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PlayStation 3 to Sell For $399, Going Underground

Zonk posted more than 9 years ago | from the money-loss dept.

PlayStation (Games) 491

Merrill Lynch Japan has conducted research that indicates that the PlayStation 3 will retail for $399. According to Gamespot's coverage of the paper, the unit will cost $494 to manufacture. Sony will thus be taking an almost $1 Billion loss in the first year of the PS3's lifespan. From the article: "It is normal for game companies to take a loss on hardware whenever a new console launches, since they typically focus on acquiring market share rather than generating a profit during the first year. During the second year and afterward, they can recover the losses with the savings that come from mass production and with licensing fees from publishers." Meanwhile, Press the Buttons is reporting on a Pro-G article in which SCEE Chief David Reeves states that "I feel proud that E3 went well from the presentations that they did...I feel very happy about that, but I told the troops: OK now we go underground. The PS3 goes underground until it comes out next year."

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No surprise here (5, Interesting)

JonN (895435) | more than 9 years ago | (#12950243)

This isn't quite a surprise, as there has been a loss on consoles ever since the switch from cartridges to the inexpensive discs. The price for a disc at the high amounts they purchase them would probably be under 10 cents/disc. Now when you see that each game is going to be priced at ~$60 [ebgames.com] it is easy to see where the profit is.

Don't get me wrong, I'm not saying that video games only take a nickle/disc to make, there are so many games out there that fail, even to the point of being fully developed but never shipped, that these companies need to balance the costs.

Re:No surprise here (2, Interesting)

AnonymousJackass (849899) | more than 9 years ago | (#12950315)

I'm curious -- does anyone know roughly how much of profits from games goes to the console manufacturer? I wouldn't have thought it'd be much because the retailer/game producers/distributers/etc would want their cut first. Would revenue from the games be enough to make up Sony's shortfall?

Re:No surprise here (1)

xMilkmanDanx (866344) | more than 9 years ago | (#12950366)

AFAIK, the licensing costs to produce a game for a console are pretty steep. That's part of why a console games are more expensive than PC games (at least when the console is new).

Re:No surprise here (1)

m4dm4n (888871) | more than 9 years ago | (#12950438)

I'm sure I remember hearing it was around $10/copy sold went to the manufacturer of the console.

Re:No surprise here (1)

devmage (685080) | more than 9 years ago | (#12950382)

Sony and Microsoft may be able to afford throwing away that kind of money but Nintendo never has. I still think Nintendo may end up on top this time, maybe not on top of the Hype, but in terms of market penetration, and profit.

Re:No surprise here (1)

Evangelion (2145) | more than 9 years ago | (#12950453)


They won't succeed in the US unless they get HDTV [1080up.org] support on the Revolution, which isn't in the cards.

Re:No surprise here (0)

Anonymous Coward | more than 9 years ago | (#12950535)

The average person doesn't give a crap about hdtv, so I really don't see how that would affect it.

Yes it's a nice to have feature, but the games are where it counts. So far it looks like I won't be getting a console at all this time around. Haven't seen any interesting games.

Re:No surprise here (2, Insightful)

Cornflake917 (515940) | more than 9 years ago | (#12950594)

Yeah because a console's success is 100% dependent on it's HDTV support. Just look how much more X-boxes are sold than PS2's. Oh wait....

Re:No surprise here (5, Insightful)

dpilot (134227) | more than 9 years ago | (#12950596)

I suspect Nintendo knows their market, and it's not the top-feeders. I don't have 1080i, not even 720p, and neither do most of the people I know. Given the penetration rate of HDTV, I'd say that at the lower end it's feasible to ignore 1080i for this generation, if a little risky. For the current generation, Nintendo has occupied a lower space than XBox and PS2, and it looks like they're playing there, again. The XBox2 and PS3 are sounding so expensive that they may actually expand Nintendo's niche, assuming it's well-tuned to its market.

I agree that the XBox2 and PS3 will need 1080i, and everyone in the following generation will.

Re:No surprise here (2, Interesting)

Daxx_61 (828017) | more than 9 years ago | (#12950403)

It's exactly like Gillette, when they first released safety razors. They sell the razor itself for almost nothing, and the blades are really expensive. They even give them away - I got one for my birthday from them!

Re:No surprise here (1)

generic-man (33649) | more than 9 years ago | (#12950476)

Check out amazon.co.jp's best-selling games [amazon.co.jp] . Tack on 5% sales tax. They're all over $60.

Selling games for $60 is not a new thing in Japan. They'll still sell them in the US for $50. The Nintendo 64 proved that $60 is too much money for an American consumer to spend on one game.

Re:No surprise here (1)

generic-man (33649) | more than 9 years ago | (#12950520)

Two exceptions:

Everyone Loves Katamari (Minna daisuki katamari damashii) is about $45 US.

Some pachinko/slot game is the same price.

18/20.

Inflation (2, Insightful)

tepples (727027) | more than 9 years ago | (#12950602)

Selling games for $60 is not a new thing in Japan.

