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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."
what's this? reverse psychology?
"DON'T buy our console!"
If Microsoft bought Sony, they'd own a whole lot of music and movies... I wonder what they'd do with that.
My blog
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.
John
... don't buy it and just let it sit there on the store shelves collecting dust. Taking this approach also saves you $600.
"Armed forces abroad are of little value unless there is prudent counsel at home" - Cicero
Boy, that makes a lot of sense. If Sony makes "6 million PS3 units before April", and sells them all, then they recoup part of their expense. If they don't sell any, then they are somehow better off not recouping anything at all? More sensationalism.
Dan East
Better known as 318230.
My last console of purchase was a Gamecube. The number of retail games I purchased for it totals two: Super Smash Brothers and Windwaker. I hope Nintendo made money on that console because I doubt they made much on the games I purchased for it -- though I could be wrong.
So how many games would I have to buy to make a PS3 profitable? Well if they lose $300 per console and let's be generous and assume they make $50 profit on each game, then I'd have to buy six games -- which there is no way in hell I'm going to do because each game is going to be $60. If I'm to drop $500-$600 on the console (which I'm probably not going to), I'm not dropping another $300+ on games.
Now, if Sony makes big royalties on their Blu-Ray DVDs and the sales of the PS3 increase sales of that, they may be OK. It's hard to say but I think that the adoption of their Blu-Ray standard is crucial to their survival -- the PS3 being expensive because of it is just making the stakes all that much higher. And they've put themselves in that position so they have no one to blame but themselves. Quite the gamble. 'Will it pay off?' relies on too many factors for me to even ponder
My work here is dung.
"And who could be the potential buyer?
Microsoft.
That's right. I said it. Just think about it."
Okay. I've thought about it. And it doesn't make very much sense. Neither does the rest of the article -- but at least they tried to support their main thesis.
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).
Simply sell their console to themselves at the typical loss. Then sell them on ebay for the price people are actually willing to pay. Serious profit!
There was the same talk about buying XBoxes just to "stick it to the man." Everyone who thinks they can hurt a company by vigorously buying their products, even if they were sold at a loss on the razorblade model, is deluding themselves.
First, they will crow that they're selling tons of units, which will look good to their management and drive forward their strategies, whether or not games are being sold at the same rate. Second, the base units just get cheaper to manufacture over their product lifetime, so at some point, you're thinking you are still shafting them while they take profits to the bank. Third, as I've said before, once you're talking about millions of customers, any possible "hurt" done by a few thousand boycotters or complainers is something a megacorporation can simply shrug off and ignore.
[
Let's not. What kind of an idiot wrote that article??
Yeah, right. Selling 6 millions PS3s would only cement sony's position in the video game industry. It'd give them a huge market, and would have developers lining up, purchasing *gasp* dev kits, and of course, licences to produce games. Big Name Games, and hell, sony'd make cash of the turdz as well. That's why they're selling it at a loss. I thought this was the basis of console strategy for a long time? (well, minus nintendo, but they're way out in left field anyway)
Yes, I know that if I want to purchase consumer goods that I need to work to earn money to be able to afford them. I have no problem with this, the problem I have is that Kutaragi's attitude is one of "The price is not our problem, the price is your problem, do something about it."
If you own a business, and your product is rejected by the market fot being too expensive, then you either deal with the lost sales or change your pricing structure. If you cannot do the former because it would hurt your bottom line, and you cannot do the latter because your have designed a product with a very high materials cost, then it's your problem, not that of your potential customers.
There's fans from every camp here on Slashdot for consoles: Microsoft, Sony and Nintendo. However, something to keep in mind despite whatever your affiliation is, if any: This is a BAD thing All of this, if it comes true, will equal gross complacency. Marketing analysts are preaching a damning future for the PS3 (though I rarely, if ever, take marketing analysts seriously), and though some people are cheering this on, they only should be if they're an enemy of the video game industry. Suggesting that Microsoft would buy them out is herecy; and to call yourself a fan of anything having to do with video games whilst rooting for such an outcome is hipocrisy in its truest form. Think about it people, how long have we been stuck with Windows XP now? Five years. How long was Internet Explorer stuck in the 5's and 6's? Even longer. Now, you have the Firefox's and Opera's gaining steam, so IE 7 is in the midst (not saying it's necessarily good). Ubuntu, OSX and even smaller rivals like ReactOS are making their own impacts. Microsoft knows it has to compete with others now to avoid losing marketshare, so something Vista this way comes. Once again, complacency is bad. Microsoft taking over Sony's throne in the console market would be quite unfavorable. Want to be stuck with the XBox 360 another decade? With Nintendo moving over toward more of an overall experience rather than raw performance, this leaves a deficit of competition for Microsoft. They have no reason to pour millions into R&D for the next console to lose money on initially if there's no market to capture. Sony seems to be making a LOT of textbook mistakes, similar to those that can be found on the console tombstones of Atari and 3DO. Let's hope that history doesn't repeat itself for the sake of the industry.
