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[ZhugeEX]

I just realized that the number I cam up with is rather conservative. With 20.2 millions up to January the 4th, they must be at around 23 million sold in today. Would not that make their shipment in the vicinity of 24-25 millions?

20.2m as of March 1st, not January.

Thanks!
Meh! Of course it was them.

Don't trust or use their numbers for anything.

Well, highly possible. Anyway, i'm sure that Sony has great ratio sold-trough/sold-in PS4'S.

PS4 stock management has been great so far.

Do we have details regards their manufacturing levels? I know they reduced them early 2014 but obviously it takes time, dependent on the contract, how quickly that comes into effect.

ps3ud0 8)

Blimey.... now you're asking aren't you.

The short answer is that we don't know right now. But If i had to make an educated guess I'd say at this point in time we're looking at 1 million per month with ramp ups during the second half of the year.

The long answer takes us back to the PS1. So it released end of 1995 in the West. So aligned that means we're looking at 1997 vs 2015.

In 1997 Sony confirmed the capacity they had would lead to 1 million consoles being produced per month. For the first 3 months of 1997 the production capacity was 3 million. Due to high demand for the console the production capacity was increased to 1.35 units in April and then 1.50m units in May. This means by the end of Q2 1997 the theoretical production capacity for the first half of 1997 was 7.35m units. The 1.50m production capacity continued through Q3 leading to a theoretical maximum production of 11.85m consoles by the end of September 1997. For the final quarter we saw Sony raise production to 2 million consoles per month according to the Tokyo office which meant that theoretical production capacity for the full year of 1997 reached 17.85m units.

The actual number that Sony produced and shipped out of the factory was 16.6m units which wasn't too far off the maximum theoretical production capacity of 17.85m for 1997.

The PS2 started off with huge production issues in 2000 but were able to gradually sort them out in 2001 by increasing monthly productions from 1m to 1.5m. In 2002 the total number of units produced was 24.6m and Sony said they were producing 2 million per month at peak so this makes sense.

In regards to the PS3 the production shipments weren't so great early on due to production issues. They targeted 1 million per month from the get go but weren't able to achieve this straight away. We don't have many updates from Sony in regards to production capacity but it seems the maximum they every pushed production capacity to was 1.25m units in 2010 based on their internal Fukushima plant Blu-Ray production numbers for PS3.

Looking at PS4 the production was ramped up to 1 million per month in 2013 (H2) to cater for the high demand and it's believed/estimated that this was ramped up to 1.4m per month in H2 2014. Although it's hard to say with PS4 because they haven't been forthcoming.

 

[jryi]

2. To the people that think sony has a 10 million unit lead, people shouldn't forget that the xbone didn't launch in nearly as many regions as PS4 on launch. I think its closer to a 6 or 7 million lead at this point.

Oh, we are back to this. Although, I don't understand what number of launch countries in holiday season 2013 has to do with shipments through March 2015.

Sony announced 20 millions in early January...Surely they must be around 22 millions sold in right now, and north of 23 millions provided to retailers?

I bet that Sony tries to be very accurate with their forecasts and only ships what gets sold through. In other words, whatever their shipment number turns out to be for the quarter, that is also how much retailers have sold to consumers. There is really no reason to continuously overship; once you have the buffer stock, you should keep the level relatively stable.

Also, I would appreciate it, if people used consistent terminology.

Shipped = sold in = what Sony/MS has dispatched from their warehouses.
Sold = sold through = what has actually ended up at consumer hands. (Of course, to be precise, "sold" alone causes confusion, so avoid it in sales talk.)

Helps everybody understand each other.

 

[justsomeguy]

There is a reason - you need a PC that can run actual version of Windows. Companies do not work on non-supported versions so they are replacing their PC regulary. And it was in this way for many years.
Corporate part do as they usually did (except they are switching to notebooks)

Corporates sit on non-supported versions for a depressing amount of time - still plenty of companies on XP, believe it or not.

 

[El-Pistolero]

I stand corrected on the issue of the announcement date for the 20 million consoles sold-through, Zhu. I guess I am growing senile... :-(

@jiryi : Yes, I meant sold-through and not sold-in. I knwo that Sony has embraced that angle when to communicating about their sales owing to the success of the console, MS hanging to the shipped numbers for the exact opposite reason (and lumping the 360 and the Xbox One together, just like Sony does it Vita).