Japanese gamers tend to have more disposable income.

The Nintendo 64 proved that $60 is too much money for an American consumer to spend on one game.

There will also have been 10 years of wage inflation between the PS1/N64 generation and the PS3/Revo generation.

Re:No surprise here (1)

EyesofWolf (879816) | more than 9 years ago | (#12950491)

I'm not saying that video games only take a nickle/disc to make

Especially when you take into account the increased wages that the voice actors need to survive.

Re:No surprise here (1)

bodester17 (892112) | more than 9 years ago | (#12950500)

The game manufactorers get the profit from the game sales, not sony. Sony receives licensing money from the game companies, i.e. EA Games pays sony for Need For Speed Underground PS3 License.

PS3 for $399 (5, Insightful)

Anonymous Coward | more than 9 years ago | (#12950246)

Unless of course you wait like 3 months until it is $299.

Re:PS3 for $399 (4, Interesting)

MyLongNickName (822545) | more than 9 years ago | (#12950299)

Yup. That's what I like about electronics... the "First on the Block" tax. Perfectly voluntary. If it is important enough for you to be the first to have it, then you can pay. If not, then you don't.

It helps to subsidize electronics for the masses without a convoluted gov't based needs program.

Re:PS3 for $399 (0)

Anonymous Coward | more than 9 years ago | (#12950502)

I'm still waiting for the PS2 to get to $99.

Ouch! (5, Interesting)

DrMrLordX (559371) | more than 9 years ago | (#12950260)

A $1 billion loss in the first year of production? That's going to hurt a lot, considering how much cash they had to dump to get Cell production ramped up this early. Their ability to mass-produce the processor was supposed to help them keep costs down and let them recoup the investment of building fabs in the first place. So much for the economy of scale.

More R&D Coming (3, Informative)

JonN (895435) | more than 9 years ago | (#12950310)

I cannot say I agree with you, however just an fyi; Sony's new CEO Howard Stringer is saying [bignewsnetwork.com] that Sony is going to cut back on other research and development in order to finance more R&D into the two parts of PS3 which is supposed to seperate it from the competition (XB360). No surprise, these two things are: the Cell processor, which will be used not only to power the PlayStation 3 but also many of Sony's electronics, and the much ballyhooed Blu-ray disc, which will be the standard hi-def format for the PS3 and the format that Sony hopes eventually replaces DVD in the marketplace.

Re:Ouch! (1)

Lally Singh (3427) | more than 9 years ago | (#12950374)

Losing 1 billion in the first year of a console's introduction is nothing. MS Still loses more than that every year on the XBox.

Re:Ouch! (1)

GutBomb (541585) | more than 9 years ago | (#12950539)

I doubt microsoft loses money on the xbox anymore. The parts inside the xbox and the cost of manufacturing are most likely even, or lower than the MSRP of the xbox.

Sony will not lose $494 on every PS3 sold forever. Eventually the prices for the parts that go into the PS3 will go downand before the end of PS3 production they will be able to make a profit.

Re:Ouch! (1)

MP3Chuck (652277) | more than 9 years ago | (#12950472)

If Sony has their way, though, the Cell will find its way into other products. While the Cell's primary intent may have been for the PS3, I'm sure they'll look to more than make up lost dollars with other licensing and such.

A billion dollars???? (0)

technoextreme (885694) | more than 9 years ago | (#12950262)

That seems a bit excessive for a product that will only be out a year. It seems risky for someone that is not entirely familiar with the video game industry. How much money did the PS2 lose when it first came out?

Re:A billion dollars???? (2, Informative)

taskforce (866056) | more than 9 years ago | (#12950320)

From TFA (first one):

During its first year of release, Sony Computer Entertainment suffered a loss of 51.1 billion yen ($458 million), but it recovered the next year with a profit of 82.9 billion yen ($759 million), followed by 112.6 billion yen ($1.03 billion) the year after.

Re:A billion dollars???? (1)

mmkkbb (816035) | more than 9 years ago | (#12950325)

Keep in mind that each of those console sales will probably have at least one game sale in the first year.

What's the licensing fee for a copy of a PlayStation game? If it's $25 / disc, the average PS3 owner will need to buy 4 games over the life of the platform for Sony to make its money back. $25 / disc sounds REALLY high, though.

Re:A billion dollars???? (1)

xMilkmanDanx (866344) | more than 9 years ago | (#12950450)

Yeah it does. I would like to hear from a developer as to the actual cost but I would guess probably around 10-15 per game. Plus they sell the SDK too AFAIK.

Re:A billion dollars???? (1)

Fr05t (69968) | more than 9 years ago | (#12950505)

" $25 / disc sounds REALLY high, though."

Buying only 4 games in the life of a platform sounds REALLY low.

Re:A billion dollars???? (1)

Emetophobe (878584) | more than 9 years ago | (#12950569)

Buying only 4 games in the life of a platform sounds REALLY low
Lol, my thoughts exactly. Of course I own around 35 ps2 games, I consider myself on the high-end of purchasers.

