Interesting reads, thanks. I knew it was bad, just not that bad.
I hope they just bail out of handhelds [very soon] and focus on PS4. But Vita has already hurt that pretty bad I assume.
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The Ten Years Decline of Sony
- Thread starter Canis lupus
- Start date
Interesting reads, thanks. I knew it was bad, just not that bad.
I hope they just bail out of handhelds [very soon] and focus on PS4. But Vita has already hurt that pretty bad I assume.
But to be fair, Valve's engineers aren't creating hardware prroducts for the mass market (*yet). When it comes to consumer hardware, considerations of design, cost, and appropriate fit with emerging trends are indeed of greater importance than the technical specs on paper, and engineers are likely to be focused squarely on the latter to the potential detriment of the former (as the article suggests with the costs of the PS3).
Iacobellis
Junior Member
PS3 was a complete disaster for Sony. PS2 R&D and timeline was pretty much perfect. Looks like Kaz Kuturagi went crazy with the budget and over engineering.
Did Ken and Kaz adopt a child?
It's a viable business right now because it generates returns.
You cannot "cash out" the losses at the start of the gen by abandoning the business. Those are sunk costs. Good or bad, they do not impact your perspective on the future. Only the ongoing business does. And that's why it's completely unreasonable to assume a currently healthy division will get the axe.
Have several seats. I guess having one of the best launch line ups in history doesn't mean anything. Your personal taste (or lack there of) on the vita line up shouldn't be forced on others that like their vitas and the games coming out. I am awaiting Miku in the mail. Vita is jam packed after October and you will deal.
It also holds about $100 billion dollars worth of Sony's liabilities.
It is quite dishonest to compare the liabilities of a company involved in the finance industry to those of companies that aren't.
If we ignore reality, it will go away!
A concise and precise statement. Accurate too, I'm guessing.
All the evidence points to Sony losing money on the Vita hardware, and yes she is right, Sony have still not learned their lessons from the PS3.
PopcornMegaphone
Banned
I'll also add - now that it's selling like shit, the projected economies of scale savings aren't going to be there.
I find it really unlikely that Sony will keep their development and publishing as a third party. Aside from Gran Turismo Sony's first parties make games that are not justifiable if they are not first party showcases paid for by COD and GTA license fees.
thehypocrite
Member
It's also the end of the generation, the time when they expected PS3 to be recovering the billions of dollars they invested into it. Instead, they're barely eeking out any profit (they made 47 billion yen in 2011, only to lose 25 billion yen in the first quarter of 2012). Even if they're making some small amount now, the equation changes with the start of the next generation.
Economies of scale don't hold only for devices built with custom parts.
Stupidest post I've read in this thread. Finances matter, no matter how ignorant you want to be about them.
Microsoft's next system being the safe choice for next generation is pretty much a given unless they really screw up public perception by stumbling on win8 integration kinect or something. If MS puts out something that connects with the 360 userbase it is in the default win position. Again though it was expected that the PS3 would be like this but Sony made all those mistakes.
StoppedInTracks
Member
It already did. Last gen it was Microsoft, this gen it is called Apple.
Opus Angelorum
Member
The problem for Sony (in the context of that eye opening graph) is that 2010 will be the only positive operating income to be seen for a while. The research and development costs of both the PSVita and PS4 will ensure at least another three years of negative numbers.
As as company Sony are fine for now, but if the PS4 begins a similar life to the PS3...I think the slightly hyperbolic 'they are doomed' posts may actually be warranted.
Sony need to hit the ground running, no mistakes.
As as company Sony are fine for now, but if the PS4 begins a similar life to the PS3...I think the slightly hyperbolic 'they are doomed' posts may actually be warranted.
Sony need to hit the ground running, no mistakes.
PopcornMegaphone
Banned
Not true. For example, savings from buying in bulk, production and marketing can all increase the per unit costs if sales don't meet projections.
People talk about the loss of marketshare but I don't think it has as much impact on their future business and ability to move forward as people think. I mean Sony has had a monopolistic grasp on the console market for the better part of a decade. Thats not normal at all. Going from first to last is alarming but alot of it is regression to a mean, they just regressed a bit more.
There is still a pretty sizable market for PlayStation consoles. The PS3 has been the best selling console for two consecutive years and could possibly hit 100mill consoles sold by the end of it(so could the other two). Something that never get thrown out but has to be factored in is that they have also sold 50+mill PS2's since PS3 launched.
They have the money to put out a great product. They have a formula that can move systems. What their main focus needs to be is how they can make a leaner product that makes margins relatively early.
Having said that, I still don't see the basis for saying that they would pull out of the console game completely by next-gens end. Certainly not on the merit of their current console performance(unless you expect the PS4 to inject PS3 level losses).
There is still a pretty sizable market for PlayStation consoles. The PS3 has been the best selling console for two consecutive years and could possibly hit 100mill consoles sold by the end of it(so could the other two). Something that never get thrown out but has to be factored in is that they have also sold 50+mill PS2's since PS3 launched.
They have the money to put out a great product. They have a formula that can move systems. What their main focus needs to be is how they can make a leaner product that makes margins relatively early.
Having said that, I still don't see the basis for saying that they would pull out of the console game completely by next-gens end. Certainly not on the merit of their current console performance(unless you expect the PS4 to inject PS3 level losses).
Father_Brain
Banned
I'm under the impression that it used customized versions of off-the-shelf parts, not completely off-the-shelf, but I could be wrong. Either way, the economy of scale would require Vita to be continuously manufactured in large quantities for a decent length of time, which has probably not been the case given that only 400K units were shipped worldwide in the entire April-June quarter.
thehypocrite
Member
Then please elaborate on how the smartphone parts present in the Vita won't benefit from the economy of scale of a growth and booming industry.