If we can find out who is making all the decisions it probably wont be hard to convince him that they aren't selling because they need to manufacture more units, maybe add a root kit to every box and recall the old ones.
I think that the Japanese government would block a takeover of Sony by Microsoft for one reason: pride. Despite its faults, Sony is still widely preceived as being one of the crown jewels of the Japanese nation. If Sony went deeply in the red, the Japanese goverment is likely to not allow a takeover and bail them out.
Most of Sony's troubles lie in its poor management. Sony could own the MP3 market if it hadn't been as concerned with content protection or proprietary formats. If Sony had made a deal with Toshiba with high definition format DVDs, Sony would be almost guaranteed to make moderate (billions) profits off of the new format. Sharing a positive number (profits) is better than having a negative number (losses) all to yourself. With a new format decided on, the adoption rate of high definition discs would be much quicker. Sony felt that it could win the format war easily by putting the Blu Ray drive in the PS3. I feel that Microsoft launched the Xbox 360 in 2005 because they knew that Sony would be in a poor position with the Blu Ray drive.
If Microsoft could take over Sony, they should. Microsoft doesn't really have anywhere to expand in software, they need to find new products if they want to have growth. Consumer electronics would be a very good area to get into for Microsoft. It is a low profit industry, but Microsoft would be in a position to sell services and software on the products. Many of Sony's failing products could be attractive to various Microsoft strategies. Think Sony with better management, it is really hard to get worse management.
This situation will most likely happen if the Wii is the dominant console this generation. If the PS3 doesn't do well, Sony will be in a position ripe for acquistion. If the Xbox 360 doesn't do well even though they had a year head start, Microsoft will either drop out of the console market or buy Sony and combine the Xbox and PS3 brands. If the Wii is the dominant console, then the anti-trust people will look more favourably on the merger of two failed brands.
Most fast food places earn a profit on EVERYTHING they produce. At McDonalds circa 2 years ago, the ONLY thing the restaurant sold at a loss was a Big'N Tasty (sorry, I've already forgotten where the ' goes. It's their Whopper-clone) and even THEN it was only at a loss during a particular sale (1 dollar a sandwhich, very short lived) and even THEN only if used in conjunction with an employee discount of 50 percent. The sandwich was the most expensive one made because it required (1) Quarter meat, (2) Tomato (usually a premium charge), (3) Quarter Bun, and (4) the cheap stuff like lettuce, onions, mayo.
The sandwhich cost 54 cents rounding upwards, and on effectively a double sale they lost 4 cents. When the sandwich returned to $3, the returned to making 2.50 per sandwich.
And yes, I understand that there is other overhead and labor costs, but the time-per-transaction is relatively low. Divide the hourly salary of the average McDonalds worker (let's go with $7 although I think the average pay might have trickled up a little), and divide that by the number of seconds in an hour and we end up with about 2 cents per second. Lets say the staff is slow and from start to finish that BnT took 40 seconds to assemble and wrap, that cost the store about 80 cents. Now let's assume that it took another 40 seconds for the counter person to pick up your sandwich, put it on a tray and set it on the counter. Another 80 cents. Now, we're looking at about 2.15 to make the sandwhich, versus the 3 price.
And don't foolishly equate the time you wait for your food with the time it takes to assemble, or at the very least should take.
You can further break it down to include the cost of heat to cook that sandwich, the roughly 20 cents in money-time it takes the grill person to lay and remove an entire tray of quarter meat (divided by the number of patties cooked over course), the penny for the wrapper, taxes on the building divided by the number of seconds in a year, the cost of management's salary divided by the number of seconds they work and the number of employees they oversee, etc... but I'm sure there's still baselining a little profit. Just not as much as the soda where the cup costs more than the soda itself.
The fast food analogy is more appropriate to Nintendo who will make some profit on the console, but is predominantly looking at the markup on games.
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.