Re:A billion dollars???? (1)

xMilkmanDanx (866344) | more than 9 years ago | (#12950331)

Doesn't really matter as long as it sells well they'll make a killing in the software licensing. Then, a couple years down the road when the hardware manufacturing costs have come down they start breaking even on the hardware too.

PS2 has been selling for what? Almost 5 years now. While they sold at a loss at first, it's likely been profitable even at their reduced price for quite awhile now.

Game consoles are all about potential market, if it wouldn't cost too much they'd give the boxes away just to keep the developers making for their product.

Geeze (1)

czarangelus (805501) | more than 9 years ago | (#12950275)

That's a pretty steep price tag for a poor college student like me. That had better be the price with a decent sized harddrive, and Linux preinstalled. Being able to use it as a toy, entertainment system, and cutting edge computer might be the only way for me to justify blowing that much money on it.

Re:Geeze (0)

Anonymous Coward | more than 9 years ago | (#12950289)

I'm already out of college.

Re:Geeze (0, Troll)

generic-man (33649) | more than 9 years ago | (#12950317)

The price includes no hard drive and no Linux.

Sony recommends that you purchase the 10GB SonyDrive with MagicGate for $299 more. You can install SonyLinux, and only SonyLinux, for $49 on top of that.

You'll also need a television capable of HDMI in, which'll run you at least $1,000. Anything less will not be able to capture the level of reality that Sony brings you.

Re:Geeze (0)

Anonymous Coward | more than 9 years ago | (#12950381)

If you're a "poor college student," you shouldn't be playing games. Take that $400 and build yourself some Linux boxen instead so that you can do your homew0rk.

Re:Geeze (0)

Anonymous Coward | more than 9 years ago | (#12950496)

Yeah, thing is, game companies really aren't that interested in selling to poor people... it's no problem though, when I was a college student (finished 2 years ago) I was perfectly happy with a low-end PC - plenty of older games are worth playing, you don't have to stick to the latest.
If I were you I'd be pleased that the next-gen launch will mean I can finally afford an Xbox.

Re:Geeze (1)

orderb13 (792382) | more than 9 years ago | (#12950573)

Do what my roomies and I did, everyone chip in and buy one together. We did it for the PS1, true, but it was still a good idea. Only problem is you have to live with the same roomies for a couple of years.

Will It Make A Difference? (4, Interesting)

Omega697 (586982) | more than 9 years ago | (#12950291)

With all these consoles coming out in such a spread-out schedule, I wonder if it will be possible for anyone to keep the hype up.

Quick question re: the PSP (1)

Wah (30840) | more than 9 years ago | (#12950292)

How much does that thing cost to make? It feels faaar more expensive than the $250 asking price.

But yeah (re: hardward discounts), when you have your name on every game, those props comes with a couple bucks, so they do make the initial loss in volume.

Re:Quick question re: the PSP (0)

Anonymous Coward | more than 9 years ago | (#12950582)

You don't even have to RTFA. Just read RTF link.
$494

Meh.. (2, Interesting)

kutsu119 (883719) | more than 9 years ago | (#12950296)

Would it be wrong of me to hope that Sony taking this sort of risk backfires and means the playing field is a bit more even this generation?

I'd love to see what would happen if all 3 companies had 33% market share.. Besides the obvious multi-platform title increase, specific and exclusive games could really swing the buying public.

Re:Meh.. (1)

Fr05t (69968) | more than 9 years ago | (#12950418)

Yes it would, and this isn't the kind of "risk" you think it is. It's the same risk MS took with the XBox, and will with the 360. I'm guessing XBox was your first console right?

Re:Meh.. (1)

kutsu119 (883719) | more than 9 years ago | (#12950477)

I just own a Nintendo DS and a gaming PC, so no, no Xbox

Re:Meh.. (2, Informative)

JonN (895435) | more than 9 years ago | (#12950463)

It is not really that much of a risk that Sony is taking, as Microsoft is taking nearly the same risk [bignewsnetwork.com] . It is reported that the XB360 will be selling for $299, which still means a ~$75 loss per system for Microsoft.

How is this not considered "Dumping" (3, Interesting)

Aumaden (598628) | more than 9 years ago | (#12950300)

If a silicon manufacture in Japan/Korea/etc sells chips below cost, it's considered "dumping". Folks start yelling for import tarifs and whatnot. The manufacture is generally painted as being "evil".

How come this is ok?

Is it because this is a direct consumer product?

Re:How is this not considered "Dumping" (1)

tomstdenis (446163) | more than 9 years ago | (#12950342)

There are a lot of sony developers in the US. Getting the thingy capable of playing the stuff the developers writes ... think about it.

Though yeah, it is anti-competitive as it bars newcomers to the field since they can't afford the cut.

