Goolge is a very small program run on distributed hardware. WoW is a very large program run on dedicated hardware. Google can serve any request on any machine. If a machine dies they just replace it with a new one and service goes on. WoW must serve your request from a specific machine that is concurrently serving requests from thousands of other people. There is a world of difference here.
Apparently many employers do. It is quit common for hiring managers to read your profile on social networking sites so dont post anything that you would not want soemone else to see.
The real reason the Ipod is dominating the markey now is not the design, featuers, not the ease of use, not even itunes. The real reason is advertising. Apple entered a niche market that was fragmented between more then a half dozen different players (creative, rio, archos, iriver, samsung, philips, etc.) No one had a dominant market share or mind share. Apple then entered the market with a device that worked well enough for 95% of consumers and flooded the media with advertising. Before apple, if you were not activly looking for an MP3 player you probably could not even name a mp3 player. None of the other players used any mass market advertising strategy. Can you even think of a single TV commercial for an MP3 player before Apple came along? It was the advertising that made people want the ipod. Before they saw the add most people didnt even know about mp3 players. It was something thier geek buddy might have. After the add it becomes "Oh cool". Then when they go shopping for an MP3 player they ask for that thing they saw on TV. Its the only one they know anything about. When they see it they see "mp3 player" because thats the only one they HAVE ever seen that is what they expect all mp3 players to look like. They are not comfortable at all with other mp3 players because they have no information. In the end, they buy the one they are most familiar with, from a company that they know.
Actually telco boxes have been doing this for ages. Everythign runs off of a -40V main and you have 2 redundent supplies so that there is no single point of failure. The problem with computers is 12V is still too low of a voltage for global wireing. The wires would have to be huge. For a rack 1000 watts of power you; At 40V thats 25.0 Amps at 12 volts that would be 83.3 Amps. To put this in perspective: To handel 25 amps you would need 8 AWG wire (3.26mm diameter rated for 40 amps). To handel 83 amps you would need 1 AWG wire (7.35mm diameter rated to 110 Amps)
I do agree with you on the ps2. It was sold at a modest loss initially and became profitable later in its lifespan. The problem with the PS3 is it may not become profitable to make, ever. Since it comes with a hard drive, there wont be any profits from memory cards. Sony has not shown any unified online system so profits fron micropayments are questionable.
So, Why won't the PS3 be profitable? Analists are predicting that each consol loses from $300-$500 (thats before the price cut). This number seems in the ball park because Blueray Players sell for $1000. Lets assume Sony is getting discounts beyond even what the analysts predict so the loses are only $200 per consol. That puts the total price of the consol at $700 for the base version.
Lets look at the ps2 price history now:
US$299.99 (October 26, 2000, Launch Price) (CAD$449.99)
US$199.99 (May 14, 2002) (CAD$299.99)
US$179.99 (May 13, 2003) (CAD$249.99)
US$149.99 (May 11, 2004) (CAD$179.99)
US$129.99 (April 20, 2006) (CAD$139.99) (from wikipedia)
Over 4 years the price dropped by 50%
If the ps3 follows the same pattern it will cost $250 in 4 years. Now the question is: Can Sony reduce the manufacturing cost from $700 to $250 in 4 years? I don't think they can. Here are the reasons:
#1) Hard drive. As Microsoft found out, there is a minimum cost associated with a hard drive and it is substantial. Just because the price/Gig goes down does not mean the price per unit will.
#2) Blueray drive. When the PS2 came out at the end of 2000 DVD players were already cheap. You could pick one up for less then $250 and the DVD format was clearly the way the market was going. The first DVD players and discs were already available in November 1996 in Japan and March 1997 in the United States. (from wikipedia) That is 4 years before the ps2 hit the market. The first Blueray Movies and players are JUST coming out now. If Blueray follows the same adoption rate as DVD then in four years Blueray players will still cost $250!
