Hirai: PS3 Slim sold at a loss, but business profitable overall

OH! You can watch Sony movies now on the 360?

How generous of Sony!

Joystiq, the words "gross profit" don't actually mean something is profitable. Gross Profit is product revenue - cost of goods, but doesn't include overhead. So that means before payroll, before interest, before taxes, and before other business expenses.

So he's not actually saying the division is profitable, especially when you consider how high of a cost salaries are in a technology company. Also, for the whole playstation division, manufacturing costs for other aspects aren't that high when we are talking about producing the blu-ray disks, boxes and whatnot. The vast majority of expenses are going to be all of the software developers working on uncharted 2 or Gran Turismo 5 or whatnot.

Last quarter and for the full fiscal year, Sony's earnings report said they were operating at a loss across the board and the two major factors were the Bravia TV's and the Viao/Playstation division. Since they recently merged the two (viao and playstation), its impossible which is a bigger loss.

Saying Playstation makes gross profit is backpeddling and a word game, hoping that someone will post a headline that they are making money (looking at you, joystiq). If they were actually making profit, he would have said they have positive net income.

Before I get downvoted, I have a 40gb ps3 and wipeout hd is my favorite game this generation. :)

One issues with the slim, the price cut, and this new that they're still makig a loss on every unit sold is when I see people on this (and many other) websites saying things like "great, now I can buy and 2nd one" or "now I can buy a slim and make my phat a media hub" or "now i can get a slim and pass my phat model along to my brother/sister/parents/roommate/etc."

The problem with that is, if you're entering one of those scenerios, you're usually not (obviously not ALWAYS the case but USUALLY not) increasing yoru software purchases with your second or new PS3. If you bought a 2nd one, are you likely to start buying twice as many games? If you passed your phat along to your little brother and bought a slim, is your little brother going to buy as many games as a new owner might? Or will he use your existing software library and maybe only buy a handful himself?

The point is, if sales increase, but people aren't buying more software/peripherals as a result of this, then buying these consoles at a loss actually ends up hurting Sony. If you have a PS3 in every room in your house, but don't buy an increased number of games to match, you might end up costing Sony money. As long as everyone here that is upgrading to a slim or buying a second or third new PS3 increases their software and peripherals as well, it's all good then. Otherwise, it's a slippery slope for Sony

"and the other sells two Gamecubes duct taped together for $250."


You are apparently either from the year 2007 or do not own a Wii.



Joke's old and false.

The joke is old, but it's still funny. It was always false. It's almost the same chip as Gamecube, just clocked higher. Less than twice as high. There aren't two of them. So in reality, it's in a way less powerful than two Gamecubes duct taped together.

No matter how much you may ridicule the joke, the point is Nintendo is selling you cutting-edge technology from the year 2000 at a price 2.5x what the Gamecube cost you in 6 years ago (dropped to $99 in September, 2003).

Selling old silicon at high prices is highly profitable if you can manage it. And Nintendo has managed it very well.

"Joke's old and false."

Modern Warfare Wii begs to differ.

So Xbox is still profitable but ps3 is still in the hole, hah!

@ why not

Why is it, when everyone argues against the Wii and it having "old tech" they can only bring up the over clocked Gamecube chip (which ,btw, gives EVERY Wii the ability to be the only 100% backwards compatible console this gen)?

Let's not forget the Bluetooth controllers. Built in Wifi. 2 USB ports and SD Card slot, which, in comparison to newer PS3s, is pretty impressive. Up to 32 Gbs of expandable starage for a fraction of the cost of HDDs from Microsoft.

It's not the archaic rock some make it out to be.


@ tmac,

To every Monder Warfare Wii there is a Red Steel 2 buddy.

*Modern

ugh

The main market for a PS3 Slim is made up of two groups: Those folks who were for a PS3 that might bring back backwards compatibility and those who were just holding out on a PS3 purchase because of cost. PS enthusiasts and video game enthusiasts overall who were interested in a PS3 already have one.

That's a small market to rely on for reinvigorating your brand and it's smaller still when you consider that they've ruled out backwards compatibility completely for the future. That means most holdouts for the feature, including myself will either never buy a PS3 now, or will buy an early model second hand, leaving the PS3 Slim to the price holdouts which aren't a huge group.

Say what you will about the PS3's "superior" features, but those features haven't stopped people from picking up 360s and Wii's, and putting that feature set in a smaller form won't reverse the trend.

