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PlayStation (Games) Sony The Almighty Buck Games Hardware

Sony Finally Turning a Profit On PS3s 117

Posted by Soulskill
from the catching-up-with-moore dept.
When the PS3 launched in 2006, estimates pegged the price of producing the consoles to be as much as $250 more than the price at which they were sold. Production costs have dropped since then, but there have been several price cuts as well. Now, almost four years later, Sony Worldwide Studios president Shuhei Yoshida says they're finally turning a profit on the hardware. "This year is the first time that we are able to cover the cost of the PlayStation 3,' Yoshida said. 'We aren't making huge money from hardware, but we aren't bleeding like we used to.' In May, Sony began shipping new PlayStation 3 consoles with smaller and more cost-effective graphics chips. Now, Yoshida said, Sony is looking at replenishing retail stock that has been running on empty since January rather than cutting the price. 'When we bring the cost of hardware down, we are looking at opportunities to adjust prices if we believe that will increase demand,' he explained. 'At the moment, we are trying to catch up our production.'"
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Sony Finally Turning a Profit On PS3s

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  • Why cut prices? (Score:3, Interesting)

    by CaptainNerdCave (982411) on Thursday July 01, 2010 @04:07AM (#32754060)

    Why not return the features that were removed? Why not add more features? I was going to buy a PS3, but scrapped those plans when several things went out the window. How many other people are like me?

    A cheaper turd is still a turd.

    • Re: (Score:1, Troll)

      by ArcRiley (737114)

      Ditto. I was planning to purchase a PS/3 for our home entertainment system just before they decided to end support for the Other OS feature.

      Then again, their Linux support was never that great with their intentionally crippled hypervisor. What use is a Linux console without accelerated 3d and video? I can build a dual core system with 2gigs ram and accelerated graphics for under $150.

      • by jplopez (1067608)

        I can build a dual core system with 2gigs ram and accelerated graphics for under $150.

        Where? In Lala-land? A *decent* dual-core mobo and the CPU would already be around $150. Add another $100 or $150 for a starter graphics card.

    • I'm in the same boat. There is a ton of PS2 games which i like. in fact, there's a whole lot more ps2 games that I like, than PS3 ones. And there's also a lot of PS ONE games that are still great fun. Asking for backwards compatibility to that level would be way, waaaaayyy too optimistic.

    • by poetmatt (793785)

      not only that, but the price was atrocious at launch. Did it really take them 4 years to realize that they needed to lower the price from the straosphere?

      $400-600 for a console is retarded.

      • by DinDaddy (1168147)

        Prices were lowered years ago. Not to their present level, that took a couple of steps, but they began lowering when they took the BC out a couple of years ago.

        • by poetmatt (793785)

          BC? (what does that stand for)?

          anyway, they're still at $275-$400+, which is still atrocious. Sony just doesn't want to give in to market pressure, you know, demand, which says that lower price = higher demand and a better revenue (Although a smaller margin). Given mass manufacturing, shrinking your margins to raise your revenue is an obvious decision.

          Sony has been retarded on this. Anyone with basic economics could have told them this from the start.

    • by Nyder (754090)

      Why not return the features that were removed? Why not add more features? I was going to buy a PS3, but scrapped those plans when several things went out the window. How many other people are like me?

      A cheaper turd is still a turd.

      I'm with you on that.

    • Why indeed. It seems to me that the most profitable and smart solution is to have "trim levels" for the PS3 (or any game console for that matter) separate from the hard drive size. At launch, if I recall, the PS3 was about $800 US. It could replace the following hardware: Blu-ray player, DVD player, CD player, PS1, PS2, PC (taking advantage of the Linux option), Anything that has a PPC emulator for Linux (NES, Sega, etc.), DVR (so I've heard), and possibly others in one box.

      It was the ideal machine for peo

    • by freman (843586)
      They're making a profit on the PS3 perhaps, but since they axed the features I care about and paid for I've not bought a single Sony product. Hell I've even avoided products that use technology licensed from Sony.
  • IOW, SNAFU (Score:3, Insightful)

    by Magada (741361) on Thursday July 01, 2010 @04:15AM (#32754074) Journal

    The old hardware's too pricy to keep making, there's not enough of the new cheap stuff so they're bleeding in new and interesting ways - not having enough product to sell is making distributors angry and their profits small. They're hoping that passing on some of the savings to some of the distributors will make them less angry. That will make their per-unit profit even smaller but they hope to compensate with volume, maybe, someday, when they are able to make enough of the damn things.

    • That will make their per-unit profit even smaller but they hope to compensate with volume

      If they make a profit on the hardware at all, they are in a better position then before.