I think it will for what I stated above, I'm interested in seeing the arguments for your opinion.
FY11 was profitable for SCE also.
Opus Angelorum
Member
Is profit the same as overall operating income? Someone help me out here.
I thought we found out down the line that it wasn't.
grimshawish
Banned
Likely its going to be about the same as the 360 - not sure what that will be/cost - the hope can be as I say - next gen hardware costs aren't as high as other generational hardware jumps. Part of the 'but it'll be amazing power' is just thats the line certain people have used to back the PS3.
I don't think its impossible for someone like Sony to 'bow out' - Nintendo did it and rose to new heights. Simply put - Gaf is unimportant.
We'll see what happens I suppose; I just think its maybe better for them to take the financially stable route at the moment...or don't turn up at all.
I could elaborate, but PopocornMegaphone already answered this succinctly.
A lot of Sony's problems are because it's too big of a company. They try to do too many things, and they keep buying companies every year which makes them even bigger.
Even if the gaming division does well, the problem is other divisions can bankrupt Sony. So even if PS4 does well, Sony basically has a juggling act with all of their other divisions and assets.
You look at a company like Apple and they seem to have a few core focuses like ipod, ipad, and macs. By focusing on certain products, it's really helped Apple.
Sony on the other hand is movies, music, financial services, computers, game consoles, mobile devices, televisions, bluray players etc. Just juggling too many things without any real focus or clear direction.
PopcornMegaphone
Banned
Those parts will benefit with economies of scale, however Sony may not get a full bulk discount due to lower orders of those parts. But those are not the only costs I was referring to. See my post above.
To simplify it, yes. FY11 was +375mill USD
The original report(from somewhere that wasn't sony) that said they lost money was false, we later got from the official Q1 2012 reports the correct numbers.
thehypocrite
Member
I think you overestimate bulk and quantities. 400k of anything is a very large number on itself. Not every product is a juggernaut, however we have a lot of variety in the market of low priced gadgets that don't sell 400k.
Nonetheless please don't interpret the statement above as if I'm trying to say the Vita is in a good position, I just think its more than enough to benefit from the prices in is components parts.
Taking on more debt when you're already stacked with debt sounds crazy.
Yep, or one of the worst with OG Xbox.
PopcornMegaphone
Banned
Honestly, I'm not sure what you're trying to argue anymore. No one is saying Vita doesn't use common parts. If anything, because those parts are common it will be tougher to reduce their costs further from an already low prices.
That said, when I made my economies of scale comment it was mostly in regards to marketing and idle production. There's no doubt the per unit costs of Vita are higher due to not meeting sales projections.
thehypocrite
Member
Vita and marketing? Are you kidding? We have seen that the marketing effort for Vita has been nothing special. I doubt you honestly think they are making a huge investment there. Which is the right decision to make in my opinion.
The Vita as a mass market device isn't there yet. It shouldn't be marketed as such.
Giant Panda
Member
I expect that we should start seeing changes in how Sony behaves soon, if in fact Kaz is making any changes. He's had the opportunity to learn the ropes now.
Yes, difference is that Nintendo increased their profits in the transition.
Good old Yamauchi.
I think you are missing his point.
Opus Angelorum
Member
Sony spent $50m for the launch of PSVita:
John Koller said:
They seem(ed) pretty serious.
PopcornMegaphone
Banned
Well, Sony certainly positioned it as a mass market device...
Sony’s marketing chief: PlayStation Vita to be biggest marketing spend ever in U.S.
Sony's Vita launch budget was 50m, which means the marketing cost has been over 50 dollars for each unit sold in the U.S. (they haven't sold over 1m yet). If they had sold more units, the per unit marketing costs would have been lower - that's economies of scale.
edit - math typo
thehypocrite
Member
Idle production? You think that Vita is made on a dedicated factory? I just see unsubstantiated speculation in your posts.
I don't think the Vita is a factor in Sony's fortunes, we shouldn't be fixated on it.
Father_Brain
Banned
I don't understand that Koller quote, since Googling quickly turns up articles from 2006 reporting that PS3 in fact had three times ($150m) the launch marketing budget that Vita did.
PopcornMegaphone
Banned
You're trying to put words in my mouth. I'm telling you Vita's not being produced is raising Sony's cost per unit.
I think Vita says a lot about Sony's mindset in their gaming division. They're following a playbook from 10 years ago.
Me either. It's like Sony forgot their own numbers/figures.
PopcornMegaphone
Banned
It could be US vs WW budget. I don't know.
Regardless, I was more interested in the 50m number.
Xbox 1: $3.7 billion lost
PS3: $4.7 billion lost
http://neogaf.net/forum/showpost.php?p=19625436&postcount=90
Vita is not exempt from the rules of economics. Note that I'm only quoting one of your posts but I'm responding to the last several.
SniperHunter
Banned
They have already learned, Kaz Kuturagi is gone and it seems like PS4 will be built using mostly off the shelf PC parts. The GPU might be customized though.
In that case it never should have been made.
thehypocrite
Member
50 millions on a new hardware launch? That's not a lot of money. We have several software/movies launched every year whose marketing budget is order of magnitudes higher. I don't want to compare it to Apple, Microsoft, Nintendo, Samsung or Google. That's pocket change guys if you're looking for mass market penetration.
True, but I'll believe they've learnt their lesson when we know the price of PS4 vs. the cost of it.
I don't see why you say this? Its a relatively low risk, moderate reward product. They have done better than any of Nintendo's competitors in the portable market, why not try to expand?