective.
They see the problems with the PS3 launch and all of a sudden it THE END OF SONY.. FINAL NAIL IN THE COFFIN.. this is the North American way of seeing things.. how much profit can you make NOW! or the next quarter.. rather than long term vision.
This is mostly a cultural issue; NA people want results NOW NOW NOW! This is the problem with the domestic automakers when they concentrated on milking their SUV cash cow rather then putting money into more mundane tasks like quality control.
Blammo @ Dec 1st 2006 11:12AM
YEAH, it was a rumor thats being kept alive by guys like you - LOL
Jordan @ Dec 1st 2006 12:10PM
Not going to happen!
Considering how MUCH R&D went into the PS3, and considering how LITTLE R&D will be needed for the PS4, I think a successor is certain.
What will the PS4 look like? It will probably have:
1. A 200GB Blu-Ray (no R&D needed)
2. A quad 45nm CELL with only minor changes (very little R&D needed, MS has to start from scratch)
3. No software re-training as CELL is already multi-threaded. Adding more CELL's is a LOT more of the same.
4. More RAM, more bandwidth, rumble, perhaps an EDRAM daughter card
The only drastic change will be the RSX, which was a dissapointment considering the price.
Sony made HUGE investments this round so they wouldn't have to make it next round.
The CELL's brilliance is how easily it can be ugraded. It will be around for 15 years
Jonah Falcon @ Dec 1st 2006 11:06AM
"Only if they don't lose a boatload of money on the PS3"
Worse, only if 3rd party developers don't lose a boatload. For example, Capcom needs 500000 units to be sold to turn a profit. The PS3 hasn't even released that many *machines*, and roughly (working from memory), 30000-40000 copies. Now, compare that to the just under 2M (from memory, again) copies of Dead Rising sold.
Plus, Capcom announced it was financially unfeasible to have exclusives (Tsujimoto explained the next-gen strategy by stating, "In order to curtail development costs, we intend to implement a multi-platform strategy, marketing a single title for a number of different types of game consoles, thereby expanding sales and optimizing our profits.")
Sony is in real trouble. It all started when they decided to force gamers to purchase a Blu-Ray drive. Microsoft made it optional. Always, always, always make expensive features OPTIONAL.
Flit @ Dec 1st 2006 10:50AM
Didn't nintendo re-arrange after the gamecube? There will be a ps4, look at how bad the gamecube placed, and there was still a Wii. Sony isn't going out without a fight, even if they have to purchase Nintendo to keep their business running.
robert816 @ Dec 1st 2006 10:50AM
This doesn't mean that the Playstation will go the way of the Dodo. It just means that he believes there will not be another unit developed to replace the PS3. I'm certain with the current installed base, and the fact that the PS2 is almost pure profit by now, that the Playstation line will continue, but there may not be a PS4. Ken and company had already stated that they expected the PS3 to have a 10 year life span, so there's no real need for them to consider a new unit for several years anyway.
On the other hand, MS has already mentioned they are already working on the next Xbox and are looking at creating their own processor to help lower cost per unit production.
bubbastump @ Dec 1st 2006 10:52AM
Remember that the PS3 is not the only struggling hardware Sony has. The PSP has not been selling well in comparison to the DS. The UMD format has completely failed for anything other than software (no surprise). And there have been reports on GamesIndustry.biz that developers are taking a wait and see approach with the PSP...if they don't see improving sales or Sony do something about the poor sales...Many developers are ready to pull development projects for the device. That would be the nail in the coffin for the PSP.
And then there's Blu-Ray...the 360 seems to be 3 steps ahead of the PS3 at every turn. Those silly enough to hold out a year for the PS3 are now realizing that next gen gaming began long ago when MS released the 360. And unlike the PS3 and Blu-Ray...the 360 HD-DVD add on drive is a big hit and = HD-DVD sales...which is yet to be seen if Gamers purchasing PS3 will actually purchase Blu-Ray movies.
Sony is indeed in trouble...far worse than most people think. The PSP is on the brink of failure and the PS3 and Blu-Ray may be going the same route.
Nintendo is going to canabalize Sony in Japan this year and the 360 and Wii won't give Sony a break in North America...as for Europe...Sony has yet to show up.
