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Could the PS3 be Sony's final console?

by Steven Williamson on 1 December 2006, 10:12

Tags: PlayStation 3, Sony Computers Entertainment Europe (NYSE:SNE), PS3

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Its been no secret that the PS3 launch gas been a bit of a shambles, but could this analyst's prediction really come true? Following on from yesterday's major Sony management re-shuffle, which saw Ken Kutaragi moving from his Presidential role in the company to Chairman, a financial analyst from Nomura, Yuta Sakurai, has spoken to the Financial Times and believes that this recent role change may be "the start of a shift from hardware to software"

Kaz Hirai has now taken on the role as President and Sukurai believes that most of Hirai's management career has focused on software. Sukarai told the Financial Times, "I cannot now imagine a PlayStation 4."

The press release issued by Sony yesterday played down the role change by stating that Kutaragi will still play a major role in Sony and will "exercise his power to reinforce and further accelerate the development of the PlayStation business."

According to research company, iSuppli, Sony are losing approximately $307 on each console it sells. Console manufacturers often sell their hardware at a loss with the hope of profiting from game sales, but these high losses far outweigh those of previous consoles, but will Sony really call it a day?

Let us know your thoughts in the forums.

Source : Financial Times

UPDATE (10.50am) - Sony has inevitably responded to the story, with US spokesperson Dave Karraker saying, "Following the launch of the PlayStation 3 just a few weeks ago, and witnessing the huge consumer demand for the product, I think it would be rather short-sighted for anyone to predict there might not be a next generation of PlayStation product."

Source : Gamespot


HEXUS Forums :: 8 Comments

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Posted by 5lab - Fri 01 Dec 2006 10:35
basing this on 1 analysts prediction is a little strong.. given its one of sony's most profitable product lines, i strongly doubt this is the case - and while they're loosing $300 per unit - i believe a large chunk of this is the blueray bits that'll drop as it becomes more mainstream.. they're probably making about $50 per unit on ps2s at the moment (cmon, it can't cost much to knock a 300mhz cpu and 32 meg ram together, especially when you're shipping millions of units a year)..
Posted by Steven W - Fri 01 Dec 2006 10:51
Sony's response:

“Following the launch of the PlayStation 3 just a few weeks ago, and witnessing the huge consumer demand for the product, I think it would be rather short-sighted for anyone to predict there might not be a next generation of PlayStation product.”
Posted by GeorgeTuk - Fri 01 Dec 2006 11:06
I think with the release of the console just last 3 weeks ago I think its a little early to talk about the future of their product line, maybe this is just talk to quell rumour of an ‘upgraded’ version like we had with the Wii.

I think the product line is bigger than just one man, and yes its fine saying about hardware over software but I would have thought that because companies want to get bigger they will try both.

Still I wouldn't be buying Sony software, MS proprietary wouldn't have anything on Sony formats!
Posted by Fabula - Fri 01 Dec 2006 14:31
We have to wait and see. Sony are definately in difficulty, and will have to persuade a lot of people to buy sony stuff in order to overcome the losses they are incurring at the moment.
It would be years before they may be able to sell the console at a profit. Manufacturing costs will fall, but they will also need to cut sale costs per unit to remain competitive.

If they need to make back $300 per console, that may equate to 15 games per console (at $20 profit to sony per game) just to break even. And that is ignoring the development costs and running costs of support etc.

Sony are in a difficult position, and only time will tell whether they survive.
Posted by GeorgeTuk - Fri 01 Dec 2006 20:40
Fabula
We have to wait and see. Sony are definately in difficulty, and will have to persuade a lot of people to buy sony stuff in order to overcome the losses they are incurring at the moment.
It would be years before they may be able to sell the console at a profit. Manufacturing costs will fall, but they will also need to cut sale costs per unit to remain competitive.

If they need to make back $300 per console, that may equate to 15 games per console (at $20 profit to sony per game) just to break even. And that is ignoring the development costs and running costs of support etc.

Sony are in a difficult position, and only time will tell whether they survive.

Sony certainly have had some setback but a company like that does not hit the skids, you seem to forget they have many many other product lines (v. succesful Bravia TVs, Vaio PC range, digital cameras and camcorders) are still going well, and still have a pretty good reptation games wise in Japan and US.

And your calculations based on the fact that PS3 core components will remain at the same price, the production costs will drop significantly after about a year when there plentiful components.

Yes they have faltered a little in one area (well two if you count the batteries issue) but it is a flexible business with a new head honcho (Howard Marks) with a very good reputation, and thats forgetting the classic Japanese trait of never giving in. :mrgreen:

This is not an attack on you Fabula but alot of people have said similar about Sony folding and frankly there is very little chance of that, if they do…i'll eat my keyboard! :surprised:

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