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Sebastiano
02-09-2006, 09:15 PM
Could the Playstation 3 Kill Sony?
Category: Industry Buzz - February 09, 2006

As we quickly approach E3 in May, many people are eagerly anticipating more details on the Sony PS3. Since Sony burst onto the gaming scene with the original Playstation, they have been the company to beat in the console wars. As a matter of fact, while the rest of Sony has struggled, the Playstation division has been a cash cow that the rest of the company has relied on. With Microsoft having already launched the Xbox 360 to overwhelming demand, many are wondering what the counter from Sony will truly look like, hype set aside. It wouldn't be exaggerating to say that Sony is betting a large hand on the Playstation 3. It's not just the Playstation division that's making the bet, either. With the next-gen Hi-Def format war still raging, Sony is betting a substantial portion of it's future on Blu-Ray. While most analysts agree that HD-DVD will not likely win, some analysts are openly wondering whether Blu-Ray will as well. If it doesn't, Sony could be in serious trouble.
Isn't This Thing Supposed to Play Games First?

In order for Sony's Trojan Horse strategy with Blu-Ray to work, the Playstation 3 has to succeed as a gaming console. As a game console, the Playstation 3 has to deliver on several fronts. In pure horsepower and graphical ability, there's little doubt that the console will impress. There are serious reservations as to Sony's online strategy (compared to Xbox Live) and we'll cover that in a bit. However, one aspect of gaming that is often ignored, but can become a major issue is load times. Ask any Sony PSP owner what annoys them most about the portable console and you are sure to hear about it's dreadful load times. Gamers are an impatient breed and if Sony frustrates hardcore gamers - and developers, for that matter - it could greatly damage it's reputation with the group that will comprise PS3 early adopters.

Until now, it's been widely assumed that the Blu-ray drive that will make it's way into the PS3 will be single-speed. If true, this choice could be disasterous. Blu-ray single speed transfers data at a constant rate of 36Mbps (Megabits per second) or 4.5 MBps (Megabytes per second). Sound impressive? Think again. DVD single speed is rated at a little over 1.32MBps max. A 12X DVD, such as the one in the Xbox 360, transfers data at rates between 8.2 and 16.5 MBps for an average of around 13MBps. This article from Gamespot provides all the details on transfer speeds, but simple math should show that there are some serious concerns looming with a single speed Blu-Ray drive. So, all things being equal, a 20 second load-time on the Xbox 360 would equate to just under 60 seconds on the PS3!

In order for Sony to bring load times into the same range as the Xbox 360, it would have to use at least a 2X drive (which would transfer a little faster than a 12X DVD's minimum speed) or a 3X drive (which would closely resemble a 12X DVD's average transfer rate). Since Blu-ray is a new technology, it's a certainty that the faster speeds will increase the base cost of the PS3, which leads into the next point.
Money Doesn't Grow on Trees
The Playstation 3 will lose money for at least a few years. How much and for how long is key, and recent projections from Merrill Lynch Japan suggest that the PS3 could lose a tremendous amount of money for Sony in the first few years. Merrill Lynch is projecting losses of 1.18 billion in year 1, 730 million in year 2 and 457 million in year 3. By comparison, Sony's profits in the past three years has been about 1.86 billion. If the PS3 doesn't start turning a serious profit in year 4, Sony's bank accounts could start drying up. There's no indication if these losses also anticipate the costs involved with setting up the massive infrastructure for an Xbox Live competitor, which most people think Sony will provide. If not, Sony's losses could skyrocket even more as it looks to create a brand-new online presense.

Sony could try to offset these losses by launching the PS3 with a higher price point, but anything above $500 is considered too high for wide adoption. Will consumers agree with Ken Kutaragi's assessment that you will want to work an extra job to have one? Kutaragi has even lamented "…the PS3 can't be offered at a price that's targeted towards households."

Additionally, Sony is stil having to compete with HD-DVD, which is getting significant backing from Microsoft (and their 37 billion in cash). Whereas Microsoft has little to lose if HD-DVD fails, Sony has everything to lose. Additionally, recent announcements at CES in January indicate that the least expensive Blu-Ray drives will start at $1000 while HD-DVD is hitting the market with players starting at $500. Many analysts saw these changes as giving HD-DVD a second-wind that could ultimately hurt Sony more than it helps HD-DVD, which leads to another point.
Tell Me Why I Need Blu-Ray More Than DVD?

Unless you have an HDTV set, you'll never see the difference between Blu-Ray and DVD. And considering that Hi-Def adoption is currently at 24% and more than half of consumers are waiting for price drops, the target market for Blu-Ray is not as lucrative as one might believe. When DVDs hit the market, there were several reasons to purchase them. For one, the quality far surpassed VHS. Additionally, menus and extra features made DVD content easier to access and gave it more value. Also, DVDs don't degrade in quality over time, making them a better long-term investment. The jump from DVD to Blu-Ray (or HD-DVD) is not as significant, unless you're an HDTV owner. Even then, the question remains: Is Blu-Ray content going to be compelling enough to make me say "I have to have it?"