--- Nothing To See Here ---
If you look at the upcoming November console elections - I mean, launches, there's an interesting thing going on:
:).
1. The Wii is launching with more games than the PS3, and in greater numbers
2. Therefore, developers who develop games for the Wii or the PS2/360 will have greater sales than PS3 sales, simply by available units.
3. If a publishing company wants to make more money, make a PS2/Wii/360 game first.
I've even heard some publishers moving to shift their games to the Wii just because the PS3 will be launching in such low numbers. Eventually this will change, but if you're looking at your angry stockholders wondering why "Murder Death Kill 2000" sold only 100,000 copies on the PS3 while the Wii version of "Shoot Him In The Head III" sold 300,000 copies.
If the PS3, however, sells 6 million units within six months, you bet those same developers will want to be heading to the big lake since they expect bigger fish there. Personally, I'm holding off on the PS3 until about 2008/2009 (depending on certain game launches), and I'm actually considering getting a 360 next year with Mr. Tax Return or some such (once they get "Shenmue 2" and "Panzer Dragoon Orta" backwards compatibility up).
I'm getting a Wii this Christmas, if for no other reason than a) it looks sweet, and b) My Lovely Wife (MLW), Mrs. Non-gamer herself who got hooked on "Brain Age" is curious to try out that "Cute tennis game you showed me".
Just because any chance I get to have MLW jumping around the TV set in a cute little tennis outfit is a good day for me
52 Weeks, 52 Religions with John Hummel
OK, so I did something I'm not supposed to do before ranting, I actually read the article. Forget for a second that the author specifically repeats itself, but its poorly written as well.
First, lets take the blue-ray drive. Lets assume for a moment, that the article correctly reports the price at between 200 and 300 dollars. So you're telling me the that between half or more of the cost is in the drive itself, to say nothing of the components that make up the system. I think Sony is run by baboons most of the time as well, but come on. Maybe at a full costs level, being sold to OEMs the blue-ray drive costs that much, but lets be real here for a second, they're not paying that much to have them.
Going further into the article, it suggest that Sony will force you to buy a bundle, big surprise there. Every console during launch has basically forced you to buy some bundle. And lets be honest for a second. What good is a console without atleast 1 game. Show me one early adopter that bought anything, just to have it sit on the shelf and collect dust. Of course you're going to buy a game, possibly two. As long as I can pick the game, I don't really think thats a problem. Now, on that same note, don't force me to buy an extra controller or any other 'accessories' especially since now the low-end model will offer HDMI port. Personally, I think thats a plus. Yes it will drive up the core costs just a touch, but lets be honest again, chances are that if I bought one today, I'd still end up buying the propietary component cables. This way I can buy the HDMI cable from a vendor of choice, and probably at a non-inflated price. I'll be standing just outside of BestBuy offering HDMI cables at half the cost of Monster on release day. Digital is digital.
Is the price of the PS3 high, yes it is. Do I still want one, yes I do. Will I buy it, probably not - but maybe. Does it cost more than the xbox 360, not necessarily. I can buy the 'base' console for the same price as the 'premium' 360. Plus I get BlueRay without any additional costs. The only advantage I can immediately see the 360 currently having is the modability. Give the PS3 1 year and I'm sure we'll see the same results.
I could go on, but to be honest I don't have the time or the energy to further crap on this article. I think someone had a word quota to fill, and this was there attempt at getting it done with.
think before you write, it'll save me moderator points.
"Name and conquer"
No, people does not know what DRM means, but what they do know is that they cant copy their music freely from their iPod as they could with the tape recorder. They also know they cant backup that game/app DVD as they could do 10 years ago, or that movie DVD as they could with their VHS movie.
What happens is that they do not relate those annoyances they have everyday with technology with the Bad(tm) DRM. They just think it is "more difficult". Back in the times of the VHS you just inserted the original and the blank and presseed REC+PLAY and voila.
It is your task as "computer expert" to let them know that it is not a consequence of advanced tech that it is more difficult or impossible to do that but it is a consequence of the restrictions that these corporations are adding to their content (wheter that is or not legal is another story)
Ubuntu is an African word meaning 'I can't configure Debian'
It's only a guess that GT HD will be expensive, it could also be the case that it sells for half the price of other games and filling it out just adds up to the cost of a normal game. You are turning a feature I like (being able to buy the game cheaper and just get a few cars that I care about) on its head and making it seem a negative.
As will all other things PS3, we have to wait till the console arrives to see what are negatives and what are positives.