But alas... whatever, we're all gonna work for Taco bell anyways ... ;-)

Tom

Re:How is this not considered "Dumping" (5, Insightful)

Omega697 (586982) | more than 9 years ago | (#12950351)

Well first off, they're not just "dumping" it here, they're "dumping" it in Japan too (and anywhere they can sell it). I think dumping has to do with attempting to invade a particular market by offering goods (ones that are extremely similar to others offered on that market, i.e. the PlayStation brand alone is enough to differentiate it) at well below what they are worth. However, just because it costs Sony $494 or whatever to make them, doesn't necessarily mean they are worth that much. They're only worth what people will pay for them, and I'd bet dollars to doughnuts that Sony's going to be asking exactly what they think people will be willing to pay.

Re:How is this not considered "Dumping" (0)

Anonymous Coward | more than 9 years ago | (#12950388)

Mod up, on both counts. (Although I think the first is the key one.)

Re:How is this not considered "Dumping" (5, Informative)

parliboy (233658) | more than 9 years ago | (#12950401)

Because dumping refers to selling a cost in a foreign market at a cost below a product's home market cost. Here's it's not dumping, simply a loss leader, as the cost is low in all markets. http://www.wto.org/english/tratop_e/adp_e/adp_e.ht m [wto.org]

Distinction: Government Subsidies (3, Insightful)

reporter (666905) | more than 9 years ago | (#12950429)

When a company sells a product below cost, such behavior is consistent with free-market principles except in 2 situations: government subsidy or monopoly. When Korean companies like Hynix sell their memory chips at very low prices (or at prices below cost) in the USA, Hynix is receiving financial support from Seoul so that Hynix can afford to sell at a loss or at no profit. Such financial distortions (which are common in Korea) materially impact the American economy because Washington opens the American economy to "free" trade with Korea.

The other situation that is prohibited is for a monopoly to sell a product at a price below cost in order to destroy the competition. In such situations, the monopoly aims to destroy the competition so that the monopoly can, at a later point in time, dramatically raise the price of the product to reap monopoly profits. Such actions also hurt the American economy.

Except for these two problems, there is no issue with companies using selling-at-a-loss to gain market share. IBM sells its server hardware at zero profit or at a small loss in order to reap the profits from a service contract. Sony sells its Playstation at a loss in order to reap the profits from software sales. Neither IBM nor Sony is a monopoly. Further, neither IBM nor Sony (unlike Korean companies) are being subsidized by either the American or Japanese governments.

Weird.. (4, Insightful)

seti (74097) | more than 9 years ago | (#12950304)

Correct me if I'm wrong, but doesn't the loss or profit made on each unit depend initially on the development costs, and then on the actual amount of units produced?

i.e. if the development costs were a theoretical $1000 and each unit has a cost of $1, making 1000 units will be $2 each, whereas making 2000 will cost $1.50?

Starving Geeks (4, Funny)

Vonotar82 (859920) | more than 9 years ago | (#12950305)

Well, I can't say I'm that surprised at the price tag, as all new technology is rather pricey. Will that stop all the random single people from buying one immediately? Not at all. In fact, I'm pretty sure we'll see those self same buyers out on street corners with signs saying "Will max out materia for food".

Y+ou FAIL it (-1, Troll)

Anonymous Coward | more than 9 years ago | (#12950311)

would 7ou 7ike to

There it goes... (-1, Flamebait)

Anonymous Coward | more than 9 years ago | (#12950319)

What is SONY thinking?!?!! Are they out of their minds? 6ft. under is not where the PS3 should be! Let's start a petition to have SONY keep the PS3 from going underground! I just don't understand it. They didn't even give it a chance.

Going underground a mistake (2, Interesting)

slusich (684826) | more than 9 years ago | (#12950324)

Putting the PS3 underground for a year with the 360 coming out in a few months seems like a mistake to me. It would seem they would want as much exposure as possible during this time to keep from being completely overshadowed by Microsoft.

Re:Going underground a mistake (-1, Flamebait)

Anonymous Coward | more than 9 years ago | (#12950391)

Overshadowed?

What fucking fanboy planet are you posting from?

The Dreamcast 360 is a pathetic attempt at cost saving by Microsoft. It's got a gimped CPU people are calling IBM's OS/2 revenge. And Microsoft has nothing but PC developers supporting them outside of the usual companies dumping Playstation ports on the platform.

Overshadowed? Get real clown. Even diehard xbox/MS fanatics are questioning if they will stick it out for another four years of nothing but MS and Halo.

WTF?! (3, Funny)

LegendOfLink (574790) | more than 9 years ago | (#12950328)

The PS3 goes underground until it comes out next year.

I feel bad for the poor bastard who has to dig the hole to bury all of those units...

Re:WTF?! (1)

Fr05t (69968) | more than 9 years ago | (#12950543)

I don't - digging a hole to bury the maybe 3-4 prototypes that exist shouldn't be too hard.