Recent announcements also suggest that Blu-Ray disc prices will come at a significant premium over existing DVD prices. With broadband adoption growing rapidly, one also has to ask if a physical format has a long life ahead of it. Bill Gates has publicly stated that he thinks the format war is the last we'll see, because hi-def content will be soon be delivered over the Internet instead. HD-DVD may not win the war, but it doesn't mean that Blu-ray will.

Games, Games, Games
The Playstation 3 has wide support right now. However, rumblings have been surfacing that the PS3 is hard to develop for, due to the complexity of a brand new processor with multiple cores. Similar criticisms arose with the PS2, and while Sony was able to overcome the same hurdles then, there is one major difference now that may keep history from repeating itself: the Xbox 360.
Since the original Xbox came into the game a good bit later than the PS2, developers had to stick with Sony because it was the clear market leader. This afforded Sony liberties that it may not have had otherwise. Now, Microsoft has the head start. Additionally, the Microsoft unit has already been praised by the likes of John Carmack (creator of Doom, Quake, etc...) for it's great development environment, while Hideo Kojima of Metal Gear Solid fame has expressed some concerns that development for the PS3 could be more difficult than for the Xbox 360. Sony must have strong 3rd party support so that licensing fees will help recoup the costs of putting the PS3 into the market. Just being Sony may not be enough anymore.

Conclusion
While I don't think we'll see Sony close it's doors for good, I have some concerns about the affect the PS3 could have on Sony's financials over the next few years and into the future. Microsoft has created an impressive console with the Xbox 360 and while Sony has a strong history in the Playstation line, there are key components for concern. Blu-Ray, an online service like Xbox Live and a hard development environment create additional areas for financial loss that may not be recouped. For the sake of competition and a strong market, let's hope Sony can address these concerns

LINK (http://www.ehomeupgrade.com/entry/2100/could_the_playstation)

xbdestroya
02-09-2006, 09:21 PM
Oh man...

woundingchaney
02-09-2006, 09:24 PM
You dont know what you have done, do you Seb :buldge:

Sebastiano
02-09-2006, 09:29 PM
You dont know what you have done, do you Seb :buldge:
:honor:

I personally don't agree with the article, but I figure this would be a good place to dissect it LOL

Infernal
02-09-2006, 09:31 PM
These articles pop out faster than babies... Anyway i'm not even going to bother to comment, I will just say that there is so many flaws in that article that its not worth a comment.

Viper
02-09-2006, 09:33 PM
It has some validity but it needed to clarify on much of it. It leaves readers with a less rosy picture than it should have.

True, Sony could be in trouble if things go south but some of those factors aren't as bleak as made out to be.

xbdestroya
02-09-2006, 09:35 PM
Well, the article is built up on a lot of specious premises - the Merrill estimates, Carmack's console preference, etc etc...

I mean I have to say the guy seems to be a big Microsoft fan - not that that automatically would deem anything he says incorrect mind you - it's just I don't see what Bill Gates saying digital distribution is around the corner actually has to do with digital distribution being around the corner.

I *will* say this: it is far more important to Sony that Blu-ray be included inside PS3 than it not be, so if this entire article is more or less focused on the 'boon-doggle' that is Blu-ray inclusion, they are really approaching it from a misguided direction.

Coded-Dude
02-09-2006, 09:41 PM
While I don't think we'll see Sony close it's doors for good, I have some concerns about the affect the PS3 could have on Sony's financials over the next few years and into the future. Microsoft has created an impressive console with the Xbox 360 and while Sony has a strong history in the Playstation line, there are key components for concern.
Sounds biased......like someone regergitating old all too familiar rhetoric

Viper
02-09-2006, 09:43 PM
I think they went for the Sony low margin for error angle and kinda missed.

They went with the easily referrence data instead of digging deep. Some concerns were legit but not really given an real reasons why. Others were obviously just BS and speculation.

Leedogg
02-09-2006, 09:49 PM
first of all ehomeupgrade.com I have never heard of it. I am so sick and tired of all this bs by the media. All these what if statements.

Here are the facts:

1. First of all, Sony builds all the parts in house (ie Cell, RSX, Blu-Ray drive, etc) The statement of not being profitable for 4 years. Is totally BS.
2. It has already been stated that the drive will atleast be a 2x possibly being a 4x.
3. and finally, If the Xbox 360 is so much better well then why is it not in stock?

I know that last one didn't make sense but I'm pissed. :realmad:

But hey it'll be all cleared up in a couple weeks.

xbdestroya
02-09-2006, 09:49 PM
I don't know, I mean *of course* PS3 could tank and drag the company down with it, but the case for that argument is based on too many unknowns. What's known though is that Sony finds themselves in a very competetive environment right now on a number of fronts, and in that light I think Sony's 'all-out' strategy with PS3 makes perfect sense; there's simply too much opportunity there to help out other divisions to leave it alone.