"There is more worth loving than we have strength to love." - Brian Jay Stanley
Is that a sister site to The Wall Street Journal or the Gartner Group? :)
You are all forgetting that the US is not the only market Sony serves. [Unless I didn't fully read everything, and if I didn't, I'm sorry] And while Slashdot is US-centric, Sony is not.
UMD is alive and well in Japan. Minidiscs are alive and well in Japan. New video games [for the ps2] normally cost around $70. It seems Sony is treating the US market as if it were Japan.
However, even if this strategy bombs in the US, there is still a huge market that will eat it up. People wonder why the XBox 360 does poorly in Japan. It's because there are no games for it - most of the games that Japanese like are for PS2. The trend will continue with the PS3. Even if sales in the US are poor, Sony will recoup some of the losses from overseas markets.
I'm just guessing, but the PS3 won't bomb nearly as badly, and it will make up ground. It may not end up being more successful than the PS2, or even the XBox 360, but I think it will end up being successful.
I want HD movies. I don't want an add on. I'll gamble with a $600 system that does that and gamves vs a HD DVD player that does only one thing.
"There is no real right or wrong, just what the majority accepts at the time."
Wow, haven't been reading news much? Universal is the only movie company on the board of HD-DVD. While the Blu ray disc association is comprised of almost everyone else. http://en.wikipedia.org/wiki/Blu-ray_Disc_Associat ion
http://www.blu-raydisc.com/general_information/Sec tion-14009/Index.html
Before you say something along the lines of HD-dvd having more going for it than blu ray is purely selective.
When did Microsoft last take over a competitor in an industry they are well established in? Exactly. The suggestion makes zero sense. Besides I'm sure the japanese would figure out a way to save Sony if it really came to it. Microsoft want to move into new industries, so gaming is not on the radar, as they are pretty well covered there.
Just take a look at the last 2 flops from Nintendo. The N64 was outsold by the PS1, the Gamecube came in a stale 3rd behind the regular Xbox and PS2
Getting outsold, does not a flop make. This is business, you know, where you try to make money? Do you understand that skippy? This isn't a video game where you try to get the highest score.
Because this is business, where the goal is to make money, saying Nintendo released two flops when they sold millions and made billions is about as idiotic a fanboy statement as I've come across. Jaguar was a flop. Dreamcast was a flop. N64 and Gamecube were both successes.
As to the price issue, this will be the first time that there was a $200+ price difference between the consoles. This is also a different economic environment. This is also during a year in which Sony has had it's worst public relations disasters in a long time, if not ever. And, Nintendo, actually seemed to have added a different dimension to gameplay that a lot of reviewers seem to like. But none of this means I think Nintendo will be number one in terms of market share.
My call is, out of the gate, Nintendo is going to fly off of shelves, because of the faithful and the price, they will outsell the competition this year. Sony will end up having to implement drastic price cuts because despite having their own faithful(many of whom have to go through mommy and daddy for their console), the cost prohibition is simply too great for now(many mommy and daddys will go postal when asked to purchase a $500 video game system for their precious little couch warmer). They will regain their "#1" position in terms of numbers after the price cuts, but it will come at the cost of having profitability issues for the first year or two(speaking hardware wise). The new video formats will be largely irrelevant to the majority of console consumers for at least a year, if not two to come. Period. Only the very small "gee whiz" early adopters care at all about, the majority don't see what's wrong with their DVD players. The VAST majority.
After a few years, and sony has a higher percentage of the market, fanboys like you will call the Wii a "flop" after it's sold millions of units and made more billions of dollars for Nintendo, and assholes like me will be here mocking your dumbasses for making moron statements like that.
This is a best case scenario too. Pray that Sony doesn't run into supply problems with the chips.
Ah... the never-ending influx of morons to Slashdot... This really feeds my bashing fetish.
You assert two things (nobody else supports HD-DVD, everybody else supports Blu-ray) and then "whoops," forget to give a reference for your first statement. Now how convenient. Especially when you are wrong.
Read:
"HD DVD is promoted by Toshiba, NEC, Sanyo, Microsoft, Hewlett Packard, Intel, among others. In terms of major studios, HD DVD is currently exclusively backed by Universal Studios and The Weinstein Company (through Genius Products) and is non-exclusively backed by Paramount Pictures, Warner Bros., New Line, HBO, DreamWorks, Image Entertainment, Magnolia Pictures, Brentwood Home Video, Warner Music Group, Ryko, Goldhil Entertainment, and Studio Canal.
