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Sony PlayStation 3 hardware finally profitable

Written by Andre Yoskowitz (Google+) @ 13 May 2010 23:17 User comments (9)

Sony PlayStation 3 hardware finally profitable Sony has announced today that the PlayStation 3 hardware is finally profitable, and the company expects its game business to be profitable for the year as well.
"The game business achieved a profit in the fourth quarter due to strong sales of first-party software and the elimination of negative margins on the PS3," adds Nobuyuki Oneda, Sony's new chief financial officer.

The fourth quarter ended March 31st, 2010.

The hardware had been sold for less than cost since its release in November 2006, and high manufacturing costs made the console a continued money loser until just recently.

In late 2009, Sony released a "Slim" version of the PS3, which has more streamlined internals, and a cheaper price tag which led to an increase in sales. Manufacturing costs continue to fall as well, and it appears that Sony will reap the benefits of a profitable fiscal year.

For the fiscal year ended March 31st, Sony lost almost $900 million USD for their games division. That will change this year. "For this year we expect to be able to generate at least double-digit profits," adds Oneda, via BusinessWeek.

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9 user comments

114.5.2010 20:32

And the new 40nm RSX model is shipping now which will help out profitability and possibly a counter price drop (probably only to $249) when MS does theirs this year as it is almost definitely going to happen as they are taking a beating in sales on all sides plus need to entice Natal purchases.

215.5.2010 4:27

This is a bad thing; it goes against the whole marketing model that sony has for the PS3....sell the system cheap and charge a lot for the games. If they keep this up, then the xbox720 will slaughter the PS4.

316.5.2010 19:22

Originally posted by KillerBug:
This is a bad thing; it goes against the whole marketing model that sony has for the PS3....sell the system cheap and charge a lot for the games. If they keep this up, then the xbox720 will slaughter the PS4.
I disagree because by the time IF/WHEN the NeXtBOX releases the PS3 will have the install base handily (for HD consoles), vastly better/more support from devs coupled with a greater understanding of the hardware and devs will be slower on the uptake for MS to integrate/buy/use/learn about their new hardware again...plus you have to look at other factors like the economy and MS's standings/holding/worth/profitability (remember they STILL haven't even recouped the original Xbox's losses and the 360's are still prevalent). Add on top of all of that the known SERIOUSLY poor inhouse first party support and the NeXtBOX is poised for some big problems/challenges even before the minor rumblings of rumors about a new system are even spoken! Plus I forgot that MS is really trying to back Natal as their golden ticket to ride out this gen of which they have confirmed will be supported longer than the last, and it's looking quite sad.

I have doubts about their next console...real serious doubts. Not immature fanboy ramblings but honest questions, views and supportive information. MS's short term quick/first to the market plan is proving to be HIGHLY detrimental. They are getting their asses handed to them by their closest comparable console (PS3) day to day, week to week and month after month, especially when you look at the whole picture and weigh all the factors. Sony's 10 year plan is tried, true & proven and the PS3 is no different being the 3rd fastest selling console in history to catch right up to the 360 while being ALWAYS more expensive ~

2006 Fiscal Year (November 11, 2006 to March 31, 2007) 3.5 million
2007 Fiscal Year (April 1, 2007 to March 31, 2008) 9.1 million
2008 Fiscal Year (April 1, 2008 to March 31, 2009) 10.1 million
2009 Fiscal Year (April 1, 2009 to March 31, 2010) 13 million

But lets say the NeXtBOX is real and comes out in say a little over 2 years time or closer to almost 3, that will make the PS3 about 6-7 years old and by then will be highly profitable, inexpensive, with a large install base as mentioned earlier, all while still being able to churn out not only graphically amazing titles but astounding physics capable games with phenomenal story lines that REALLY push boundaries forward and are cleaning up in awards year over year. Lastly when you think about what MS will have to offer technology wise within their next console it would have to atleast contain standardized things like POSSIBLY ~

BD or another storage medium that is larger than DVD
WiFi
HDD
Bluetooth
Etc.

Sounds oddly familiar doesn't it? Kinda like what Sony has already had since 2006! People have laughed at Sony since day 1 about the cost and technology they designed within the PS3 and I have always said from day 1 in return that they are laughing right back because they planned just as they have 2 gens previously and this one is no different. In the beginning offer something MORE than what the others do, sell it at a loss just as twice before and ride it out until the profits come piling in. They have the games, they have the talent/devs and the have the foresight of 2 of the most influential/successful consoles in history (mind you one of them is STILL selling!) to back them.
This message has been edited since its posting. Latest edit was made on 16 May 2010 @ 19:31

416.5.2010 20:25

@Oner, I agree with that! I remember when the PS3 was released and everyone here was like $700 for a game system F$%^ that! But looking at the Fiscal Years they are growing in selling the unit, and like the commercials say, "It Only Does Everything!"