I find it interesting that the author is not concerned at all about the Home and Entertainment division's obstacles and historically high losses; it's enough for him to say Microsoft has built a "good console" and be done with it. I mean... and they have built a "good console" - and I also agree that Microsoft can weather the pain in a way Sony can't. But I think if the financial performance of the console division is his ultimate end-point with the article, there is a lot of cognitive dissonance going on to raise Microsoft up as the exemplar and Sony as the student.

Phryne Astynome
02-09-2006, 09:51 PM
Microsoft doesn't have 37 billion dollars in cash reserves. They have been giving out dividends recently and right now they are only sitting on 5 billion in cash. The balance sheet shows they have only 5 billion in cash while their cash flow show their dividends. Their dividends are gigantic to put it simply.

Here is the balance sheet: http://www.hoovers.com/microsoft/--ID__14120,period__A--/free-co-fin-balance.xhtml

Cash Flow Statement:
http://www.hoovers.com/microsoft/--ID__14120,period__A--/free-co-fin-cash.xhtml

Lots of errors in this "business" article and it is obvious he does not even have a basic accounting background. They should know that Microsoft recently (in 2004) began paying dividends. In fact that 37 billion dollars cash reserve is long gone.

PS. Please don't say Sony has 60 billion dollars in debt.

Viper
02-09-2006, 09:56 PM
If they are down to $5 billion and the x360 has one or two repeat years of the Xbox, it's history.

Even Nintendo has $9 billion in cash.


XBD, I agree that Sony has a form of checks and balances that if one end fails, the others can keep it afloat. It would take a bad fall from pretty much the whole thing to really hurt them.

xbdestroya
02-09-2006, 10:00 PM
XBD, I agree that Sony has a form of checks and balances that if one end fails, the others can keep it afloat. It would take a bad fall from pretty much the whole thing to really hurt them.

Well that's not really what I was saying even, just rather that the upside potential of a broad PS3 strategy is a lot higher than the downside potential is low.

NoZ
02-09-2006, 10:01 PM
Its mainly all speculation. Like alot of articles it is biased.

version
02-09-2006, 10:02 PM
ps3 kill m$ not sony :D

Viper
02-09-2006, 10:02 PM
EDIT@XBD
Oh, well yeah, that's true. It's obviously got more potential to do well than to fail. I don't even think that article was trying to say it was more possible to fail that be successful.

xbdestroya
02-09-2006, 10:08 PM
EDIT@XBD
Oh, well yeah, that's true. It's obviously got more potential to do well than to fail. I don't even think that article was trying to say it was more possible to fail that be successful.

Right that's along the lines of what I was saying... and even beyond that, if PS3 fails, wouldn't it have failed anyway? If PS3 fails, I'm pretty sure it won't be because Blu-ray was included, but just because it failed in general. And then what Sony will be doing is eating the extra expense of Blu-ray drives - so a bigger loss than otherwise, but I mean...

Now... if PS3 succeeds and includes Blu-ray, LocationFree, etc... that has the potential to truly springboard those various initiatives, and it's a potential that IMO totally justifies their inclusion in the system, even though some might consider it 'non-gaming fluff.'

jaxmkii
02-09-2006, 10:41 PM
yea... about that.... once i saw his sorces for info i stoped reading

Phryne Astynome
02-09-2006, 10:45 PM
The thing that really angers me about some of these articles is that most use second hand sources for their arguments. I would prefer it if these writers go to the SEC website or etc. and look at the financial statements to analyze the situation on their own.

To Viper:
I will admit I am not a big Nintendo fan but I do recognize Nintendo won't be exiting the market anytime soon. Their biggest problem is a falling market share in the home console market but other than that, their financial status is fine (that is if you bother to read their statements).

To Everyone:
If anyone here is planning to invest in securities, I HIGHLY HIGHLY suggest that you learn basic accounting principles so you can invest in them on your own. You need to learn these principles so you can invest wisely and not be misled by the sensationalistic media. That is IF you don't know these principles. If you do, you are fine.
To some of the people, companies can fail and shut down even if they are profitable FYI. Why does this happen: check the cash flow statement and you can gauge why it happen. It happened during the dot-com boom.

Sorry for going off-topic I just wanted to give my 2 cents on these financial articles and etc. and give advice to people who read them.

Luis
02-09-2006, 10:56 PM
Sony has already created two home consoles which have sold 200+ million units (most of them on profit) combined. PS2 still sells really well (totally on profit) and PSP base is growing nicely. Even though PS3 contains expensive components and game development should be more expensive than before, I'm sure they will be able to make a profit out of it sooner than any analyst could have ever expected.

I'm afraid all the pessimism is grounded on the lack of information from Sony. They will manage to surprise these people when PS3 succeeds just as much or more than its predecessors.

Viper
02-09-2006, 11:05 PM
To Viper:
I will admit I am not a big Nintendo fan but I do recognize Nintendo won't be exiting the market anytime soon. Their biggest problem is a falling market share in the home console market but other than that, their financial status is fine (that is if you bother to read their statements).
Not only do I read theirs but Sony and MS as well. I've posted the past 2 years of quarterly financial data in a thread recently.