+1 Offtopic (-1, Offtopic)

Dancin_Santa (265275) | more than 9 years ago | (#12950329)

This likely has nothing to do with the story at all. I am tripping on my first hit of LSD. Don't ask how I got it, the little elf who brought it shall remain nameless. ;-)

The first thing I've noticed (besides the obvious euphoria) is what seems like an increase in my ability to concentrate. The keyboard itself feels like it is part of my brain and typing is just a matter of thinking. Typing is not a matter of moving my fingers so much as it is a matter of flying through the keyboard.

The screen itself is various colors, a vast improvement over the standard Slashdot color scheme, let me tell you. To liken it to something that I've had experience with, it's similar to watching a lava lamp except with multiple colors. It's like visual goo.

My Playstation 2 (the predecessor of the PS3) is sea-blue but it also seems to contain various colors. Beyond that, it seems to float and move on its own. The controllers emerge from the console like tentacles seeking cartoon schoolgirls. The controllers are calling me. Santa... Santa... I don't suppose you've ever been called by an inanimate object?

Nande kono saito ga konna ni attraction ga aru no kana. Honto ni tsumannai koto bakkari, onaji koto wo nankai mo sai-posto wo surunda. But the lights are flickering. The computer is flickering. Gotta stop. Pressing Submit.

Submit.

Re:+1 Offtopic (-1, Offtopic)

Anonymous Coward | more than 9 years ago | (#12950394)

omae chin kasu yaro!

Oh god (0)

Anonymous Coward | more than 9 years ago | (#12950422)

Watching anime is hardly the same thing as studying Japanese.

Both of you.

Re:+1 Offtopic (-1, Offtopic)

Anonymous Coward | more than 9 years ago | (#12950458)

your japanese sucks, fuckface

If you can still type (0, Offtopic)

Anonymous Coward | more than 9 years ago | (#12950570)

That was one weak-ass hit of LSD. Ask the elf for your money back.

Pricing (3, Interesting)

dannyitc (892023) | more than 9 years ago | (#12950344)

I wonder if MS and Sony are creeping up on the ceiling price of what consumers are willing to pay for a new console. With an initial price of $400 and games costing $60 apiece, it'll be interesting to see their sales figures for the first few months after launch.

Also, anyone else think that Nintendo may be a bit more successful at undercutting MS and Sony with MS and Sony both ramping up prices? I would assume that Nintendo will make the Revolution's price point a large issue.

Re:Pricing (1)

generic-man (33649) | more than 9 years ago | (#12950408)

Companies have been selling PS2 games in Japan for ¥6850 brand new for years now. That's over $60 by the current exchange rate and it doesn't include (5%) sales tax. People snap 'em up.

From TFA: (4, Funny)

Shadow Wrought (586631) | more than 9 years ago | (#12950354)

Sony estimates that the aging console has only completed 10% of its lifespan in Iran. No, seriously. There's a Sony office in Iran.

I can only imagine how well GTA: San Andreas is doing over there...

Re:From TFA: (3, Funny)

Hinhule (811436) | more than 9 years ago | (#12950548)

You haven't heard of GTA: Tehran eh?

Re:From TFA: (3, Funny)

Anonymous Coward | more than 9 years ago | (#12950576)

Yeah, it's too frustrating though. The cops catch you and you get executed instead of just fined.

Dumping (2, Interesting)

DarthVeda (569302) | more than 9 years ago | (#12950360)

This sounds a lot like:

"Dumping [answers.com] : selling goods at less than the normal price, usually as exports in international trade. It may be done by a producer, a group of producers, or a nation. Dumping is usually done to drive competitors off the market and secure a monopoly, or to hinder foreign competition."

Drive off competitors? Secure a monopoly? Sony? Never!

Re:Dumping (0)

Anonymous Coward | more than 9 years ago | (#12950451)

Really, it would effectively be dumping only if (1) the PS3 and the XBox 360 are fungible goods, and (2) the XBox 360 is selling for more than $399 when Sony starts selling the PS3.

Since neither is likely true, your case for dumping doesn't hold water.

Re:Dumping - legal? (0)

Anonymous Coward | more than 9 years ago | (#12950459)

Isn't dumping illegal?

Re:Dumping (1)

GauteL (29207) | more than 9 years ago | (#12950541)

The reason they can do this is that the Playstation is not a useful product by itself, it becomes a useful product when combined with the games for the platform. Thus Sony is selling one part of it at a loss, and recuperating the rest on games.

This is not uncommon, nor illegal (IANAL). It is used for mobile phone services and digital cable boxes (giving away the hardware and earning money on the subscription), or razors (think Gillette).

It is also extensively used by others in the Game console industry. For example Microsoft used it heavily for the Xbox.

Dumping is normally done by using income from one part of the world to subsidise the sale in other parts in order to drive away local competitors. See for instance Microsofts prices in parts of the world compared to the US. Sony sells consoles at a loss everywhere.

Besides, Sony does not have a monopoly on game consoles. Microsoft and Nintendo are both in it.