It's just a matter of seeing how they will last in the long run, because I agree there, that they still have the PS2 that are still having games made for, and I haven't seen it dying anytime soon.



517.5.2010 2:13

"It Only Does Everything"
That might be my favorite lie of all time...it even beats out, "We are from the government, and we are here to help you."

I agree the PS3 was an incredible system, and is still very impressive given the price point...but I also see a lot of corners that were cut in the early days, and I see the horrible results every time I use my PS3.

For starters, the memory...there simply isn't enough of it to keep that hungry CPU going. I know you might say that devs need to write their software better, but none of them do, so it is a bit unrealistic to say that they all should. For that matter, they should bug test before release...but they are not going to do that either.

Also, the video is very sad...it was not even a very good video chip at launch, and it is a dinosaur today.

I know that Sony wants a 10-year lifespan from each generation, but that does not mean that the system is top-of-the-line for ten years...I think they were still making PS1 games when the PS3 came out...this is what they mean by a ten year life span. Given the fact that PS2 sales are finally starting to drop, I would be surprised if Sony isn't already working on the PS4.

Oh, and they did get hurt by the fact that the 360 came out before the PS3...they still have not caught up...and the 360 only had a 1-year head start.

This message has been edited since its posting. Latest edit was made on 17 May 2010 @ 2:20

617.5.2010 11:30

Originally posted by KillerBug:
"It Only Does Everything"
That might be my favorite lie of all time...it even beats out, "We are from the government, and we are here to help you."

I agree the PS3 was an incredible system, and is still very impressive given the price point...but I also see a lot of corners that were cut in the early days, and I see the horrible results every time I use my PS3.

For starters, the memory...there simply isn't enough of it to keep that hungry CPU going. I know you might say that devs need to write their software better, but none of them do, so it is a bit unrealistic to say that they all should. For that matter, they should bug test before release...but they are not going to do that either.

Also, the video is very sad...it was not even a very good video chip at launch, and it is a dinosaur today.

I know that Sony wants a 10-year lifespan from each generation, but that does not mean that the system is top-of-the-line for ten years...I think they were still making PS1 games when the PS3 came out...this is what they mean by a ten year life span. Given the fact that PS2 sales are finally starting to drop, I would be surprised if Sony isn't already working on the PS4.

Oh, and they did get hurt by the fact that the 360 came out before the PS3...they still have not caught up...and the 360 only had a 1-year head start.
I absolutely agree that Sony is definitely working on a PS4 right now, it's part of the cycle and the 10 year generation is intrinsic/synonymous with "PlayStation" but nobody believes it's top-of-the-line for all ten years. That's would just be misguided and immature to say the least. Technology gets dated (that's a given) but it is undeniable how Sony has consistently planned by offering "more" at the start. And it has always paid off.

I can see the point of there "only" being 512 megs of ram available, but more does not always = best. What would you rather have twice the amount of slow standard ram or half the amount of EXTREMELY fast (about 4x+) ram? Because remember half of the PS3's ram is tailored/well suited for the task in being XDR @ 3.2ghz combined with the overall throughput of the MB and it's sum as a whole becomes as the saying goes greater than its parts individually. Looking at an item as it stands by itself i.e. "only 512 megs of ram" or the GPU specifically in that way is selling the capability of either very short, because the PS3 does not ONLY rely heavily on it's GPU like it's competitor(s) and the CPU takes up what ever "slack" the GPU may contain. You really have to look at the system as a whole to properly see/understand it's "power" (for what it is) not piece by piece as you don't play each piece by themselves no? Cache, Bandwidth, Speed, Efficiency & Design as a whole is what differentiates the hardware that lies within from just a part on a table. Early titles like Uncharted 1, Heavenly Sword & GT5P showed pretty well that there was/is a hell of a lot of growth within the system (and to make a call back to an earlier comment just as both previous iterations of PS's have proven in the real world).