HD DVD is product of the DVD Forum which works to promote broad acceptance of DVD products on a worldwide basis, across entertainment, consumer electronics and IT industries. The primary 20 companies involved with the DVD Forum are: Hitachi, Ltd., IBM Corporation, Industrial and Technology Research Institute, Intel Corporation, LG Electronics Inc., Matsushita Electric Industrial Co. Ltd, Microsoft Corporation, Mitsubishi Electric Corporation, NEC Corporation, PIONEER CORPORATION, Royal Philips Electronics, SAMSUNG ELECTRONICS CO., LTD., SANYO Electric Co., Ltd., SHARP CORPORATION, Sony Corporation, THOMSON, Toshiba Corporation, Victor Company of Japan, Limited, Walt Disney Pictures and Television Warner Bros. Entertainment Inc." (from Wikpedia)
So you go check Wikipedia about Blu-ray, and then just assume that you are expert on HDDVD? You are either a moron or a paid minion. Turn in your pass and go home.
If I understand Dirac correctly, his meaning is this: there is no God, and Dirac is his Prophet. -Pauli
Posted by CmdrTaco on Monday September 25, @10:00PM
from the could-things-get-any-worse dept.
An anonymous reader writes
Sony is going to have a lot of trouble withstanding an attack from Gamera, as not only does he possess great destructive power, but he is also a friend to all children.
The key to sinking Sony is not just to purchase their subsidized console. It's to do that while dissuading a massive proportion of these subsidized PS3 owners from buying PS3 games.
There is a way to accomplish this, but I suspect it will not be easily or quickly accomplished. Sony's Achilles heel in all of this is not the underpriced PS3, it's the PS3's game-disc copy protection scheme. To have any hope of sinking Sony, a torpedo will have to be directly aimed at that copy protection.
In a best case scenario (or worst, depending on your perspective), a comprehensive crack of Sony's game-disc copy protection would be released at the very instant PC-based Blue Ray burners drop to a reasonable price, say $300. This game-cracking software should be so easy to use that any punter with a PC and a Blue Ray burner could easily make copies of Sony's only profit center, the game discs. To truly sink Sony, this crack shouldn't require swapping discs or modifying hardware. The cracking software should be very easy to use, completely effective, and comprehensive across all of the PS3 line.
If such a comprehensive crack were released after Sony had shipped say, 5 million PS3 units, it would be nearly impossible for Sony to "fix". Of course, if Sony have done their work correctly, the execution of this will be supremely difficult.
Sony has almost certainly used some sort cryptographic hash to sign the game discs. So unless Sony has left a gaping hole in their copy protection system, a massive effort would be required to unravel the keys. If I were to suggest an avenue of attack, it would not be a brute force assault against the cryptographic keys. I think a far more productive attack would be a signal analysis of the PS3 chipset. Just such an analysis managed to crack the Xbox keys.
It's a big job, but if someone out there really has it in for Sony, this would sink Sony right to the bottom.
Two basic criticisms with Evermore's analysis.
First, she (?) assumes no economies of scale for Sony in manufacturing the console, and no ability for Sony to squeeze its own supply chain. Perhaps there is or isn't, but I remember when the iPod first came out, there was a lot of discussion about Apple's margins on the device were marginal at best, and perhaps even negative, given the known component costs. But that fact was not in evidence in Apple's financial reports for that quarter or since.
I'm not arguing that the PS3 will be profitable initially or any particular year of its life, but Evermore's analysis (a $300 or $400 loss per unit over 6 million units ?!?) has a weakness that a lot of economic projections seem to share: assume perfect knowledge not only about current price structures and individual and corporate economic behavior, but also assume you know exactly how it's going to turn out in the future.
Second, her comparison of the DaimlerChrysler merger to a putative Sony-Microsoft merger does not make sense from a anti-trust perspective. Daimler and Chrysler largely had a complementary market presence in that Daimler-Benz's strengths were in markets Chrysler was weak in or did not serve, and vice-versa. In fact, I'm not aware of any market or market segment where both could be regarded in the top two, like Sony and Microsoft, or even the top five. (If anyone knows different for any of the national markets, please apprise us. I'm honestly curious.) There may have been other reasons to question the merger, but anti-trust issues were not one of them.
In other words, Daimler/Chrysler didn't trigger heightened anti-trust scrutiny. Microsoft/Sony most certainly would, and not only in the United States.