More from the Corporation of Arrogance: (2, Interesting)

kryogen1x (838672) | more than 9 years ago | (#12950373)

From TFA:

The press was saying that it was expensive, but it was a huge hit. It's the same thing with the PlayStation Portable from last year. The Game Boy Advance is a same handheld gaming machine, and it costs less than 10 thousand yen ($91). On the other hand, our PSP had cost 25,000 yen ($229). But people lined up overnight to buy it, and it sold out on the day of its launch. It all depends on whether people want it. Of course, I'm confident that the PS3 is a product that people will definitely want.

Funny, I remember Slashdot covered this and the PSP didn't sell out on opening night.

Re:More from the Corporation of Arrogance: (0)

Anonymous Coward | more than 9 years ago | (#12950461)

Not in the States...but it did in Japan.

Re:More from the Corporation of Arrogance: (1)

mikael_j (106439) | more than 9 years ago | (#12950515)

Well you see, it's statements like the one you quoted that can normally be used to identify a fanboy. The covert message here was (I think) "Nintendo boring, Sony r0xx0rZ, byu teh PS3 ro yuo r teh l00zar Nintend0rk k1dd13!!!11"

/Mikael

Has History tought them NOTHING? (3, Insightful)

Orion83 (448477) | more than 9 years ago | (#12950376)

The hubris of these guys... how many times in history has a $399 game console sold well?

Oh wait, it's not just a game console "this time"?
It's an entire entertainment center? A supercomputer too? Gee, in THAT case....

Re:Has History tought them NOTHING? (0)

Anonymous Coward | more than 9 years ago | (#12950478)

Well clearly Sony has learned nothing from history. Although if they actually HAD learned something from the history of $399 game consoles I would be most impressed.

Have to hand it to Sony. (4, Interesting)

mr_luc (413048) | more than 9 years ago | (#12950384)

I have to hand it to Sony.

They really know how to do this "business" thing.

Microsoft comes to E3 with a console that is looking amazingly polished, down to the extensive new XBox Live features, and with tons and tons of in-engine first looks.

Sony comes to E3 with a gigantic press event held at their cinema, with 2 simple real-time tech demos, prerendered (although using PS3 hardware) gameplay footage that blows away any other *footage* to date, and a bunch of video clips featuring their spider-man franchise.

There is no doubt about it -- MS is shipping earlier, MS has a better online infrastructure, and many of MS' games are already playable ...

But Sony won E3. All anyone wanted to talk about was the KillZone trailer.

Now, to keep anyone from pointing out that the Emperor has no clothes, they're disappearing. So all anyone will talk about, until they're ready, will be ... the KillZone trailer. Which is not a bad situation to be in, because that trailer was pretty amazing.

It's absolutely a great idea. For the record, I have nothing against MS, but I'm WARY of them. Anything, even something unfair, that keeps them on their toes is probably a good thing for the rest of the world.

I won't buy either until they're both out next summer, though, so it's sort of moot.

Judging by Sony's record (2, Informative)

EmperorKagato (689705) | more than 9 years ago | (#12950386)

If they decide to take a $1 Billion dollar loss they should make sure this time no extra finances will have to go into system recalls, fixes etc.

I have a strange feeling that two giants may fall hard from a war this huge.

To bad that SEGA isn't around there (1)

DrYak (748999) | more than 9 years ago | (#12950396)

I just think it's too bad that SEGA isn't around anymore in the console market.
With more constructor on the market : more concurence and thus even better prices and more efforts to put out something inventive.
Too bad they never learned to do good marketing to better sell their products. They did have some quite descent consoles in the past (IMHO: Genesis/MegaDrive and DreamCast were good, not to mention the fantastic hack-ability of the latter. Saturn would have been ok too, if only more titles have been translated from japaneese)

Or maybe am I just a little nostalgic ?

Um? (4, Insightful)

oGMo (379) | more than 9 years ago | (#12950397)

People seem to be taking this for gospel, when both numbers are analyst estimates.

Of course, retailing for $399 on lauch is probable: in Japan, the PS2 retailed for about this. When it came here, it went for... $299. The PS1 retailed for $599. When it came here, it went for... $299.

So let's wait for a real number from someone with a clue, as opposed to an analyst.

Ahem!!! (5, Interesting)

alvinrod (889928) | more than 9 years ago | (#12950410)

From article:

It is normal for game companies to take a loss on hardware whenever a new console launches, since they typically focus on acquiring market share rather than generating a profit during the first year. During the second year and afterward, they can recover the losses with the savings that come from mass production and with licensing fees from publishers.

Nintendo will probably launch the Revolution somewhere between $200 and $300 and still manage to make a profit on every console they sell. A while back there was an excellent article on /. that explained how Nintendo's business model was different from Sony and Microsft, and that even though they came in third place against the Xbox and PS3, they were still the most profitable.