 

[Marlenus]

I am talking about general PC sales, not a gaming PC sales. And in general PC sales there is a clear trend to go from desktop power-hungry PC (those sales dropping like a rock) to small and light notebook to hybrids and tablets that can't really provide enough power to support AAA gaming.
This is what Gartner says about PC sales -
http://www.gartner.com/newsroom/id/3026217

Not a surprise to be honest, windows XP extended support ended, businesses finally bothered to upgrade to either 7 or 8 (probably 7) and now they wont upgrade again until there is a hardware need (rare) or the OS gets to the end of its extended support which is 2020 for 7 and 2023 for 8. That easily explains the drop off in business purchases.

As far as high end hardware is concearned, again there has been no impetus to buy any. 4k and VR are still niche and require lots of hardware to make work and we have been stuck on 28nm for years. There will be a big upswing with 14nm, that I can guarantee. The thirst is real, so to speak, and by then 4k and VR will have a lower price of entry so that will also drive sales of higher end hardware.

Then you have stuff like surface pro, that is a tablet but it uses x86 hardware, is that classed as a PC sale or a tablet sale and from Intels POV does that even matter as long as they are selling chips?

 

[ZhugeEX]

I bet that Sony tries to be very accurate with their forecasts and only ships what gets sold through. In other words, whatever their shipment number turns out to be for the quarter, that is also how much retailers have sold to consumers. There is really no reason to continuously overship; once you have the buffer stock, you should keep the level relatively stable.

This is a somewhat accurate representation of sell in/sell through based on all available data points.

Btw how did you get that tag haha!

I stand corrected on the issue of the announcement date for the 20 million consoles sold-through, Zhu. I guess I am growing senile... :-(

Na no worries. Sony have been very forthcoming with sell through data which is something we haven't seen much of in the past decade. It's always just been sell in.

 

[jryi]

Btw how did you get that tag haha!

It's pretty awesome, isn't it. I must have done something right. (Or wrong, I'm not quite sure, truth be told...)

 

[Theonik]

It's pretty awesome, isn't it. I must have done something right. (Or wrong, I'm not quite sure, truth be told...)

Definitely right.

 

[slavesnyder]

This is a somewhat accurate representation of sell in/sell through based on all available data points.

Btw how did you get that tag haha!



Na no worries. Sony have been very forthcoming with sell through data which is something we haven't seen much of in the past decade. It's always just been sell in.

This looks textbook healthy.
Would love to see the XboxOne-version...

 

[Cthulhu_Steev]

It's pretty awesome, isn't it. I must have done something right. (Or wrong, I'm not quite sure, truth be told...)

I vaguely remember your post (that led to a poster being banned when you posted the agenda-driven history) that I believe got you that tag, but I can't find the post in your history. I remember it because I wanted to read it again the day your tag landed So yeah, you definitely did something right.

 

[Conduit]

PS4 stock management has been great so far.

So, 20.2+ sold trough as of March 1st, probably 21 mil. sold-in as of March 1st?

 

[Swass]

Looks like they are trying to maintain an approx 2 million units in retail channels and it's probably safe to say they are averaging a million a month sold through especially with the pickup in sales in March but the slowdown in April, should be around 22 mil sold through and 24 mil sold in.

 

[ZhugeEX]

It's pretty awesome, isn't it. I must have done something right. (Or wrong, I'm not quite sure, truth be told...)

Yup, must have done something right haha.

This looks textbook healthy.
Would love to see the XboxOne-version...

Very healthy.

Unfortunately we don't have figures for Xbox One so it's hard to say. The only accurate figures we have is 3m ST / 3.9m SI as of the end of 2013.

So, 20.2+ sold trough as of March 1st, probably 21 mil. sold-in as of March 1st?

Looks like they are trying to maintain an approx 2 million units in retail channels and it's probably safe to say they are averaging a million a month sold through especially with the pickup in sales in March but the slowdown in April, should be around 22 mil sold through and 24 mil sold in.

As long as Sony are able to sell through remaining channel inventory on a 30 day rolling basis then they'll be fine shipping what they are now. So I'd say anywhere between 1m-1.5m would be ideal. 2m is a bit high imo.

Here is my forecast for sell in this year- (With my forecast for last year also included).

 

[serversurfer]

I bet that Sony tries to be very accurate with their forecasts and only ships what gets sold through. In other words, whatever their shipment number turns out to be for the quarter, that is also how much retailers have sold to consumers. There is really no reason to continuously overship; once you have the buffer stock, you should keep the level relatively stable.