Paul P. @ Dec 1st 2006 12:50PM
Even if PS3 were a relative success, that doesn't mean Sony will continue with a PS4. Their console division doesn't have to fail for Sony to cut out of the business of making consoles. They simply have to decide that another section of their company would be worth more investment. And it is entirely possible.
Sony is not in the business of making video game consoles. They are in the business of making consumer electronics, and video game consoles happen to be one. If they think they can make more money with a different focus, then they will.
Andrew F @ Dec 1st 2006 10:54AM
>, it's not NA; it's the market. And unfortunately, the market doesn't reward really long-term investments. As a shareholder, I can jump in or out of an investment at any time. So, if Sony's strategy will result in a profit 5 years from now, I'll invest in it 4 years from now just when the price is likely to take off and in the meantime, invest in something that's making short-term profit (e.g. Nintendo).
However, this loss of cash can create a lot of problems for Sony. Simply put, their employees need to be paid now, not four to five years later.
altodarknight @ Dec 1st 2006 10:57AM
It comes down to content. Who makes content? Developers. The reason the Xbox 360 is loved by developers is because it was created by software developers. The 360 is the hardware developers would choose to put into a console. The tools provided are tools developers would want to use.
Sony recognizes that the industry is ultimately driven by the actual games, and great games sell consoles. Great games are made by happy developers and Microsoft knows how to make developers happy (Windows anyone?). Sony is just following suit. The hardware focus has lead to the price, the delay, the production issues, the hardware issues, shoddy online setup and unhappy developers.
The console industry is a lot like the OS industry, people don't buy it because of the technical superiority, they buy it because they can easily use it and good software. This is why Microsoft is doing so well in the industry.
crono141 @ Dec 1st 2006 10:56AM
About the update, of course SCEA is gonna say its short sighted. You want all the shareholders to bail out now if this is indeed the plan?
I do think sony is going to shift their focus from hardware to software, but not abandon the hardware division. This will ultimately be good for Sony to do, and if sony has to carry the PS3 (like nintendo did for the N64), they will either become one of the best software makers (like nintendo did) or playstation will sink.
Hank @ Dec 1st 2006 11:01AM
There could be a different strategy, when it comes to thinking about PS4, Sony is in this for the long haul with PS3. The possibility of a PS4 showing up in the next couple of years may not take place until Sony has used the PS3 to its fullest potential.
Just what PS3 is capable of, only time will tell, for now it is definitely a rocky start.
Jeff @ Dec 1st 2006 11:32AM
"Key thing for shareholder to look at is not market share but whether PS3 is the best use of Sony's resources."
No, the key thing for shareholders to look at is the future direction of the company. Shareholders couldn't care less what's going on at this particular moment. Only fanboys care about that. Console launch issues, therefore, are pretty meaningless. Shareholders care only about this particular moment as it relates to where Sony could be 5-10 years from now. (That's what P/E ratios are all about - you never buy a stock for the company's current earnings, you are buying based on the expectation of future earnings.)
And I don't see how putting a software guy in charge of SCEA means anything. And I mean *anything*. These are management positions; it's not like Kaz is going to be in there designing the GPU. They could have promoted somebody who had no experience with either hardware *or* software but was simply a good manager and it would have been exactly the same thing. Kaz's one big advantage is that he's fluent in English.
There will be a PS4. Hey, you know what? There will even be a PS3! In a year, you're all going to forget these launch issues ever even happened - just as most of you seem to have forgotten the Xbox 360 launch issues by now. At every launch, there are all sorts of weird and crazy prognostications before things settle down and we all start playing games again and forget about trying to be amateur analysts.
> @ Dec 1st 2006 11:04AM
Andrew F, you're right that it is the market.. but, i think (and should have put it this way originally) that NA are more likely to be only interested in short term goals. Its an institution problem: senior management and the reward/compensation structure operate on short term success; to appease the shareholders who want return on their investment NOW NOW NOW!
Firegirl @ Dec 1st 2006 11:15AM
Totally agree with his opinion. Sony is losing money on each console sold, and it's not selling as well as the 360 or Wii. I think they focused on the wrong thing, and didn't make the darn thing very user-friendly. I hope their won't be a Playstation 4, or at least one as bad as the PS3
crono141 @ Dec 1st 2006 11:48AM
>,
The other thing I just realized is that the current head of Sony proper is an American (or british, I can't remember. Same outlook on profit though).