For Sony to release a console after Microsoft and for a higher price could cause problems for them like the article stated. Microsoft has deep enough pockets to launch the console at around $350 when it comes out and cut it down to $300 when the PS3 launches. They'd be taking some huge hits in the pocketbook, but it would probably get more people to buy Xbox 360's.

However, as illustrated with the PSP, some people will buy something no matter how much it costs just because they want it. Sony is really going to need to count on its fan base to help out a lot.

Re:Ahem!!! (1)

greymond (539980) | more than 9 years ago | (#12950562)

A while back there was an excellent article on /. that explained how Nintendo's business model was different from Sony and Microsft, and that even though they came in third place against the Xbox and PS3, they were still the most profitable.

I think the major reason for Nintendo needing to have an entirely different business model than Sony and MS, comes from the fact that Sony and MS create, research, develop, etc... a lot more consumer electronics, software, and participate in so many different markets making rediculous amounts of money that they can have one of their singular divisions tank financially in order to gain market share.

Nintendo on the other hand does not do anything other than make video games. They can't possibly ever take even a chance of tanking financially to grab market share, because they don't have other divisions bringing in any funds. I mean when was the last time Nintendo had it's name on a PC, Monitor, Stereo, TV, DVD Player, Cell-Phone, MP3 Player, let alone an OS and Office suite?

Nintendo focused on limited monopolies (4, Interesting)

alexhmit01 (104757) | more than 9 years ago | (#12950571)

What was smart about Nintendo, is instead of joining the fray and getting bashed by Sony and Microsoft (three companies in cutthroat competition means profits drop considerably...) Microsoft didn't make any money, and Sony didn't mint money the way they did with the Playstation.

Nintendo took their limited Monopolies (Mario, Metroid, Zelda, Pokemon, etc.) and pushed them into that market. They made money along the way, kept their costs down, and sold most of their own titles. Sony/MS make something like $8/game on third-party games. Nintendo makes considerably more per game.

Even if customers bought fewer games/console, Nintendo probably made more per customer, and wasn't trying to recover a $100/customer acquisition cost.

Sony ONLY makes money on its fan base. A recreational player that buys a few sports games each year will never pay Sony enough in its fees to cover the $100 Sony spent subsidizing their hardware.

HOWEVER, in this case, Sony has another advantage. Getting the PS3 out means getting Blu-Ray DVD players into millions of homes. When the HD-DVD crew comes out with their $1000 HD-DVD players, and Apple and Sony have moved their Blu-Ray DVD machines (including Apple machines that will no doubt let you burn HD Blu-Ray DVDs of your kid's little league game), this might be the first time that the superior technology wins DESPITE being backed by BOTH Apple and Sony... :) I loved Blu-Ray, and was saddened to see adoption by Apple, because I feared that it would go like Firewire/iLink that Apple/Sony managed to kill through poor technology marketing (they both rock at consumer marketing, but technology marketing is NOT their strong point). Note, I am typing this from my Powerbook. :)

Alex

Cuz, you know (1)

mcc (14761) | more than 9 years ago | (#12950412)

Since Merril Lynch owns Sony [sd68.bc.ca] and all... they'd know what Sony plans to charge for things...

Right?

They want YOU to get addicted (3, Interesting)

xiando (770382) | more than 9 years ago | (#12950445)

Gilette did it with razors.
The printer corps do it with printers.

1. Sell some product which addicts you to something cheap.
2. People must buy more of your razor-blades, printer-ink, games/controllers,
3. ???
4. Piles of profit.


Anyone know a Playstation owner will spend at least ten times what the console cost on other things.

Re:They want YOU to get addicted (1)

Durinthal (791855) | more than 9 years ago | (#12950525)

Well, if they buy $400 worth of accessories like additional controllers, a headset, a camera, etc.. they'd still have to buy 60 games at $60 each to make 10x the console cost.

Re:They want YOU to get addicted (1)

Emetophobe (878584) | more than 9 years ago | (#12950547)

Anyone know a Playstation owner will spend at least ten times what the console cost on other things.
I would agree with that. I bought a PS2 a few months after they first came out, I currently have around 35 PS2 titles. Plus controllers, their crappy 8mb memory cards and a cheap remote control for watching dvds, the total adds up over the years..

Where do we go from here? Is it all worth it? (1)

TheHarker (841979) | more than 9 years ago | (#12950452)

Really? I am getting really bored with this console hype. The online thing looks promising (Animal Crossing DS looks like it'll be a revelation).
The fact that I only ever play Winning Eleven these days it quite telling. I hope Nintendo and Mr Gates do undercut Sony, just to freshen things up a little

$100 more than the Xbox 360? Ouch. (5, Insightful)

AvantLegion (595806) | more than 9 years ago | (#12950468)

Microsoft has already confirmed that they're targeting the $299 price point, and have said that it will definitely be "in the neighborhood of $300" (translation: definitely shooting for $299 but not yet ready to commit to it).

Not only is that $100 less, but by the time the PS3 launches, the Xbox 360 will be out long enough to cut its price. It could conceivably go down to $250-275.