      Most of the time (and including earlier PS3), console hardware is sold at a loss to push it into the market and the vendor regains the money from game sales. The Wii was the first among the current generation consoles that broke this tradition. Now, after some cost-saving redesigns, PS3 sales also cover the cost for the hardware. I'm not sure about the present situation of the XBox 360, but when it was new it was sold at

      • by delinear (991444)
        Some sites suggested that the 360 made it into profit less than a year after launch (based on estimates of shaving 40% off the cost to produce as component prices fell), however that doesn't take the red ring o' death debacle into account, which I'm sure kept the company in the red (no pun intended) on the hardware front for a few more years.
      • by ookaze (227977)

        Most of the time (and including earlier PS3), console hardware is sold at a loss to push it into the market and the vendor regains the money from game sales. The Wii was the first among the current generation consoles that broke this tradition.

        This "everyone sells its console at a loss" is a myth.

        This was never a tradition, so the Wii didn't break any tradition. Nintendo is the older console manufacturer still alive, so is the traditional one, and they never sold their console at a loss, except the very first months of Gamecube because they quickly dropped the price before launch.

        Sony is the big one that introduced this business tactic that was then followed by several companies or gaming division of companies which all met their demise. This inc

  • by GrumblyStuff (870046) on Thursday July 01, 2010 @04:15AM (#32754076)

    "What's that?! Speak up! I can't hear you from this giant pool of money I'm swimming like Scrooge McDuck!"

    • by gblackwo (1087063)
      Different products, different markets. Yes, there is some gray area, but anyone who has taken econ 101 will tell you that the products are not direct competitors.
      • Re: (Score:3, Interesting)

        by GrumblyStuff (870046)

        I was thinking more in terms of home console (profits from base system) vs home console (profits from base system). You know, Wii vs PS3. Yes, yes, they're not direct as in beer competitors Coors and Bud (in that they're selling the same piss flavored shit) but they are still aiming for the same function so there's a pretty big overlap of markets.

        Also, PS3 is getting its own motion controller. Different products are becoming not as different.

        • Re: (Score:3, Interesting)

          by delinear (991444)
          It seems like Sony's usual mis-step of creating nice hardware but completing misjudging the mood of the market. They released a be-all-end-all console that could play games from the current and last two generations, contained a Blu-Ray player and was a Linux computer, but they charged an astronomical price at launch. It then transpired that there market wanted a cheap, dedicated game console and didn't care about the bells and whistles. The world economy starting to collapse a year later probably didn't hel
          • Yeah I think you are right on with regards to the outcome of the format war. They released an ultimate home entertainment gadget that put a Blu-Ray player in 90% of American technogeek living rooms. Looking at their direct competitor, MS put out that crappy HD peripheral drive that put the cost of the completed Xbox 360 system at the same price point as the PS3, with fewer features and poorer graphics. Sony bit the bullet and took a loss on the hardware, and I think that will pay off huge for them.
  • by Psaakyrn (838406) on Thursday July 01, 2010 @04:35AM (#32754148)

    Now, they can start not making a profit again when they ship Move!

  • by mykos (1627575) on Thursday July 01, 2010 @06:39AM (#32754768)
    I remember the 90s being full of consoles:
    3DO, Dreamcast, Saturn, PS1, Atari Jaguar, N64, Philips CD-i, in addition to existing ones like Genesis/SegaCD/32x and SNES which were in the prime of their lives in the early 90s.
    Now the 360 has been out for five years and the PS3 has been out for four. Neither company seems interested in making new hardware anymore, which is understandable since they lost so much money working out the bugs. But it seems that nobody wants to one-up the other anymore.
    Rather than pursue hardware that is clearly superior to their competitor (as many attempted in the 90s), they just blow money purchasing exclusives.
    • Re: (Score:2, Interesting)

      Maybe they noticed the success of casual gaming (Wii mostly), and figured that better profits await if they can sell equipment to wider audience. That instead of pushing expensive bleeding-edge hardware to small group of hardcore gamers.

      Hopefully a break in hardware race forces the game publishers to move from "my effect-bling is better than yours" mode to actually compete in gameplay and quality content.

      • Casual? (Score:3, Informative)

        by tepples (727027)

        Maybe they noticed the success of casual gaming (Wii mostly), and figured that better profits await if they can sell equipment to wider audience.

        Or maybe they're gluing feathers onto their bodies and trying to fly. I wouldn't say "casual" is exactly the right word [50webs.com] for Nintendo's strategy.

    • by Calinous (985536)

      Anyone new to this market would be sued out of existence by the holders of game related patents (not to mention the initial cost of hardware development, the initial cost of software development - devices and SDKs, the cost to produce games that will sell the console and so on)

    • by Turzyx (1462339)
      I think it's definitely stalled, yes.

      There is little point upgrading hardware for any other reason than improved visuals. You can get better rendering, AA, FPS. etc, but most people are satisfied with the visual quality of the current HD gaming systems.

