Buy a PlayStation 3 and Sink Sony

sonnyweathers writes "There has never been a more perilous time for Sony than 2006. But if you think you can save the company by buying PlayStation 3 consoles, you're wrong. Analyst Evermore believes that selling 6 million PS3 consoles will make Sony a ripe target for takeover — perhaps even by Microsoft."

Comments

What would Microsoft do with all that content?

[pieterh]

If Microsoft bought Sony, they'd own a whole lot of music and movies... I wonder what they'd do with that.

Re:What would Microsoft do with all that content?

[bmajik]

Speaking for myself only (but, I am a MS employee), I seriously hope that _never_ happens.

To say that I am ... dissatisfied with what we're doing in terms of DRM and content protection technologies for content we have no financial stake in.. would be an understatement. I've gotten in some pretty heated arguments with people closer to those groups internally and there are days I feel like looking for other employment options.

Imagine how awful things would be if MS owned a bunch of "traditional" content (besides software.. which has grown up with "piracy" and the market understands how to deal with it..and the providers have grown up figuring out how to stay alive inspite of it)

When one umbrella organization owns content and technology, the interests of one are going to suffer due to the other. Sony makes this plainly evident. I suspect that the content people at Sony are furious that the technology people haven't invented a remote "extort-money" button for the latest Sony-Style line of kitchen radios.. and the consumer electronics people are livid that they keep getting memos suggesting that they invent a TV that plays ONLY Sony Pictures movies from the content arm.

When I talk about stuff like the broadcast flag, etc at work, I can still posture the argument that it's not clear that we make money by playing well with that thing vs ignoring it or taking a more consumer friendly approach. If suddenly "we" benefited from crap like the broadcast flag, those arguments would be DOA.

(Just like slashdot - there is not a singular hive-mind mentality inside Microsoft, and it should be clear that not everyone is 100% thrilled with everything that gets MS's name attributed to it. I can only imagine that there are good engineers at Sony as well that are upset with what has happened to their company.. )

"Save Sony?"

[plover]

From the article, Sony's CEO was quoted as saying "Want a PS3? Work a little harder."

What do I have to do if I happen to like watching the company most actively pushing DRM on us flounder and collapse? How can I personally help to hasten that demise? Work a little harder? Be a little less greedy?

Actually, that's a strategy that could possibly save Sony -- abandon DRM loudly and publicly, and tout themselves as the Kings of Unrestricted Media. A big campaign of "We trust you to not steal our stuff, but Microsoft and Apple think you're thieves."

Hey, if they're going down the toilet anyway, try a little innovation! Work a little smarter, not harder.

Re:"Save Sony?"

[plover]

It's all about history. A lot of (old) people are still bitter about having to replace their Betamax VCRs. The feeling of having been screwed by a corporation doesn't fade -- it ossifies in the brain.

It's not an issue of cold facts, it's one of perception. Keep in mind that at this time Sony was widely loved for having produced the Walkman, which was 1979's version of the iPod. I'm not saying Sony went out to deliberately screw the people who adopted Betamax. Far from it, it's obvious that they wanted Betamax to dominate the market. But it didn't, and people felt like they had wasted a huge amount of money trusting their beloved Sony (feel free to adjust a $1000 price tag for a VCR for 25 years of inflation.) When they spent that money, they didn't know it was a gamble or that there was a chance they'd "lose" -- this was Sony!

Now, compound that disappointment with the rest of the restrictions and proprietary media that Sony's shoveled out the doors or supported ever since they entered the production side of the entertainment industry. ATRAC, the copy bit in DAT tapes, Macrovision, Memory Sticks, CSS, HDCP, (and the rootkit fiasco) and you can't help but notice a pattern of general contempt for their customers evolving over the years.

So if a pissed-off grumpy old guy wants to whine about getting burned by Betamax, let him. He's got tons of evidence on his side, even if the facts are slim.

(A lot of people who paid thousands of dollars for non-HDCP HDMI televisions a few years ago are about to enter that same ripped-off state, so look for a fresh crop of bitter young technophiles to adopt a similar attitude towards the makers of their plasma TVs.)