Just to clarify, there are always units "hidden" in the channel because any given unit will spend a few weeks on ships and trucks before it even reaches the retailer, much less the actual customer. Those units have been sold in, but they aren't even available to be sold through yet.

If everything is running as it should, the lag between selling in and selling through seems to be roughly 5-6 weeks. So if they announce they shipped unit #100M on the last day of March, that means they and their retail partners are expecting sell through to reach 100M a week or two in to May. You can see this on Zhuge's chart. The sold in is always higher than the sold through, but rather than shipments always outpacing sales, the sales just lag behind by a few weeks. 10M shipped through June means ~10M sold by the middle of August. 13.5M shipped through September means ~13.5M sold by the middle of November.

That means when Sony announce their shipments this week, we can safely assume that will be their sales as of a couple of weeks from now. If Sony and Walmart assumed sales will be higher or lower than that, they'd have ordered and shipped more or less. So your bolded statement was basically correct, but they don't line up chronologically quite that neatly; sales always lag shipments by just over a month.

That's why it's so remarkable that MS are still working through stock they shipped before the end of the year. If they hadn't decided to make the MCC bundle generally available — it was basically a BTO bundle available only at Walmart last holiday — then there wouldn't have been much reason for them to ship anything at all this quarter, and we'd probably have seen a shipment of ~0.5M like the XB360 saw for its second Q1, instead of the ~1M Bones they did ship this quarter.

As long as Sony are able to sell through remaining channel inventory on a 30 day rolling basis then they'll be fine shipping what they are now. So I'd say anywhere between 1m-1.5m would be ideal. 2m is a bit high imo.

Yeah, 1-1.5M at any given times seems about right. They may have 2M+ going in to November or something like that, but we never really see those stock levels from the outside because they've normalized again by the end of the quarter, with the units being shipped during December intended to cover the comparatively low sales in January.

 

[Sydle]

General PC market are on decline for several years that caps future prospects for PC gaming. Second - PC gaming expands in social and non-demanding multiplayer areas, clearly target devices that are not suitable to current console-level performance, typical AAA console gaming on PC is nowhere near console levels, it's still small and enthusiast market. You can see it from publishers report. Konami has PC at 10%, Ubisoft at 11%, and this number already include their f2p initiatives, not just AAA gaming.
Mobile will overtook both consoles and PC, but it's a different kind of gaming that we got used to see on consoles with its high production vale, performance demanding 60$ AAA titles.


High performance PC gaming is even smaller than console gaming market. And it sold strictly for-profit with significant margin, so it makes it out of gaming mass-market.

I don't know why you keep bringing up general PCs. It's the common development architecture of the PC, and the benefits it brings in backwards and forwards compatibility, that I'm highlighting.

As for your second point, I think you highlighted one of the ways PC gaming has expanded. We've see F2P, indies, and even streaming services all start in the PC space and continue to expand into the console space. As for the AAA market, if I think back to the early-to-mid 2000s we were lucky if we got a PC version within a year if at all. Now they're starting to launch on the same day. The lines between what we knew as PC gaming and console gaming are getting blurrier every year and so is the hardware. It's not that hard for me to imagine the gaming console manufacturers start to offer a range of performance models to suit the growing number of gaming preferences, and with that games that are more flexible in their performance.

 

[cakely]

2. To the people that think sony has a 10 million unit lead, people shouldn't forget that the xbone didn't launch in nearly as many regions as PS4 on launch. I think its closer to a 6 or 7 million lead at this point.

This is rich. "Tier 2" markets contributed a literally insignificant amount to the Xbox One's bottom line.

 

[Wynnebeck]

Hmm. Any reason for the 7.2m estimate in Q4 of this year? I assume it's going off of your prediction that Sony keeps the same $399 price tag throughout the year right?

 

[Juanfp]

Hmm. Any reason for the 7.2m estimate in Q4 of this year? I assume it's going off of your prediction that Sony keeps the same $399 price tag throughout the year right?

Why Sony need to drop the price? They are selling incredible well and its looks like it will continue, if they drop price they would be selling the PS4 at lost, its better for them to get more profits.

 

[Boombloxer]

Why Sony need to drop the price? They are selling incredible well and its looks like it will continue, if they drop price they would be selling the PS4 at lost, its better for them to get more profits.

Not exactly. It's close to the tail end of the expected initial price. The 1st and 2nd price cuts are usually big Jump In moments.

 

[Biker19]

Last year it was a 2million split.

800k 360
1200k One.

No matter how you slice it, it fell.

The big problem is that it means people aren't upgrading from 360 to One.

