What is Digg?85 Comments
- Bara, on 10/12/2007, -9/+70I don't know where this is coming from, because every other report I've read on this has stated MS is still losing money on the 360...
- Rayonic, on 10/12/2007, -4/+34Well, it looks like the article is citing more up-to-date cost estimates, which would replace the older cost estimates. Why is everyone having a heart attack? Hardware prices almost always go down over time.
- Stonedonkey, on 10/12/2007, -1/+30Since when did a company's profit or loss affect how I felt about the price of its products? Either it's expensive, or it's not.
- Alphabet, on 10/12/2007, -0/+19Seller: Hey guys, I made this pencil for $1000 and it can do a ton of things. But I'm only selling it for $500, it's not expensive at all.
Stupid Person: Yea, it's not expensive. I want to buy that pencil for $500.
Smart Person: It's still too expensive for a pencil.
If sony's blu-ray wasn't on the ps3, the ps3 could have sold for $300. Too bad they're so greedy in trying to corner the blu-ray market that they forced gamers to buy it in order to get a ps3. - jblade, on 10/12/2007, -8/+22Basically the year MS has had, ahead of the Sony, has allowed them to narrow costs of the unit down enough to turn the unit into profit.
Likely in a year or less, the PS3 will be turning positive for Sony as well. This huge lost could help explain why Sony released so few consoles. - Rayonic, on 10/12/2007, -2/+15That report was pretty wild speculation based on a year-to-date report. It just vaguely said "Xbox 360 cost more than anticipated." It didn't say that it rose in price over the year.
- 13tongimp, on 10/12/2007, -2/+14They make money on PS2 hardware now. They always take a bath on hardware at launch and for the first year at least. They recoup it in accessories and software. That's how the business has gone for some time now. There is nothing new or interesting about this at all.
- nicbrown, on 10/12/2007, -2/+13Articles like this pop up all the time, but are completely worthless speculation. Materials and manufacturing is only part of the cost. Firstly, they do not account for R+D.
Secondly, no business is going to sink costs into development and manufacturing on this scale without spending near the same amount on marketing.
I wonder how many countries have a GDP that is smaller than the total cost of marketing the PS3 so far? - Stonedonkey, on 10/12/2007, -1/+11Well, there's the blog, and there's the primary source: http://www.isuppli.com/news/default.asp?id=6919
- prockcore, on 10/12/2007, -0/+8zenmojo seems to always pop up and spout out numbers he obviously doesn't understand.
Why are you talking about revenue? Every PS3 sold gets Sony $600 in revenue.. but you have to subtract cost to determine profit... and Sony's profits are down, their games division is losing money (costs > revenue) - Flamekebab, on 10/12/2007, -3/+11*losing.
- inactive, on 10/12/2007, -0/+7During the July-September period, Sony only made 14 million dollars in profit. However they did spend about 424 million dollars on the battery recall. Think about it that way. However, 280 million dollars is still a lot of moolah!
- andre3000, on 10/12/2007, -0/+6Value != Price
http://en.wikipedia.org/wiki/Value_%28economics%29 - proxima, on 10/12/2007, -1/+7OH RLY?
- LiveFastDieOld, on 10/12/2007, -1/+7@ ZenMojo
"Sony makes an average of 65 billion dollars in revenue a year, so if they lose 200 dollars on every system and produce 400,000 that's only 80 million in cost losses. If they don't sell a single system, that's still 280,000,000 in cost losses. 280 million compared to 65 billion last year....I repeat, it doesn't matter if Sony doesn't sell a single Playstation, the only thing it really costs them is brand name cred."
Sony is a publicly held company, so imagine if they tried to sell your argument to shareholders.
If Sony (or any company) used this kind of logic to make business decisions, it wouldn't be long before they ran themselves into the ground. Case in point: Enron.
Beyond that, the P3 is part of one of many, many divisions within Sony. You think the executives running the gaming division don't care about the only bottom line for which they're responsible?
As for your saying it doesn't matter if they don't sell a single Playstation -- uhh, what about the hundreds of millions of dollars they'd lose in game sales and other revenue over the course of the next few years? The P3 pricing isn't a charity project. It's a risk taken as part of the business model. - Joe091, on 10/12/2007, -0/+5Dude, I promise the retailers make at most $15-$20 profit on these consoles. When the PS2 came out, I worked at Circuit City and the profit was $5. But I agree that summing up the retail cost of all the individual components does not provide an accurate estimate of the total cost of the console, unless they can provide sources for the info. In reality, Sony likely gets large volume discounts and can amortize the R&D costs over time. Also, the marginal cost of each unit decreases as the total volume produced increases... economies of scale ya know.