Blammo @ Dec 1st 2006 11:12AM
Lonely attention seeking analyst: "PS3 is the last playstation"
Random internet dude who never had sex and lives with his parents: "I told you so, Sony is teh doomed".
[After reading this thread I really understand the mechanics of these forums anymore, lol.]
Urbanstorm @ Dec 1st 2006 11:43AM
I'll believe sony is doomed when not even final fantasy can save the system.........
Halo3 may be the xbox360 system seller but nobody and I mean nobody can say halo is a bigger brand/system seller than the final fantasy series.
If Final Fantasy XIII does not sell PS3 or worse/good goes on the xbox360 sony is offically done.I said this before and i'll say this again no console in history other than atrai has won without a final fantasy game (side games and spin offs dont count).......
nick @ Dec 1st 2006 11:14AM
I think the speculation over the PS4 is a purely financial one. If you look at Sony, they currently have 18 billion dollars of debt right now. They shutdown and consolidated underperforming but respected divisions, although they still have some divisions that are not doing spectacular. Earlier this year they borrowed almost 700 million.
The Playstations division, which has carried them for years, is almost required to always be succesful, for the company has a whole to be successful and carry the other divisions. Their TV business seems to be rebounding and their camera division has usually done well. The movie business has it's ups and downs, and their audio division seems to have lost its luster. Recalls have hurt the company, which include laptops batteries supplied to most computer manufacturers and camera recalls.
So it doesn't help that both the PS3 and Blu-Ray have been swiming in bad press since their introductions.
Because of the investment costs into both these newer technologies, it's going to take Sony years to recover, assuming they're both successful.
In the meantime, what is going to carry Sony? The PS2? Actually, the PS2, in the short term, might be the saving grace for Sony, assuming sales continue to be brisk.
ljbad4life @ Dec 1st 2006 1:26PM
Everyone needs to remember that sony isn't making money at all, even in their other divisions. I saw on reuter's that sony was down 18 billion... Sony's home electronics have not been that hot, the bravia line is struggling against samsung (which is #1 in tv's now)... Sony's whole future will depend on blu-ray, which depends on the success of the ps3... The life span for the ps3 is going to be extremely long, and probably become severely dated by the 8th year of the supposed life span of 10 yrs. 5yrs is a great life spand, but double that is just too much.
juicebytim @ Dec 1st 2006 11:48AM
Robert816:
I really hope the PS3 doesn't have a 10 year life span, if that were the case with the N64 and PSone, we would still be playing those now...boring.
Robert Jung @ Dec 1st 2006 12:37PM
Am I the only one getting a big laugh watching all these 12-to-18-year-olds -- who are doubtlessly living at home off their rich parents' dime -- dismissing the views of professionals who make hundreds of thousands of dollars a year using their analytical skills? It's like watching kindergarden students trying to outsmart Bobby Fisher.
This isn't IGN or Gamespot we're talking about, kids. These people don't give a shit about Sony hype or three-day-campouts or eBay scalpers; if they tell you the situation is seriously fucked up, you better listen...
--R.J.
Jonah Falcon @ Dec 1st 2006 11:24AM
"Eurogamer has a follow up story in which SCEA's Dave Karraker calls Sakurai's statement "short-sighted."
I'm sure SCEA would say that. They have a press release calling Katuragi's keynote speech at the TGS "stirring" and "exciting", too. What are they SUPPOSED to say?
Jonah Falcon @ Dec 1st 2006 11:29AM
"Lonely attention seeking analyst: "PS3 is the last playstation"
Let's examine the Logical Fallacy here. It's either:
Ad hominem abusive (The argument attacks a position by appealing to the despicable qualities, moral turpitude, and over-all lowness and meanness of the people who hold the position. Example: "I can't believe that anyone really listens to what the American Rifle Association has to say. After all, they're just a bunch of ignorant yokels.")
OR:
Appeal to Ridicule (The Appeal to Ridicule is a fallacy in which ridicule or mockery is substituted for evidence in an "argument." This line of "reasoning" has the following form: X, which is some form of ridicule is presented (typically directed at the claim). Therefore claim C is false. Example: "Support the ERA? Sure, when the women start paying for the drinks! Hah! Hah!")