For the casual gamer that isn't necessarily married to the Sony brand label, the 360 price point will certainly look much more attractive. To the slightly more technical buyer, one would note that the PS3 price doesn't even include the damn hard drive (sold separately!), while the 360 does.

I don't see a really good "win" scenario for Sony here. If they do price competitively with the Xbox 360, then they'll be taking losses per unit that blow away the losses MS was taking with the original Xbox (and those were crazy enough that MS built their new console with keeping losses in control - and apparently have succeeded).

There's still plenty of Sony faithful that want their Final Fantasys and Metal Gears, but Sony could stand to lose a huge share of the massive casual fan base that made them the #1 console seller this past gen.

(This post was written by a decidedly non MS cheerleader - he likes Ubuntu, Gentoo, and Apple)

Re:$100 more than the Xbox 360? Ouch. (-1, Flamebait)

Anonymous Coward | more than 9 years ago | (#12950559)

Well, thanks for sharing that dimwitted analysis.

I don't know what the fuck it is about console news stories that drives every clown to flaunt their ignorance.

Do the world a favor guy, just keep you mouth shut and buy the games we make. Leave the 'think'n' to us smart folk.

$399 retail. (1, Insightful)

Anonymous Coward | more than 9 years ago | (#12950483)

$399 is retail price. Which means - at this price the retailer needs to take a cut. If the bill of materials is $500, then they'll be subsidizing by between $200-$300 per unit.

Eating their own words? (2, Insightful)

moankey (142715) | more than 9 years ago | (#12950493)

Isnt this the same company that laughed at M$ when they came out with Xbox with the same model of losing money on the hardware and making it up with games?
Seems even though Sony claims Xbox has not hurt their sales and is not a threat, taking up this give away the razors and make money on the blades approach says otherwise.

Four hundred dollars? (0, Troll)

huge colin (528073) | more than 9 years ago | (#12950504)

Buy a computer! It'll do a lot more than a game console.

Oh No! (0, Offtopic)

StevenHenderson (806391) | more than 9 years ago | (#12950523)

The PS3 goes underground until it comes out next year.

OH NO!!!! Just like teh War of the WorldZZ!!!!!1

Worth It For HD (3, Interesting)

DeadBugs (546475) | more than 9 years ago | (#12950538)

If Sony comes to the market with the first High Definition DVD player in it's PS3, $399 would be a steal of a deal.

My first DVD player was $300, I can only imagine what the first HD-DVD players will cost.

Maybe they will even bundle a 1080p version of Spider-Man 2 to with it.

Sega Saturn launched at 400 Dollars... (1)

marcybots (473417) | more than 9 years ago | (#12950554)

The sega saturn launched at 400 dollars, but of course a inept marketing campaign, launching at "select retailers" instead of everywhere, and games that were rushed to market when it was released 3 months early to prempt the playstatoin didnt help either.
Just because the sega saturn launched at 400 dollars doesnt doom the PS3, but launching it with to few games combined with a expensive price tag will....the Xbox 360 will be a 100 dollars cheaper...that is a big advantage for me.

Press The Buttons (1)

News for nerds (448130) | more than 9 years ago | (#12950575)

Press the Buttons is reporting on a Pro-G article in which SCEE Chief David Reeves states that... ...what??

corrected:

Pro-G is reporting SCEE Chief David Reeves states that...

Anyone else getting deja vu? (4, Interesting)

Namarrgon (105036) | more than 9 years ago | (#12950581)

The original Xbox was late to the party, oversized, had weird controllers, was technically advanced, and cost way more to make than it sold for. The sleek PS2 wasn't, and didn't.

This time round, looks like it's Sony coming out second with the advanced yet fridge-sized beast & freakshow controllers, and it's going to really cost them a bundle, while the Xbox 360 seems to taking it more carefully...

I'm guessing that Nintendo will stay right where they were before though.

Offer the Sony credit card. (1)

WidescreenFreak (830043) | more than 9 years ago | (#12950584)

All that they have to do to recoup that billion is get their own PlayStation VISA, which will be approved to all applicants. You can pay for the PS/3 for 48 low monthly payments of $24.95 at only 27% interest! Hey, it certainly beats having to pay $399 + tax all at once, doesn't it?

Yes, that's partially sarcasm, but don't underestimate those who want it now and are willing to pay more over time with a manageable monthly payment. After all, look at how many people have store cards at 24% interest instead of regular Visa through a credit union at 12% or less all because it might be easier to get the store card! And, hey, it spreads out the payments, doesn't it? Sony could make a FORTUNE from their own Playstation credit card, if they don't have one already.

Underground until next year? (1)

Xian97 (714198) | more than 9 years ago | (#12950591)

I really can't see that happening. If the Xbox 360 is going to launch this Christmas season, I doubt if they will keep quiet and not provide more PS3 details to dissuade people from buying the Xbox and give them a reason to hold out until the PS3 release.
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