- stylerm, on 10/12/2007, -2/+7retail cut is very slim on stuff like this and ipods. They make larger margins on accessories and games.
- proxima, on 10/12/2007, -2/+7@zenmojo
Sorry pal, but it really does matter whether or not Sony sells Playstations given that the Playstation division of sony is one of the only divisions which actually turns a profit. The company is streched very thin, and most of their other electronic divisions lose money. That said, the company is at a crucial point in its life, one which could redefine the way sony does business if the PS3 happens to fail. - fallenone05, on 10/12/2007, -0/+4yes, and you are paying for the included wifi (which M$ charges you $100 for) and you are paying for the memory card inputs as well...not bad for an extra $34.50
- inactive, on 10/12/2007, -0/+3LiveFastDieOld: What a fantastic way to demonstrate your ignorance of accounting terminology.
REVENUE -- The amount of money coming in, before you take expenses into account.
PROFIT -- The amount of money left over after expenses are subtracted from total revenue.
First of all, you're stating an figure of $65 billion as REVENUE, and then saying that a certain expense (loss on each hardware unit) is a small drop in the bucket. Well, ***** DUH! That's because you're subtracting from REVENUE. You know what else you subtract from REVENUE? Employee wages and health insurance, marketing expenses, rent for multiple factories, offices, and other facilities, and about a million other things.
So, thank you for your utterly worthless and ignorant analysis. Now go back to your basement and play your videogames.
For anyone else who's even remotely interested:
Sony's forecasted revenue for this year is $69.1 billion. Out of that, Sony will post a net income of around $671.8 million for the year to the end of March 2007, a drop of 62% over the previous year, which itself was a significant drop from the year before. In other words, Sony is in SERIOUS trouble, and their struggling Sony Computer Entertainment division is to blame. - HappyScrappy, on 10/12/2007, -0/+3BlackKnight:
No they didn't say that, and no they aren't producing 360s with those chips yet.
MS is working on 65nm versions of their chips. So is Sony. Neither has a unit in production from them yet. Initial chips have been produced, but the current models of both are still 90nm.
http://www.fabtech.org/content/view/1443 - strictnein, on 10/12/2007, -7/+10Wasn't there just news that the 360 costs have risen, and not dropped as expected. I thought the 360 Premium's costs had risen to a little over $500.
- Renton, on 10/12/2007, -8/+11This is the real reason Sony is not making PS3s. Blue laser diode my ass.
- TheDiggMan, on 10/12/2007, -10/+13Sony is loosing about $300 on each console and people still think it's really expensive.
- paulmdx, on 10/12/2007, -2/+4Well by all means provide the references then...
- cnott, on 10/12/2007, -0/+2Console makers make money from licensing fees which are charged for each game software unit sold. If you buy, say, Dead Rising from Capcom for the 360, Microsoft gets a portion of the sale as a license fee. The presumption is that while you will get a console from them at less than production cost, you will buy enough games over the years to make up for it.
In a sense, the console is the loss leader. Few people would pay the real cost of the device, but will pay that real cost over the years by buying games and now services. - fallenone05, on 10/12/2007, -1/+3it's true, but we are on digg.com right now, so I cannot agree with you because I'll get dugg down.
- BlackKnight6, on 10/12/2007, -0/+2No, that is the cost of all parts, its not like a computer. They produce identical parts at mass-production levels, only in-order CPUs (both PS3 and 360 cpus are in-order CPUs, computer CPUs are out-off order CPUs, much more expensive and powerful).
- SIDSI, on 10/12/2007, -0/+2How hard is it for some of you ***** heads to understand that they all lose money on hardware.
- inactive, on 10/12/2007, -0/+2Given the highcost of the tech inside, and the dubiousness of any mass adoption of bluray tech anytime soon, I seriously doubt costs will go down for Sony in the near future. They are taking a huge gamble with this new system considering what it is costing them to bring it to market. One has to wonder if lack of capital for manufacturing is the real reason they will miss their original production schedule this year, what with the current large and potentially larger hit they are taking right now from the exploding batteries issue.
- strictnein, on 10/12/2007, -0/+2@Cedantic: It's amazing how wrong you can be. You clearly have no idea what you are talking about.