Most people assume that MS H&E can just tap into the big pocket of cash but it doesn't work that way as I'm sure you already know. Most people don't understand operating income within a division even if the overal company posts combined profits that are much higher. Losses get eaten up by other divisions operating profits. MS is by far the closest to being out of the hardware business. Notice how they are selling a million and one accessories at rediculous costs? Poor attempt to offset subsidizing and recoup losses.

xbdestroya
02-09-2006, 11:12 PM
Not off-topic at all Phryne. In fact you make a great point in that ostensibly it's the responsibility of an author to go back to primary sources in order to build context, rather than simply using the suppositions of others when they are convenient to the argument being made and assuming them to be true. Going to primary was something this author was either unable or unwilling to do.

And of course beyond the would-be responsibility of the author - which is really an ideal more than anything - it's up to the reader to ultimately decide whether to buy into the argument being made or not. Caveat emptor afterall....

Ben-N1ce
02-09-2006, 11:17 PM
According to the Blu-ray Disc specification, 1x speed is defined as 36Mbps. However, as BD-ROM movies will require a 54Mbps data transfer rate the minimum speed we're expecting to see is 2x (72Mbps).


So wouldn't it have to be at least 2X speed or you couldn't even play a movie?

xbdestroya
02-09-2006, 11:23 PM
We've gone over the Blu-ray spec a couple of times and I think that there was in fact a way that a Blu-ray movie could be played at lower than 2x speeds. Someone correct me if I'm off on this one, I don't pay much attention to that whole transfer rate thing. :)

But either way, I expect at least a 2x drive in PS3 regardless.

Not to mention, if you're coming from the direction of the articles claims on load time, I expect most games to be on DVD anyway (at least for the beginning), so I don't see where Blu-rays's slower net transfer rate is even relevent; they'll be using DVDs and accessing at the same speeds. The fact that the author would even hinge the possibility of PS3's failure on longer load times is preposterous, though I do understand he's coming from the angle of "why do Blu-ray if it's worse?"

tazz3
02-09-2006, 11:50 PM
sony has a lot of money.
the PS3 will not kill sony.

Mitri
02-10-2006, 02:25 AM
sony has a lot of money.
the PS3 will not kill sony.

i have money too. the ps3 after being finished and finalised in the gamestop window will kill me. so it is possible for it to kill sony. a price to steep will sell the 360. you think a minimum wage employee is going to save up 4-6 paychecks for a console when they can buy a car? (i have to save up 3 checks for the 360 and some games.)

i think you all have to much faith in Sony. i really do. i know all the parts are made by sony but does anyone know how much of a department it would take to make 100million ps3's? that's just a guess by all the people who already own a ps2. does anyone know how much it costs to make all those in house parts, then pay the employees, then the bills(example electricity), publicity, their development team, online, all those extra net features they are trying to implement(some may be free but not all. they have to milk someone.) does anyone see where i'm coming from? don't just bash me. someone answer the question with some sense.(and no i am no fanboy =. i am one of the 100million+ ps2 owners.)

venomv
02-10-2006, 02:31 AM
Yes it costs a lot to make all those parts, but it's costs more to pay someone for all those parts,

masonite
02-10-2006, 02:37 AM
^^what kind of car cost less than $500? definately not one that runs.

take those 100 million consoles made "in-house" and add on royalties and profits. that's how much it costs to make them if you're a software company, and you're out-sourcing.

it's entirely possible for the ps3 to kill sony, but the chance of that happening is so unlikely it's no even worth worrying about, unless sony makes some kind of monumental error (again, even more unlikely). if you're going to worry about ps3 killing sony, you might as well build yourself an underground bunker and start worrying about when a huge meteor is going to crash into the earth...

Mitri
02-10-2006, 02:50 AM
^^what kind of car cost less than $500? definately not one that runs.


just an example.(ya know family hand outs and hand me downs. ya know.) you could also buy a computer, or buy another tv, or buy a 360 and buy some games, you could also get a hotel room and stripper, buy a new cell phone, etc...


it's entirely possible for the ps3 to kill sony, but the chance of that happening is so unlikely it's no even worth worrying about, unless sony makes some kind of monumental error (again, even more unlikely). if you're going to worry about ps3 killing sony, you might as well build yourself an underground bunker and start worrying about when a huge meteor is going to crash into the earth...

see what i mean. too much faith. there were many people talking like this when the SNES was the shit. then came the n64. look at nintendo now. look at sega(bad example but i'm sure you get it) they couldn't make a mistake. they did. and now that MS is in the game there is more chance for a mistake. remember alot of developers liked the xbox more too develope for but the install base was too small to make a profit.(look at square(before the enix) they wanted to put games on the xbox until they were (somewhat)bought by sony. look how fast ff11 was transfered to the 360 and look how fast they already have 2-3 games in development for it.