      Are there even enough potential buyers to support a new generation of consoles? I honestly don't know, but I think they are aiming at the majority of the user base (casual), like myself who will need some serious justification to encourage me to buy a new
      • I also think the economy has a big part to play in things as well. It's taken Sony 4 years to break even. And given how much it cost initially, it priced a lot of people out of the market. Especially casual gamers. I have a PS2 now collecting dust because I don't have time but more over it got to the point where I wasn't willing to pay out $60 per game. Most of the PS2 titles I have were the $20 bargin games that had been out for a while. People just don't have the money to spend on it as much because

  • by Rogerborg (306625) on Thursday July 01, 2010 @06:57AM (#32754876) Homepage
    You know we can see these shelves [penny-arcade.com], right?
  • by f3rret (1776822)

    Dear Sony (I know your a shiver corporate hivemind is lurking here)

    Like to topic says, good job and congratulations on finally turning a profit on your product!
    You only had to alienate a large section of your customers and potential customers. Hell you even managed to piss off The USAF, so that's something at least.

  • Odd.... (Score:2, Insightful)

    by Jae686 (1203100)
    I never knew that was on Sony's mind when they lauched the ps3 ? What were they expecting, brand loyalty ?
    • by cowscows (103644)

      I think they bought into their own hype. They thought they could make a machine so powerful that the Xbox 360 wouldn't be able to touch it, and that people would pay a ton of money for it. They also convinced themselves that the world was hungry for Blu-ray the same way that it had been for DVDs.

      It turned out that $500-$600 was excessive for many people, the Cell processor didn't provide an insurmountable advantage, and PS3 games are not always graphically superior to 360 games. And while the Blu-ray player

      • Yeah, I'm one of SCEfoo's hardcore fans, GAP member and everything. If they'd have asked me back in the PS2 era what kind of features I would have wanted in the PS3 I would have said:

        1. HD output.
        2. Ability to run Linux out of the Box with no additional hardware required.
        3. built in hard drive.
        4. built in memory stick reader
        5. at least 4 USB ports.
        6. PS2/PS1 compatibility.
        7. PS3 versions of the PS2 Japan only BBN features (web browser, CD ripping, video, demos, downloads)

        So they listened to people like me

  • To make this profit, though, Sony had to cut a few features from consoles (retroactively for already-sold ones as well, unfortunately):

    * Linux can't be used anymore (we already know about this one)
    * Blu-ray playback now includes commercials every 15 minutes
    * When connected to the Internet, you must allow it to be a node in a botnet, or online play will be disabled
    * To save cost, gaphics are now displayed as in The Matrix, but they say you'll quickly be able to see everything in 3D with some practice

    • by elrous0 (869638) *
      You forget section 54-A of the new PSN Terms of Service: "Sony reserves the right to take possession of purchaser's first-born offspring at any time."
  • I wonder how much sony makes on average per PS3 sold. I guess the bulk income must be from licensing of games and such, since the hw hasn't turned a profit until now. Are there numbers on this?
  • I was going to build a new gaming PC, but I already have MANY other PCs in my house and I thought to myself:
    - Do I need another general purpose computing device?
    - To make it a good gaming PC to play latest titles with decent graphics, I need to shell out at least 500 or more (add another 100-150 for a monitor, luckily I was just going to hook it to a TV)
    - Can i get similar media solutions on non-PCs

    The PS3, at least for me, was already designed for gaming, decent with media (and hook to media servers -
    • by Reapman (740286)

      Reading your list, I'm curiious why you went with PlayOn as a media server when it costs money.. I stream just about everything possible via MediaTomb for free.. Any DLNA or uPNP based server will work. PS3 doesn't read MKV's but a lot of the servers transcode on the fly now (won't work well for 10g 1080p movies tho..)

      There's another server... Playstation Media Server or something? Can find with google that works really well (but requires a GUI or Windows which my Linux Server doesn't have)

      • by revlayle (964221)
        Really, i went with play on as that was all I knew and found. I will try something else if they work well also. I actually hadn't bought my first year of PlayOn yet (just finished the trial), but their support is pretty good. Thanks for the other options, however!
        • by Reapman (740286)

          Further to my post..
          http://mediatomb.cc/ [mediatomb.cc]
          That's what I use.. it's not very user friendly but very customizable.. I have it (almost) setup exactlly how I want it, and doesn't require much

          Playstation Media Server is what I recommend when people want something that just works, and the media server is a Windows Box (also runs OSX and Linux I believe). Seems pretty sweet honestly, but haven't tried it myself.
          http://ps3mediaserver.blogspot.com/ [blogspot.com]
          or
          http://code.google.com/p/ps3mediaserver/ [google.com]

          Good luck, if you go with Me

  • for all the fscking 60GB units that finally overheated and died this year.
    • Tell me about it. PSU just blew on my machine yesterday. Sending it for repairs hell if I am going to give up the PS2 hardware being integrated in to my system.
  • This would be a good time then, to re-enable OtherOS again.
    Universities that buy ps3 farms would no longer hurt them, but help them instead.

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