After Sony announced job cuts for it's electronic departments, Katsuhiko Mori, fund manager at Daiwa SB Investments, said in an interview with the BBC: "Sony doesn't have any core businesses that generate stable profits". But will the Playstation 3 help Sony?
Although some people may point this woud that ever since the Playstation 3's release back in 2006, it hasn't been making a profit. And that it because of the rather odd but simple fact that Sony are selling the console for less than it costs to make. And it has been like that since the consoles release. Sony reduced the price below manufacturing costs on purpose so that they could attempt to break into the market.
Although it may seem odd, but Sony has used this tactic with every console they have released, PS1, PS2 and even though the competition is tougher, they even did it with the PS3.
Their idea was that they release a high spec console into the market at a loss price, but because of the spec, the console will last a long time, making them money in the long run. But will they come through on top this time? With high pressure price reductions of the Xbox 360, and the new market of the Nintendo Wii, will Sony manage to cope and make enough money to cover their losses?
The problem is that Sony will not start to reduce the price of the Playstation 3 until they start to make a profit. But as the consoles prices is alot higher than the competition, they won't get a huge proportion of the console sales, which, in turn will cause them to lose money for longer.
Although it all sounds a bit down and bleak for Sony, they do have one upside, Blu-ray. It was lucky for them really that Blu-ray came out on top of the DVD battle. If HD DVD had won the battle, it would have not given the Playstation 3 any edge over it's competition.
So, at the moment, it's not looking good for Sony, also, with their release of their new online community, Playstation Home, already being shot down by Microsoft and EA. Both of them have said that their latest attempt at creating a social community is outdated and not directed.
Senior manager at Xbox 360 game console division, Aaron Greenberg, said: "When they unveiled it, it seemed innovative. I think what's happened is now here we are a couple of years later and we feel beyond that. It feels like 2005 tech in 2008.".
Hawkins stated: "I can't tell if they're going towards this mass market idea...or if they're being lured into essentially trying to compete with Warcraft or Second Life".
After Sony has spent alot of time and money on their new online community, it has just been shot down, personally to me it just seems like an idea of earning money, there are several things within the new world that requires money to buy, and they also have sections of the world which are sponsored by different companies like Red Bull. I'm sure that all gamers don't want to have to walk around while being spammed with adverts.
Overall, until the Playstation 3 sells more units to make Sony more money, Sony aren't going to reduce the price of their consoles, but because the price of the console is too high, buyers are being turned off and considering the cheaper competition. Who knows where Sony will be if their console doesn't start to sell more.
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