Sony may not mess up as big as nintendo or sega did but it is still a possibility that MS with its devs(according to some the ease of development makes them more prone to the 360) and price tag(possible advantage) could rise up.

venomv
02-10-2006, 02:56 AM
But the world is a differnt place now, Sony has more guarenteed sales then Nintendo or Sega had costumers then, so the chances are even slimmer now.

Red_Eyes
02-10-2006, 03:52 AM
What if PS3 doesn't fail? Then what? What happen to Microsoft and Nintendo then? What if Xbox 360 fails? Will that bring down Microsoft too?

Viper
02-10-2006, 04:01 AM
If the X360 fails, I'm quite sure that's it for MS. Too much money lost.

If the Rev fails, they'll try again but with a low price and the most loyal, if not insane, fans it has the least likely chance to financially fail. The GC was 3rd place but made the most profit so don't worry about failing to make profit, they always do.


Sony is putting a lot of eggs in one basket and that's really the risk. It's doubtful they'll fail financially but that's their risk is that if by some meterological miracle it does fail, they've kinda bet the farm with this one.

gnznroses
02-10-2006, 04:42 AM
well, as well all know, ps3 is not gonna fail. tho i do wonder about all the money they're gonna be losing on it.

joelcool7
02-10-2006, 04:52 AM
With Sony's 60+ Billion dollar dept yeah I can assume the failure of the PS3 could sink Sony but not drown them.

Sony's networth is in the negative because while Sony makes enough profit to pay intrest they have to pump their other funds in to their many other operations to keep the company alive.

What would happen if PS3 sold around 10-Million units, Sony would be forced to sell out MGM/BMG/Revolution/ColumbiaTristar and most likely their toilet and dairy companies as well. After selling off most of their branches leaving only their hardware branches they could probubly manage to avoid for closure long enough to launch the PS4.

In other words if PS3 fails bye bye Sony monopoly, all in all it would be great for the industry to be balanced out again without one company owning around 65% of the entire entertainment industry. It'll be good for Sony to be cut down to a reasonable size. At the moment Sony dictates everything that happens in the market but if they get cut down their will be room for competition and improvement in the industry. I don't want Sony to go under but I do want them to take a very heavy blow so that balance is restored like it was back in the Sega and Nintendo days

rpgamer_2k5
02-10-2006, 05:17 AM
60 billion debt? Are you sure? Sony's revenue is around that figure per annum.

As for the PS3 costing a fortune... BS once again. There has not been one individual who could prove (logically, no magic) that the PS3 is going to cost $700, 2k or more.

The Blu-Ray player is not going to have a cost significantly different from the PS2 DVD player when released. The drive is going to be mass-produced and it's quite bare. Cell isn't that expensive and is probably comparable to the Xenon at worst. If the RSX is a G70 derivative, it will be very cheap, since the dev't line is up, meaning that investment requirements won't be high. If that is not the case (RSX = non-G70 GPU) then the cost would be similar to the GS.

That is why I believe that the RSX will be a G70 variant at times. Sony could significantly reduce the cost to manufacture the GPU. Just think about it, this time Nvidia really oversees the manufacturing of the Geforce 7800GTX. All the parts are manufactured in an identical manner. The manufacturers along with Nvidia probably found many ways to increase yields significantly. It shouldn't be hard for Sony to adopt these innovations.

Digressing significantly...blah. PS3's cost will not departure from the PS2's value. :)

Phryne Astynome
02-10-2006, 05:24 AM
With Sony's 60+ Billion dollar dept yeah I can assume the failure of the PS3 could sink Sony but not drown them.

Sony's networth is in the negative because while Sony makes enough profit to pay intrest they have to pump their other funds in to their many other operations to keep the company alive.

What would happen if PS3 sold around 10-Million units, Sony would be forced to sell out MGM/BMG/Revolution/ColumbiaTristar and most likely their toilet and dairy companies as well. After selling off most of their branches leaving only their hardware branches they could probubly manage to avoid for closure long enough to launch the PS4.

In other words if PS3 fails bye bye Sony monopoly, all in all it would be great for the industry to be balanced out again without one company owning around 65% of the entire entertainment industry. It'll be good for Sony to be cut down to a reasonable size. At the moment Sony dictates everything that happens in the market but if they get cut down their will be room for competition and improvement in the industry. I don't want Sony to go under but I do want them to take a very heavy blow so that balance is restored like it was back in the Sega and Nintendo days

Here check out Sony's balance sheets:
http://www.hoovers.com/sony/--ID__41885,period__A--/free-co-fin-balance.xhtml

Sony's short term debt is 9.668 billion while their long term debt is around 6.335 billion. You are confusing liabilities with debt. Debt is a form of liability however liabilities are NOT debt.

rpgamer_2k5
02-10-2006, 05:30 AM
^^That makes more sense. I had a feeling the debt stated earlier was close to the value of their total assets.

Sony isn't dying at all. They are still in the red, not in a hazardous position, but they will be picking up once the changes made by Stringer comes into effect.

Phryne Astynome
02-10-2006, 05:40 AM
^^That makes more sense. I had a feeling the debt stated earlier was close to the value of their total assets.