It is well known and proven that towards the latter half of PS consoles the refinement/optimization of not just graphics but physics as well vastly outshine what was available early on. And just as you said "that hungry CPU" is more than up for the task! With titles like Killzone 2, Uncharted 2, God of War 3 & the upcoming GT5 that have or are pushing what is capable by the system the next 4 or 5 years makes me pretty amazed at what is STILL left to see & experience! With just the most recent MLAA Morphological Antialising technique alone that has shown between 16-32xAA on Saboteur, God of War 3, the upcoming LBP2 and GT5 as well the proof is stacking up on how versatile and able Sony has designed it's flagship console.

Lastly Sony may have been hurt but it is hard to grasp how in my eyes with their sales bettering it's direct competition especially in the EU where the PS3 has surpassed the 360 in total sales while again always being more expensive and releasing almost a year and a half later than the 360 (1 year in NA) which had absolutely no competition at all! Not to mention how the PS3 is trouncing the 360 in Japan. To the tune of only being behind about 4.4 Million (39+/- vs 35 +/-) which is not that "huge" at all. Especially when you see how the PS3 Slim sold over 3 Million more over the holidays..plus when you estimate/deduct/factor in things like the attach rate being almost equal (PS3 vs 360), RROD failure amounts, Banning repurchases, DRE issues and so on it is not "Fanboyish" or improper to come to the culmination of how the numbers of working consoles in peoples homes is a lot closer than what MS will EVER admit.
This message has been edited since its posting. Latest edit was made on 17 May 2010 @ 11:50

717.5.2010 20:11

Even though the PS3 was a year behind in North America to the 360, you also need to realize that they were both 2 different systems, and one happened to cost basically double the other. I mean I remember when the PS3 price was announced, and a lot of my buddies were like "hell with that!".

But with the recent drops in price, and making a slimmer model, it's seem to attract more customers for it.

And I'm not calling out on fanboys! Not at all! I know there are people that prefer one over the other, and just put down the other. I've owned all the 3 systems, and the PS3 was just what I stuck with. I still wish I had Xbox Live, because most of my friends are on that; But with unemployment and all that good stuff, you can't really afford crap anymore...



818.5.2010 4:48

Oner - you make some great points...but even if it was just some super-slow DDR2 memory acting as a higher level of cache, I want more memory. 256MB system memory just isn't enough...even if it had 512/256 instead of 256/256, this would be a huge improvement. Heck, at this point I would even be happy to see a firmware update that gives us something similar to readyboost...I should be able to look at a picture attached to a message without quiting my game, I should be able to get to the "Create message" prompt in under 30 seconds, I should be able to blow up 10 cars in the middle of a GTA4 street without the system slowing to 1FPS. In a couple of months, we will be able to buy apple phones with as much ram as a PS3, feeding a chip that has less than 1/30 the power of the cell by itself...that just isn't right.

As for GT5...I am starting to doubt that it will ever be released. It was expected out soon after I bought my 40GB unit (they were taking pre-orders already)...that was over 2 years ago, and we still have nothing but demos with broken controls...I am sure glad that I didn't pre-order...at this rate, it will be a PS4 title, and you will have to use a wII-mote because that is the only way they can make the controls worse!

918.5.2010 12:56

Originally posted by KillerBug:
Oner - you make some great points...but even if it was just some super-slow DDR2 memory acting as a higher level of cache, I want more memory. 256MB system memory just isn't enough...even if it had 512/256 instead of 256/256, this would be a huge improvement. Heck, at this point I would even be happy to see a firmware update that gives us something similar to readyboost...I should be able to look at a picture attached to a message without quiting my game, I should be able to get to the "Create message" prompt in under 30 seconds, I should be able to blow up 10 cars in the middle of a GTA4 street without the system slowing to 1FPS. In a couple of months, we will be able to buy apple phones with as much ram as a PS3, feeding a chip that has less than 1/30 the power of the cell by itself...that just isn't right.

As for GT5...I am starting to doubt that it will ever be released. It was expected out soon after I bought my 40GB unit (they were taking pre-orders already)...that was over 2 years ago, and we still have nothing but demos with broken controls...I am sure glad that I didn't pre-order...at this rate, it will be a PS4 title, and you will have to use a wII-mote because that is the only way they can make the controls worse!
I too as well wish there was more ram, but it does the trick and the results we have seen plus upcoming are far from "horrible". GT5 WILL be out this year, all info leading up to E3 is proving it to be as well as the time is right. It cannot be pushed out any longer, it WON'T be pushed out any longer. Even the most recent Kevin Butler ad is hinting at an earlier release than what was expected of later this year from around the holidays to possibly August-September (I'm still thinking Holidays though for greatest effect with a bundle as well).
This message has been edited since its posting. Latest edit was made on 18 May 2010 @ 13:03

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