It means they're upgrading elsewhere. There should ROUGHLY be a 1:1 tradeoff as 360 sales fall and transition towards One sales.

I agree. If anything, they're most likely upgrading towards either PS4 or towards PC gaming.

 

[Graphics Horse]

I don't think it works like that, it's not really fair to compare late gen adopters to early current gen adopters. sony's combined numbers should also be down this year. (for this quarter)
Unless you have a system with radical year on year growth, you're going to start selling less units as your old system fades away.

 

[ZhugeEX]

Hmm. Any reason for the 7.2m estimate in Q4 of this year? I assume it's going off of your prediction that Sony keeps the same $399 price tag throughout the year right?

The PS4 beat my expectations for the holiday season last year.

Assuming the PS4 sees an official price drop or attractive bundle around Q3 then I can certainly see total shipments for the quarter exceeding 7 million.

AMD noted recently that the agreement they have with Sony is a long term one that allows for the ASP to decrease over time. AMD said that this year they expect the ASP to decline YOY despite potentially producing more.

 

[Biker19]

Devaluing the console really bit them in the ass it seems.

I don't think in the long run it is a good strategy to rely on short term price cuts like MS has during the holidays....it never sustains momentum and devalues your brand. Price cuts should be maximized.

Called ages ago that devaluing the XB1 so quickly was a horrible idea. That's a very steep decline for a platform so early in its lifespan. It should be speeding up, not slowing down.

That's exactly what I've also been saying for a long time now.

You mean one of the biggest businesses in the world is run like a business? Shocking!

We have scorecards too, and when we fuck up we see red (but we don't fuck up).

To think MS will just sit there and continuously dump money into a falling product year after year is silly - MS isn't in business to sell Xboxes, they're in business to make money. After years of the department losing money, people should start thinking about whether or not the mindshare opportunity MS sees in the division is still worth it. There is a breaking point, and if the XB1 underperforms there's a chance (how big of one no one knows) that MS will wash their hands of the console industry.

People on here who honestly think that Microsoft's going to continue to dump tons of money onto a division which isn't making them tons of money, just because that they have a bigger warchest are being very delusional.

 

[Marlenus]

The PS4 beat my expectations for the holiday season last year.

Assuming the PS4 sees an official price drop or attractive bundle around Q3 then I can certainly see total shipments for the quarter exceeding 7 million.

AMD noted recently that the agreement they have with Sony is a long term one that allows for the ASP to decrease over time. AMD said that this year they expect the ASP to decline YOY despite potentially producing more.

You would expect ASP to go down over time. Even on the same node the chip will get cheaper to produce as yields increase leading to more viable dies per wafer meaning average chip production cost decreases.

Also if they reach certain wafer numbers they might hit price breaks with the foundry leading to further reductions in cost of production.

 

[ZhugeEX]

You would expect ASP to go down over time. Even on the same node the chip will get cheaper to produce as yields increase leading to more viable dies per wafer meaning average chip production cost decreases.

Also if they reach certain wafer numbers they might hit price breaks with the foundry leading to further reductions in cost of production.

You're right there.

However I was referring specifically to the contract that's in place between AMD and Sony which allows for ASP decline.

I'll see if I can dig up the quote.

Edit:

Vivek Arya - BofA Merrill Lynch - Analyst
Lisa, as you mentioned that game console units could grow somewhat this year, I'm interested in understanding what
happens to your ASPs now that you're in the third year of launch? Should we think of your ASP -- AMD's ASPs be flattish, or could they be up or
down this year? What happens typically during the third year of this kind of very prominent launch?

Lisa Su - Advanced Micro Devices, Inc. - President and CEO
So, Vivek, we have long-term agreements with our customers relative to ASPs, so there is some ASP decline. It's fair to say that it's less than it was
in the early years.

 

[LiquidSolid]

Why Sony need to drop the price? They are selling incredible well and its looks like it will continue, if they drop price they would be selling the PS4 at lost, its better for them to get more profits.

The more systems they sell, larger the install base and the more software they can potentially sell. That's where console manufacturers make most of their money.

 

[Marlenus]

You're right there.

However I was referring specifically to the contract that's in place between AMD and Sony which allows for ASP decline.

I'll see if I can dig up the quote.

It is a bit odd for it to be penned in black and white rather than it being a side effect of production cost reductions but AMD have been in the game long enough to have pretty accurate forecasts for this sort of thing. As long as the ASP decline penned in ink is roughly in line with production cost decline then it may have helped get them the contract in the first place.