Sony isn't dying at all. They are still in the red, not in a hazardous position, but they will be picking up once the changes made by Stringer comes into effect.

They actually left the red already.

http://psinext.e-mpire.com/index.php?categoryid=17&m_articles_articleid=328

Viano
02-10-2006, 06:18 AM
well come on, I wouldn't mind buying it even if it costs 600 or 700(which is unlikely). I know it's not like everyone can afford the money, but on the contrary, it's just a wonderful new thing that these people have worked so long to provide you the newest technologies and experience. Just like someone would pay huge amount of money that most people will never be able to earn for riding spacecraft. If people consider the gaming is some wonderful thing to them, I dont see the reason not to buy PS3(or any console) even if its priced higher than other consoles since it's packed with more new technologies.

Shai-Hulud
02-10-2006, 09:07 AM
First of all, we are talkong about the company who made the frickin`walkman for crying out loud! they will NOT be killed off, even if the PS3 fails miserably. one of the big reasons being that most of the technology they have developed for the ps3 will be used in many other areas. Take cell as an example. sony will cash in a little bit on every cell sold, right...?

secondly, when talking about sega going down back in the early 00`s or whenever it was, let me tell you, they had it coming.. ok, so they marketed their Genesis\Megadrive incredibly good, and got the wind in the right direction, but when they launched three (2 1/2) rushed(ok, maybe not rushed.. anyway..) consoles in relatively rapid succession afterwards, the damage was done.
nintendo on the other hand did not go "all-in" and probably had a backup plan.. they saw sony coming and took it a bit easy. and they did not launch 50 halfway-done consoles to eat away at their bank account like sega...

Don`t get me wrong, i would really like to see sega back as i was a really big sega fan back in the 90`s. even bought the mushroom 32x genesis add-on, and it wasn`t even launched in the country where i live! (glad it was damaged-on-arrival so i had an excuse for trading it in for a playstation..)

Thirdly, any sane person should boycott what microsoft is trying to do; make a complete software\digital content provider monopoly. As i see it, that is a big factor in all of this. If microsoft somehow manages to win this generation by a relatively large margin, it doesn`t just mean a worse starting position for the other companies the next generation (by that i mean ps4 \ xbox720 or whatever. yboy for that matter), but it will be EXTREMELY difficult for any other company to enter the battle against microsoft if they have monopoly on pc os`es, digital content providing and even more cash...

we all know that microsoft`s hidden agenda is to develop SkyNet and telefrag us all through their wireless yboy 1440 gold edition controllers, and then bombing us back to the stoneage by raining nuclear death upon us, then topping it all off with a MEGA bluescreen of death type weapon.. Gross.

and you thought the vision of the future in The Terminator was bad...

Luis
02-10-2006, 09:15 AM
Why people are so pessimistic about Sony and the PS3? Most forum members here who think Sony is risking too much seem to not even consider it is very likely PS3 will succeed just like its predecessors did and its hardware sales will be profitable sooner or later, exactly like PS1 and PS2 were some time after their launch.

You have to keep in mind that PS2 will still be very profitable for Sony for the next two or three years to say the least. While they may lose money with PS3 in that period of time, PS2 will still be there giving a lot of profit and compensate the loss. PS2 hardware sales will decrease (maybe not too much? it's still selling more than most of its competition) although that doesn't mean they will stop producing it soon after PS3's release. PS2 could very well live until the end of this decade if developers' support goes on, and it will to some extent. Who would leave a 100+ million (and still growing) consoles base market totally unattended anyway?

Also, I'm not sure if PSP is totally profitable already, but I believe Sony themselves were surprised by higher than expected UMD sales. And PSP is selling well enough to believe it will be totally profitable very soon.

Honestly, thinking about all that, I don't see how the Playstation brand could possibly kill Sony anytime soon. They're reducing costs on all their divisions since Stringer is their CEO too. In my opinion, Sony will be more financially healthy in 4 or 5 years from now than it is today.

masonite
02-10-2006, 10:54 AM
sony is putting all of their eggs in one basket with the ps3, but whilst that may be risky, the pay-oof will be exceptional. the realistic worst case scenario is that the console will come in at ~$500, blu-ray won't take-off and they'll lose some market share to the other two consoles (some market share - the idea of sony selling as little as 10 million consoles is unrealistic i believe). the best case scenario is that their storage format takes off (which will mean royalties and profits as everyone takes to their format - not unrealistic, but not a particularly short-term goal either), the cost will be acceptable to the vast majority of people, and they maintain/increase market share.

someone pointed out that they want sony to take a huge blow to "balance out" the industry - to basically cut sony and the ps3 down to size. personally, i'd rather see the other two consoles increase their market share by bringing out a better product than sony, with better value, instead of waiting for sony to make a mistake so they can trot out average consoles (not saying the other two companies are doing that now, simply that if one company fails there is less incentive to improve your product as there is only one other competitor).

the only way i can see sony fail is by a monumental error - like ken putting his finger on the "start ps3 factory" button but then getting distracted and hitting the "self destruct factory" button instead...