Meh

[richdun]

First, TFA suggests that MS could take over Sony's video game arm, not the whole company. Second, it pretty much assumes that MS would want it. Why exactly would MS need/want it? If Sony goes that in the hole over the PS3, meaning not only did they lose a ton of cash on the loss per sale, but also didn't make hardly anything in third-party licensing deals (something TFA seems to forget is the largest revenue driver for consoles these days), that would mean that the Wii60 combination dominated the market - all this after the PS3 sold 6 million units (see the faulty logic yet?). Both Sony and MS lost tons on sales of consoles with the Xbox and PS2, but more than made it up with first-party games, third-party licensing, and the like.

Stranger things have happened, but I don't see it. Microsoft itself is a prime takeover target with almost zero debt and huge cash reserves, but it's too big for an LBO (at least we think it is).

Re:Strange

[UbuntuDupe]

Yes, and along the same lines, what if people bought them en masse for a non-gaming, non-blu-ray purpose? What if, say, university workers started buying them, and salvaged them for parts, esp. the processors for a supercomputing system. You'd also get hard drives and graphics cards. I'm sure these could be used in other fields, and they're priced under cost -- a better deal than anywhere else.

Then, they're just a charity for people who need computer parts. What would stop this?

Not MS But...

[skribble]

Disney would buy Sony (with some part being sold off to Apple) MS would have nothing to gain by buying Sony except to just put them out of business. Even though MS is getting more aggressive in competing directly in the Hardware business, buying Sony would freak out the Dell's and HP's of the world (And honestly the anti-trust gov't types would have to be smoking something real good to let this one get through... essentially MS would likely have to sell off the hardware stuff, leaving just the media, which while interesting to MS would turn away the other media people and make MS's media/DRM play more difficult for them). Disney on the other hand would be a perfect fit. They would add the media to their portfolio (give them more theme park ride possibilities even) The PS3 is great since Disney like to publish Games... They could hire the right game developers and go all Nintendo on everyone (in stead of Mario though, think Mickey). Of course this would benefit Apple indirectly since well their interests are currently tied together pretty strongly (iTunes now gets Sony movies, and has more leverage in future iTunes Music negotiations), yet still Apple maintains the guise of neutrality. The computer hardware would likely get sold off (Sony Laptops are quite cool). The software could get sold off too (maybe to Apple, Combining Acid IP with Garageband, Vegas with iMovie, FCP, maybe creating a PC version of iMovie and GarageBand?). The Camera business, Chip making, and all that could continue under the Sony name or get sold off as well, heck the peripheral stuff would also mesh well with Apple (except the Walkman but again the IP could be valuable). Of course Steve Jobs could make this happen without too much problem making a win-win for both of his companies.

Re:Strange

[drew]

Two things:

1) Sony doesn't make the consoles as the order comes in. Sure, they won't make 6 million right away if nobody is buying them, but they still have to have enough on hand for the initial launch to fill demand. So if they make two million consoles and manage to get half of those onto store shelves before stores realize that nobody wants them, then Sony is out $600*1M + $100*1M = 700M. If they make 6 million and they sell out, they are out $100*6M = 600M, and even that is assuming that there are really 6 million people out there who are willing to spend $600 on a console and nothing else just to spite Sony. Sorry, don't think so.

2) Does anybody actually know that Sony is selling these consoles at a loss, or is this all just wild speculation? So far as I know, the only company that has ever sold a console at a loss was Microsoft, and they explicitly were not interested in making money on the console, but rather spending a boatload of money to make their way into a new market. The razor blades analogy is so bad for this market for a variety of reasons, but the most obvious one is that razor blades are consumed. You can't buy a razor and just one blade, because the blade will wear out and you have to either buy a new one or you're left with a worthless plastic stump. Console games are not consumed- you can buy just one, and it will last you the lifetime of the console. I know a couple of people who bought a PS2 just for the GTA games. If Sony had been selling that console at a loss, they would have never made their money back from three games, when one or two of them were purchased as "Greatest Hits" for $20. All of the estimates that I remember seeing for the "per console" cost to Sony of the PS3 included sunk costs such as the cost to develop the BluRay drives, which is misleading because Sony has already spent that money, whether they sell 1 PS3 or 100 million.

Anyway, I think Sony really blew it on this generation. They are too expensive to compete with Nintendo, and they are a year later on the market than the XBOX. Unless they have some really good exclusive games, (which it's been a long time since they have had) they are in for a world of hurt pretty soon.