I guess the fact Sony knew what the ASP decline would be for the SoC enabled them to narrow the error bars on their forecasts which in turn allowed them to price and spec the console as they have since they did not want a repeat of the PS3.

EDIT: Looking at the quote it suggests MS and Nintendo have similar agreements in place as well. In that case it seems like it may have been a way for AMD to ensure they got the contracts over NV/Intel. I would have though the fact they are the only company who can offer a decent (for its target market atleast) X86 CPU and a good GPU in a single die would have helped with that as Intels GPU are weak and NV cannot produce X86 processors. Still AMD need every bit of revenue they can get so if this helped them it is probably for the best.

 

[ZhugeEX]

It is a bit odd for it to be penned in black and white rather than it being a side effect of production cost reductions but AMD have been in the game long enough to have pretty accurate forecasts for this sort of thing. As long as the ASP decline penned in ink is roughly in line with production cost decline then it may have helped get them the contract in the first place.

I guess the fact Sony knew what the ASP decline would be for the SoC enabled them to narrow the error bars on their forecasts which in turn allowed them to price and spec the console as they have since they did not want a repeat of the PS3.

EDIT: Looking at the quote it suggests MS and Nintendo have similar agreements in place as well. In that case it seems like it may have been a way for AMD to ensure they got the contracts over NV/Intel. I would have though the fact they are the only company who can offer a decent (for its target market atleast) X86 CPU and a good GPU in a single die would have helped with that as Intels GPU are weak and NV cannot produce X86 processors. Still AMD need every bit of revenue they can get so if this helped them it is probably for the best.

It's a bit odd but seems to be the case here. It's also a bit of an obvious one when you think about it, as you said yourself the ASP will decline naturally, and naturally that'll be passed on to MS/Sony as well.

One other quote I'd like to point out here. It suggests that CY2014 H1 saw increased sales over what is expected for CY2015 H1, however it looks like AMD are certain of two things, Q3 will be the peak for them in regards to SOC shipments in order to build consoles for the holiday season and they're expecting a much stronger CY2015 H2 in terms of shipments. Also they're fairly forthcoming in saying that ASP will be down YOY in line with the higher demand.

Thoughts?

Stacy Rasgon - Sanford C. Bernstein & Company, Inc. - Analyst
Got it. That's helpful. For my follow-up, I had a question I guess on the trajectory of the console revenue. I have got to say, I was a little surprised at
the level of guidance and even in the current quarter, your foundry supplier for consoles had consumer revenues in Q1 up quite a bit. We don't seem to be seeing that in your revenue guide.

I know last year, we had a bit of a stronger console profile in the first half, and then it was flattish I think a little lower than what expectations had
been in the second half. It sounds like now maybe you are expecting that profile to reverse, and you are seeing a stronger console presence in the
second half than the first half. Can you give us some color based on those drivers, on how you see that trajectory moving through the year?

Lisa Su - Advanced Micro Devices Inc. - President & CEO
Yes, Stacy. We do expect that -- it is hard to call console seasonality, as each year is somewhat different. So last year, if you remember the first half
was coming off of a very strong holiday season where there was still unsatisfied demand. As we go from the second half 2014 into the first half
2015, I think the demand is more normalized.
There is an expectation that the second half of 2015 will be stronger in terms of units, and that's what we see from our customers right now. We
are very in tune with them in terms of their forecast, and so that's what we see at the moment.

Stacy Rasgon - Sanford C. Bernstein & Company, Inc. - Analyst
But why would it be stronger? Don't they need to build in front of the holidays?

Lisa Su - Advanced Micro Devices Inc. - President & CEO
They do, but the peak quarter for semi-custom is always going to be the third quarter, because that's when they will build ahead of holidays. What
we saw in the first half of 2014 was more I would say demand that was not satisfied from the previous holiday.

Stacy Rasgon - Sanford C. Bernstein & Company, Inc. - Analyst
Got it. It's fair to say that pricing will be down year-over-year, correct?

Lisa Su - Advanced Micro Devices Inc. - President & CEO
It is fair to say there are some ASP decline, that's correct.

Stacy Rasgon - Sanford C. Bernstein & Company, Inc. - Analyst
Got it. Thank you, guys.

 

[Marlenus]

It's a bit odd but seems to be the case here. It's also a bit of an obvious one when you think about it, as you said yourself the ASP will decline naturally, and naturally that'll be passed on to MS/Sony as well.