Sephiroth_VII
02-10-2006, 01:06 PM
the only way i can see sony fail is by a monumental error - like ken putting his finger on the "start ps3 factory" button but then getting distracted and hitting the "self destruct factory" button instead...
Lol.

Ok first, please remember the blu-ray prices that were posted a little while back. In my opinion, this article is total BS. For crying out loud, it's got more spelling mistakes than the IGN board!!:doh:
Also, for the PS3 to fail, I think it would require such an event as WW3(no, not Worldwide Wrestling 3. World War 3(It's not a game)).

xbdestroya
02-10-2006, 02:58 PM
@Joelcool: Please do not come with that 'debt' talk unless you know what you are talking about. Just because you've heard that figure used all over the Internet, doesn't make it true. Primary sources people.

@Shai-Hulud: To be fair I don't think the Sony that made the Walkman has too uch to do with the Sony of today; it's a rather ironic choice actually, since they were totally outflanked by Apple in the music department. No company, no matter how 'great,' is immune to collapse. 50 years ago what would people have looked at you like if you told them the Ma Bell's and GM's would end up husks of their former selves? Technology doesn't stand still, that's for sure.

@Mitri: I'm not sure where you're coming from - obviously it costs a lot of money to create the components that go inside one of these consoles, but I mean... so what? I'll say this to you: the more PS3's they have to make, the lower the cost per console from a fixed costs perspective (fab equipment, payroll, etc...).

Shai-Hulud
02-10-2006, 04:01 PM
xb, Thanks for feedback. i just pulled the walkman thing up to remind that sony is no beginner in the market. it may be 25 to 30 years ago with the walkman business, but sony know their stuff and when they are on to a winner..

By the way, the "profits from ps2" as an argument is very valid (my opinion of course) just look what sony did with the ps1->psone. guess they made a few bucks on that move, and they still are! :-)

cliffbo
02-10-2006, 04:07 PM
In order for Sony's Trojan Horse strategy with Blu-Ray to work, the Playstation 3 has to succeed as a gaming console.
this is wrong. with stand alones set for around $800 to $1000 the PS3 would be a good purchase just to play movies.

However, one aspect of gaming that is often ignored, but can become a major issue is load times. Ask any Sony PSP owner what annoys them most about the portable console and you are sure to hear about it's dreadful load times. Gamers are an impatient breed and if Sony frustrates hardcore gamers - and developers, for that matter - it could greatly damage it's reputation with the group that will comprise PS3 early adopters.
lazy padding and not really a good point. i'd wait a week to play Killzone if it took that long to load!

Until now, it's been widely assumed that the Blu-ray drive that will make it's way into the PS3 will be single-speed. If true, this choice could be disasterous.
impossible! it will require 54 mb to play HD!

The Playstation 3 will lose money for at least a few years.
how can this be known for certain! anyway if it is true thats business as usual

Additionally, Sony is stil having to compete with HD-DVD, which is getting significant backing from Microsoft (and their 37 billion in cash). Whereas Microsoft has little to lose if HD-DVD fails, Sony has everything to lose.
an add on! ye thats backing for you. if HD-DVD fails Microsoft will have to go with Blu-ray for HD content.

Unless you have an HDTV set, you'll never see the difference between Blu-Ray and DVD. And considering that Hi-Def adoption is currently at 24% and more than half of consumers are waiting for price drops, the target market for Blu-Ray is not as lucrative as one might believe.
so what, its 'future proof' man for christ sake noone ever said you'd need to rush out and buy a HD TV!

Recent announcements also suggest that Blu-Ray disc prices will come at a significant premium over existing DVD prices. With broadband adoption growing rapidly, one also has to ask if a physical format has a long life ahead of it. Bill Gates has publicly stated that he thinks the format war is the last we'll see, because hi-def content will be soon be delivered over the Internet instead. HD-DVD may not win the war, but it doesn't mean that Blu-ray will.
thats DVD at current prices and people like to own a physical investment so disks will never be replaced entirely by downloaded content. its Bills excuse for copping out on fully supporting HD-DVD.

Games, Games, Games
The Playstation 3 has wide support right now. However, rumblings have been surfacing that the PS3 is hard to develop for, due to the complexity of a brand new processor with multiple cores.
boy am i sick of this. lazy programmers always say these things because the can't be bothered to reinvent the wheel.

Conclusion
While I don't think we'll see Sony close it's doors for good, I have some concerns about the affect the PS3 could have on Sony's financials over the next few years and into the future. Microsoft has created an impressive console with the Xbox 360 and while Sony has a strong history in the Playstation line, there are key components for concern. Blu-Ray, an online service like Xbox Live and a hard development environment create additional areas for financial loss that may not be recouped. For the sake of competition and a strong market, let's hope Sony can address these concerns
bla...bla...bla. oh well at least its an article. only news to me is that Microsoft have made a impressive console. :)

edoshin
02-10-2006, 04:16 PM
Downloaded music is cool. I don't like walking around with a 100 CDs in my backpack to play that one or two songs I like on a disc on my cd player.

