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Get Sony bankrupt, buy a PS3?
Posted on Tuesday, 26 September 2006 by Speed, source: Electricsistahood
Over at Electricsistahood is a pretty interesting post that suggests that Sony's goal of selling 6 million PS3's by April 2007 may very well be the last drop that will make them an ideal target for takeover
The writer counts that on average (if Sony sells primarily the 60GB PS3) will be loosing $300 for every sold console and with 6 million sold by April 2007 that would make a total loss of 1.8 billion dollars.
If you count that Sony has already giving Japan a price cut and may be doing so for the rest of the world as well, a $400 loss/console may look to become even more realistic which would result in a 2.4 billion loss by April 2007. Add to that also the fact that Sony has lost half a billion dollars for replacing bad batteries recently you're nearing 3 billion dollars of loss.
The article also takes a look at what Sony is doing to cut losses a bit and speculates at what the final price of the PS3 would be for the end customer if they buy everything Sony wants you to buy:
Luckily, corporate business doesn't always go as is described above so Sony may very well prevail and do things differently. Also, such big losses on short term can be calculated in to get profits up again after some time.
However, all analysts predict that Sony will need at least three years for the PS3 to become profitable and seeing that on average a console lasts 4 to 5 years, that only leaves up to 2 years of making any money. That's a pretty short term to make up for all the years of loosing tons of money if you ask me.
The Japanese people who owned shares in Sony could see the value in building for the future. But, with its purchase of Columbia Studios and Columbia Records, Sony has become much more of a multinational company. Today, for the first time in its history, less than half of the company is owned by Japanese investors. Investors in the West demand more short-term benefits.
Devoting nearly half of its cash reserves to losses in the video game and computing sectors, with no guarantee of future profits for another two years, could send the company's stock into a tailspin, once its investors realize the full measure of the grave situation for the company.
Devoting nearly half of its cash reserves to losses in the video game and computing sectors, with no guarantee of future profits for another two years, could send the company's stock into a tailspin, once its investors realize the full measure of the grave situation for the company.
The writer counts that on average (if Sony sells primarily the 60GB PS3) will be loosing $300 for every sold console and with 6 million sold by April 2007 that would make a total loss of 1.8 billion dollars.
If you count that Sony has already giving Japan a price cut and may be doing so for the rest of the world as well, a $400 loss/console may look to become even more realistic which would result in a 2.4 billion loss by April 2007. Add to that also the fact that Sony has lost half a billion dollars for replacing bad batteries recently you're nearing 3 billion dollars of loss.
The article also takes a look at what Sony is doing to cut losses a bit and speculates at what the final price of the PS3 would be for the end customer if they buy everything Sony wants you to buy:
Stop complaining that the PS3 costs $600. It doesn't. In order to cut down on its losses, Sony is liable to do the same thing to consumers that it did 11 years ago at the original Playstation launch -- it'll require that you buy two games in order to get a machine. That'll boost the price for you to around $725 or so.
But there's more! Want an HDMI cable? That'll be another $100 to $125. Now we're at $850 or so. You've got a Blu-ray player, so you'll want a few Blu-ray movies -- Sony titles only, of course. Buy six of them while you're at it! At an average list price of $25 each, we're talking another $150. That pushes our total price to an even $1,000
But there's more! Want an HDMI cable? That'll be another $100 to $125. Now we're at $850 or so. You've got a Blu-ray player, so you'll want a few Blu-ray movies -- Sony titles only, of course. Buy six of them while you're at it! At an average list price of $25 each, we're talking another $150. That pushes our total price to an even $1,000
Luckily, corporate business doesn't always go as is described above so Sony may very well prevail and do things differently. Also, such big losses on short term can be calculated in to get profits up again after some time.
However, all analysts predict that Sony will need at least three years for the PS3 to become profitable and seeing that on average a console lasts 4 to 5 years, that only leaves up to 2 years of making any money. That's a pretty short term to make up for all the years of loosing tons of money if you ask me.
In other news:
5 Comment(s)
Anonymous
Hay don't get me wrong, i can't wait for the PS3, but i still remember the Dreamcast and what it did to sega, only out for 1 year before it went under and it was a good console (look at soul calibre, still looks good today).
Will history repeat? Only a few years ago sony was saying things about the xbox like "what a big black brick" it was, hummm taken a look at the new PS3 of late? the words "BIG" "BLACK" and "BRICK" come to mind.
There is one thing to remember that nobody is shouting about on sites like this and that is THE PS3 WILL ONLY BE AS GOOD AS YOUR TV. If you don't have HDMI, don't bother, if it's less than 40", don't bother.
Take an xbox360 and put it on a HDTV and go "wow nice", put it on a normal 32" through AV and go "wow looks like an old xbox".
Going to be the same with the PS3, so you need to add the cost of a new HDTV into the mix too if you don't have one.
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