- BlackKnight6, on 10/12/2007, -0/+1It has to do with the silicon fabrication. They already stated the newer 360's are already starting to be produced with 65 nm process fab compared to 90nm (use less electricity, produce less heat and use less silicon since they can fit more chips on one silicon wafer which saves money).
- BlackKnight6, on 10/12/2007, -0/+1They already stated the newer 360's are already starting to be produced with 65 nm process fab compared to 90nm (use less electricity, produce less heat and use less silicon since they can fit more chips on one silicon wafer which saves money). MS was just smart to go with proven silicon fabs and is dependable and mass produced. The early 360's had cost more to produce but now they are costing less and now they profit. But even then, that profit goes to other things like taxes and retail margins and so on, not just MS.
This article is inaccurate about some things, but not that they are out of the red when it comes to producing 360s, they planned on this, just like Intel and AMD moving to 65 nm (all core 2 duos are 65 nm already).
And that old news of 360 costs going "up" was wrong, I am an accountant and the way it was on the report was including the costs they take to do the free repairs on the 360s sent in for repair, that was included in the "360 system costs". - SyDIGG, on 10/12/2007, -4/+5The PS3 is a better deal ...don't let Sony haters tell you otherwise. The only next gen console on the market now is the PS3.
- HappyScrappy, on 10/12/2007, -1/+2iSuppli isn't accurate enough to be sure how much money is making/losing.
They calculated the cost of a product I personally worked on and knew how much we were paying to make, and they were 40% off. They said we were losing a fair amount on it and we were actually making not just a gross profit on it, but a net profit on it. - slugbug3311, on 10/12/2007, -0/+1Actually I read somewhere that retailers only make like $7 or something like that on the 360.
- gravis86, on 10/12/2007, -3/+4Who cares? Yours didn't make the front page and his did. As long as I see it, I don't care who submitted it.
- unloud, on 10/12/2007, -9/+10It was previousl incorrectly reported that Microsoft will lose 75.70 on each console. They will profit that much. Look here:
http://blogs.business2.com/utilitybelt/2006/11/sonys_loss_is_a.html - inactive, on 10/12/2007, -1/+2Sorry, my previous comment was directed at ZenMojo.
- eplawless, on 10/12/2007, -1/+2Does anyone know the numbers for MS on their HD-DVD drive? Blu-ray is likely a large part of the money Sony's losing here, just wondering how MS would fare a year after launch if they included it with the system...
- inkubux, on 10/12/2007, -0/+1YOU need to get out actually, you live in a fantasy world...
Companies often sell things at loss to gain popularity and then use this popularity to sell related things at a higher price. Wallmart do this all the times - inactive, on 10/12/2007, -0/+1I don't play games anymore, I just like seeing nerds argue over which is better.
- subterfu9e, on 10/12/2007, -0/+1Hmmm, anyone remember how much MSFT lost producing the original XBOX? Heck, with the amount of cash sony amassed from selling the PS1 & PS2, forfeiting $306 is peanuts.
- Joe091, on 10/12/2007, -2/+3haha, don't try and pimp your own story in another thread, dude.
- DownIsTheNewUp, on 10/12/2007, -0/+160GB PS3 - 841.34
20GB PS3 - 806.84
So if you buy the premium unit, you're paying a hundred dollars for a $34.50 hard drive upgrade? God bless Sony. - dstz, on 10/12/2007, -0/+1Loosing $300 on a console that sell for $30.000, your car and a kidney ?
- inactive, on 10/12/2007, -0/+1Consoles are *supposed* to be sold at a loss. Subsidized hardware to lure you in, then rake in the money through expensive games - that's the business idea of consoles.
Basically the parent company make their money off the licensing fees they get for the games the hardware runs. - ICSU, on 10/12/2007, -1/+2For me (and many other I believe) it's expensive because it offers nothing new. My PC costs much more and I don't think it's expensive.
- staticneuron, on 10/12/2007, -0/+1Thats interesting. These look like the numbers merrill lynch reported quite some time ago. It doesn't seem odd to anyone that the RSX is more expensive than the cell and the blu ray drive and that the XDR ram is in the same ballpark as the hard drive? Thier "estimate" seems off......no?
- anthonybruno, on 10/12/2007, -0/+1every other week someone says, "the 360 is making money, the 360 is losing money." It goes back and fourth almost every week, and it always reaches the main page. Fanboys need to stop attacking systems and play what you have.
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