I want my physical disc for movies tho. Even if I can carry around 100 movies on a HD, I still want my favorite movie sitting on my shelf.

cliffbo
02-10-2006, 04:22 PM
Downloaded music is cool. I don't like walking around with a 100 CDs in my backpack to play that one or two songs I like on a disc on my cd player.

I want my physical disc for movies tho. Even if I can carry around 100 movies on a HD, I still want my favorite movie sitting on my shelf.

exactly... unless your prepared to get an expensive printer and print the cover and the label, and buy a box and burn it. buy it man, its easier.

Luis
02-10-2006, 04:28 PM
Unless you have an HDTV set, you'll never see the difference between Blu-Ray and DVD. And considering that Hi-Def adoption is currently at 24% and more than half of consumers are waiting for price drops, the target market for Blu-Ray is not as lucrative as one might believe.That's BS. Anyone with a good enough regular TV set and good enough eyes can see the difference between DVD and superior media. I notice compression artifacts on DVD movies many times whereas I don't see so many when I watch HD streams from my PC, and I just have a decent 28" standard definition TV. I even saw compression artifacts on a 14" TV when playing DVDs, not to mention PC monitors where it is totally noticeable. By the time more people has the opportunity to compare BDs to DVDs, they'll realise there really is a difference even if they don't own an HDTV set.


Recent announcements also suggest that Blu-Ray disc prices will come at a significant premium over existing DVD prices.Well, it seems this is not very up to date. The most recent official news say that BD movies will not be more expensive than DVD titles.

sif
02-10-2006, 04:43 PM
This article loses all credibility (not that it had much to start with) as soon as it is suggested that it will take 4 years for Sony to make a profit on hardware. Anyone with a modicum of tech knowledge would know that profitibility will probably be reached upon the move to the 65nm process - on current schedules that would be less than a year of losses. I don't even know how this made 3 pages...

Viper
02-10-2006, 04:49 PM
Because that would mean the Cell becomes profitable but there are other factors that go into cost such as Blu Ray, a fully fledged Live-like online service (which cost MS a sizable chunk of money), initial marketing blitzes and more.

I'm sure it won't take 4 years but I will be in absolute shock if it makes profit on hardware within 1 year.

sif
02-10-2006, 05:10 PM
After a year though, Blu-ray will have dropped massively in price as the change over in manufacturing lines will have happened (the main cost IIRC). How quickly did DVD drop in price within a year after PS2 launch? With the online services, most of the investment is happeneing now or within a year of launch at the latest, same for marketing.

Viper
02-10-2006, 05:17 PM
After a year though, Blu-ray will have dropped massively in price as the change over in manufacturing lines will have happened (the main cost IIRC). How quickly did DVD drop in price within a year after PS2 launch? With the online services, most of the investment is happeneing now or within a year of launch at the latest, same for marketing.
DVD had been on the market for 4 years prior to PS2's launch. Blu Ray does not have that luxury. It won't have the 4 years of public knowledge and it's superiority over DVD is pale compared to DVDs superiority over VHS so even the appeal is less than what DVD had.


Regardless of when the investment comes for the online service, the losses incurred will take time to recoup. Obviously they won't be making it back up now as the console isn't even out yet.

Games, licenses, Cell products, etc...that's what will gain them profits at a faster pace. The PS3 hardware and infrastructure will still take 2 years(3 at the absolute most though I doubt that long).

xbdestroya
02-10-2006, 06:47 PM
I definitely do see PS3 as being in the black - on hardware alone - in two years time. The Blu-ray rollout is going to be all the more aggresive because it's going into PS3 - warranting a manufacturing effort that was absent in the early days of DVD. Plus as Sif mentioned, the move to 65nm will essentially halve the costs of both the Cell and RSX chip going inside the system. But I don't know, we'll see, could take longer.

Viper
02-10-2006, 06:56 PM
I'm pegging 2 years. That's not overly optimistic or pessimistic.

Domination
02-10-2006, 07:00 PM
That artical wasn't well written at all. Already, I ccould spot a number of holes. But I'm not entirely at my peak today, so I'll probably have to comment later on.

Lekko
02-10-2006, 08:16 PM
My thoughts on this is: why are they basing everything off hardware? We all know that the PS3 is sold at a loss. We know it will be "expensive". If they only sold the PS3 and nothing else, than yeah, they are sunk already. We all know that the PS3 will probably sell out day 1 of sales. The PS3 will sell. And Sony will lose money off it. This is no shock and shouldn't be to anyone.

But the question analysts should look at is software. If you buy one PS3 and one game the day it comes out (or the following weeks), than Sony looses a lot of money. However, if you bought the PS3 and 5 games and a BD movie or two, than sony will take far less of a hit, maybe even start to profit. (I have no idea how many titles Sony has to sell to break even on PS3, and right now I don't think anyone knows 'cept sony.)

Analysts are looking in the wrong direction. The only way the PS3 would tank is if there was nothing to play on it once it launches. Sony makes money off software, not hardware at first.