None of those things you mention are spectacular either. Just because MS charges $99 for WiFi doesn't mean it should cost $99! And the SD card slot just isn't needed, yeah, it's okay. But USB memory keys are very cheap so unless you need to read cards from another device that uses SD (like your camera), just get a USB key instead. Then you can use it in all your consoles (although the 360 won't save games on it, only play music off it).

All this stuff you mention adds up, but it doesn't add up to $250. Let's face it, it is an archaic rock.

I agree the hardware BC is nice, although it's unfortunate the most BC console this gen is also the one with the smallest BC library to draw from.

We'll agree to disagree, good sir!

that SD card slot may not be needed but its convenient....32GB+ Space for games and pictures....nothing wrong with having that

Listen Sony gaming is making a profit. Whether it be through PSN, games, movie downloads etc.Many businesses use loss leaders to stimulate purchases of high margin peripherals, and this is exactly what they are doing.
They have built a solid machine, with a lot of great features already built in. When you compare all 3 systems based upon actual sales, and where they are, based upon their time in the market place, the Wii kicks everyone's butt, but more importantly the PS3 is in second worldwide. Being from the US I understand are importance in the market place, but in today's market you better be diversified and doing well in other markets or you can and will be in trouble. The 360 has not quite gotten to the global market share it should have.
The 360 also still has a one year advantage on everyone else for total figures, and I don't believe it has ever been published how many have been returned. How many replacement 360's have boosted their total sales figures?

More importantly;y its good to have a three way fight for the top. It spurs development, and helps drop pricing. If Microsoft completely knocked off Sony (or vice verse) you can forget any meaningful improvements to their systems, gaming, and pricing.

@Cody

I completely agree. For a few months the PS3 will gain, and then the distance at that point will remain constant.

@Toad

The Elite price drop has not been announced. Even at $100 more, the PS3 is a much better value as a piece of hardware. At $100 less, the PS3 is a nobrainer.

Apparently you didn't read it carefully. When comparing where each one is in its sales cycle (remember the 360 has been out a year longer) the PS3 is #2. (VGchartz.com) In overall sales figures absolutely the 360 is ahead, but you have to account for the one year head start, and how many sales are for replacement machines?

@wjyorgan

The Viao/Playstation merge was in April, right after the quarter before last's earnings report. I have links below. The Times interviewed Kaz because he is now an even bigger player than before for Sony as a whole. Kaz now runs both the Playstation brand, and the Networked Products and Services Group, which contains Playstation, Viao's, and other electronics. Here are some quotes, because its clear you didn't read the times article, nor business news in general.

Kaz - "This is one of the things that Howard [Stringer] has tasked myself and Kunimasa Suzuki to do at NPSG, where the majority of the sales and visibility, if you will, comes from the PlayStation business.
“Since I manage both there's obviously going to be a bit of a ruboff from how I run the PlayStation business. and how that's going to impact how Kuni's going to be running the Vaio business, and because of the cross-pollination that I wanted I've asked Kuni to become second in command at SCE. So there's a lot of cross- pollination going on at management level."

All of Sony is now only two Divisions, NPSG, which is playstation, viaos, and phones, and the Consumer Products Group, which is Bravia, camcorders, home audio, cameras.

And here is a link, which you won't read:

http://www.pcworld.com/article/160354/stringer_shakes_up_sony_management_takes_president_position.html

So, since Sony now has only two divisions, it will be impossible in the future to see what brand is dragging the division down. Playstation and Viao and the other brands in NPSG all combined in any earnings report.

If you want to contribute something intelligent to the conversation, why don't you learn a little about the company you want to "defend".

Thanks a lot for the information. Its great that there is a profit in business overall. The new Slim PS3 will be available in stores from first week of September. The new slim PS3 has a sleek curve body, it looks very different, has a meticulous design. It is designed in such a way that it won't stand vertically but horizontally.The new slim PS3 consumes 34% less power than PS3. Its great that it comes with 120GB hard drive. For more information refer http://www.etechreviews.net/review-of-the-new-slim-ps3/

This is capitalism ppl, dontcha get it? This "selling at loss" thing is just marketing! No company sells something at loss!

This is just to make you believe you get something of incredible value for a ridicolous low price.

And you're all buying it.

Don't let them fool you.