One other quote I'd like to point out here. It suggests that CY2014 H1 saw increased sales over what is expected for CY2015 H1, however it looks like AMD are certain of two things, Q3 will be the peak for them in regards to SOC shipments in order to build consoles for the holiday season and they're expecting a much stronger CY2015 H2 in terms of shipments. Also they're fairly forthcoming in saying that ASP will be down YOY in line with the higher demand.

Thoughts?

Perhaps based on the ASPs for the CY2015 H2, combined with historical data, they are predicting a price drop for the PS4/Xbox One which will lead to more sales and hence increased SoC demand compared to CY2014 H2.

EDIT: It also occurs to me that even if ASP is down YOY if the demand is up by enough revenue will increase and, provided they got their calculations correct, the margin % should be about the same.

 

[ZhugeEX]

Perhaps based on the ASPs for the CY2015 H2, combined with historical data, they are predicting a price drop for the PS4/Xbox One which will lead to more sales and hence increased SoC demand compared to CY2014 H2.

EDIT: It also occurs to me that even if ASP is down YOY if the demand is up by enough revenue will increase and, provided they got their calculations correct, the margin % should be about the same.

That's what I would think. Especially as they're expecting shipments of SOC to be up next quarter (To ship to consumer in Q3) but revenues to stay pretty much the same . And then the boost in Q3 will be expected to ship consoles to consumer in Q4. As they've mentioned that ASP will decrease during this time it looks like that is when we may see an official price cut from Sony.

 

[serversurfer]

It's a bit odd but seems to be the case here. It's also a bit of an obvious one when you think about it, as you said yourself the ASP will decline naturally, and naturally that'll be passed on to MS/Sony as well.

One other quote I'd like to point out here. It suggests that CY2014 H1 saw increased sales over what is expected for CY2015 H1, however it looks like AMD are certain of two things, Q3 will be the peak for them in regards to SOC shipments in order to build consoles for the holiday season and they're expecting a much stronger CY2015 H2 in terms of shipments. Also they're fairly forthcoming in saying that ASP will be down YOY in line with the higher demand.

Thoughts?

The sounds like she's just saying they expect shipments in the second half of 2015 to be higher than they were in the first half. Also, she was explaining this was a contrast to the flatish shipments throughout 2014 because they were still satisfying launch demand from 2013 in the first half of 2014, making it "artificially inflated" compared to a "normal" first half like we had in 2015, and likely in 2016, etc.

"H2 is just naturally bigger than H1, except in 2014 obviously, but that was just an anomaly because of the launches."

 

[ZhugeEX]

The sounds like she's just saying they expect shipments in the second half of 2015 to be higher than they were in the first half. Also, she was explaining this was a contrast to the flatish shipments throughout 2014 because they were still satisfying launch demand from 2013 in the first half of 2014, making it "artificially inflated" compared to a "normal" first half like we had in 2015, and likely in 2016, etc.

"H2 is just naturally bigger than H1, except in 2014 obviously, but that was just an anomaly because of the launches."

Well yeah, but we're talking about second half of 2015 in relation to production shipments/ASP. It looks like they're expecting the second half to be significantly stronger whilst Q2 this year will only be modestly up. So It looks like production is ramping up very high for the end of this year.

Historically Q2 production has been quite high as well but it looks like the full demand won't hit until Q3. So in time for holiday.

 

[Portugeezer]

Why Sony need to drop the price? They are selling incredible well and its looks like it will continue, if they drop price they would be selling the PS4 at lost, its better for them to get more profits.

Well this holiday the console would be 2 years old, yeah they don't need to drop the price but MS will remain competitive in the US as we saw last holiday season. PS4 was not selling for a loss and a ~$50 price drop after 2 years won't make it a loss either. You can only bundle so many games before dropping the price.

By this slow and steady drop, the console will be $250 in its 6th year, that wouldn't be bad at all.

 

[serversurfer]

Oh, I had a question about how MS are booking their console revenue. They said unit volume was down 20% and revenue was down 24% because of the lower prices on the Bone. As I understand it, the Bone is still being sold for $500 or headless for $400, though there's currently a "promotion" allowing you to buy them for $450/$350. Would that mean they're still booking the full $500/$400 (or whatever the retailers actually pay) as revenue, and the $50 price subsidy would actually come out of their marketing budget, along with the cost of any bundled software?

So if they ship a million headless units, they collect $400M in revenue, then spend $80M in "marketing" to fund the $50 discount and two copies of AssCreed? Is that how that works?