I see no reason why Blueray will become popular any faster. In 4 years it is estimated that only 55% - 65% of US households will own at least 1 HDTV. Blueray also hase competition from HD-DVD. Competition from HD-DVD is sure to slow adoption of both formats leading to higher component costs. HD-DVD might kill off Blueray all together. HD-DVD is cheaper and easier to manufacture. Blueray could go the way Betamax. Sony does not exactly have a good track record when it comes to picking winning formats. Finally there is the off chance that both Blueray and HD-DVD will fail. The question is: Does Blueray offer enough of an advantage to consumers that they will abandon DVD? It is possible that Blueray and HD-DVD will both fall the way of Laserdisk and VCD. They could be suplanted by a new format in the next few years that offers better value. A breakthrough in video compression or Video on demand could kill both formats as they flounder around waiting for HDTV penetration to go up.
#3) More competition. Both Microsoft and Nintendo are looking much stronger this round. Microsoft already has a good userbase started and Nintendo will beat Sony to market and ship more units this year. Can Sony maintain thier current market share even though they are starting out with the smallest userbase? Personaly I think Sony has no where to go but down this generation. High price and unit shortages are going to leave a sour taste in many consumers mouths this holiday season. I dont think people will be happy to swallow Sony's premium pricing on games either. It is especially bitter when you realize these are the same games you played on the PS2, only prettier. In the last two generations Sony has beaten Nintendo to market and won some good mindshare but this time around things are different. Sony is last to market and, with the success if the DS over the PSP, Nintendo is the company everyone is talking about now.
It seems like dejavu. Nintendo comes out with a less powerful but more unique and affordable offering to Sony's much more powerful, but more traditional and much higher priced media center offering. If Nintendo can come up with another game, like Nintendogs, that realy clicks with people and shows off the potential of the Wii, Sony could be in deep trouble.
No consol maker has ever made a profit by selling units at a loss. What exactly makes this tried and true?
Idiots keep quoting the razorblade thing. Guess what. The razor is just a handle. Its is the CHEAP part of the package. You can afford to give those away because the next time someone buys a blade you make a profit. Sony only makes about $10 per third party game sold. If they are loosing an extra $85 per consol sold that means they must sell an additional 8 games before they break even. This mean the consumer has shelled out more then $900 and you have yet to see any profit. Here is the worst part. The average attach rate for a consol is only 9-10. The highest attach rate has been the PS1 at 13.2 games per consol (as of June 2005 in Japan) and this is only after a decade of being on the market. What does this mean? If Sony losses $100 per consol they will probably NEVER see a profit. And we are only talking about hardware here. This does not take into account the cost of marketing, shipping, QA, or the initial development costs.
The dirty secret of the consol business is HAVING A LARGER INSTALL BASE DOES NOT SELL GAMES!
Here are a list of attach rates from the last generation.
GameCube (End of 2005) Japan - 6.693 America - 9.838 Other - 8.550 Total - 8.945
PlayStation 2 (End of 2005) Japan - 8.454 America - 11.222 Europe - 9.294 Total - 9.885
Xbox (Unofficial, End of 2004) Asia - 4.706 America - 9.773 Europe - 8.200 Total - 8.945
What does all this mean? The average consumer will only buy 9-10 games! The time you own the consol makes no difference either. (The PS1 average attach rate is only 9.3, The NES rate was about 8, SNES 7) Each consol sold has a total expected revenue from games of only $100.
So what exactly are Microsoft and Sony doing?
Microsoft is simply trying to buy mindshare. They expect to eventually make money on selling services over Xbox live and software that ties your Xbox to your PC (running windows) and your set top box (running Media center). They are willing to pour money into the black hole because in order to sell you high margin item at a later date. Microsoft has the financials to support this indefinably by using their profits from Windows and Office.
Sony is a different beast. Sony intends to make money off of Blueray royalties. As it stands, if Blueray fails (like betamax, Memory Stick, Atrack, and UMD) Sony will be in deep financial trouble. On the other hand if Blueray takes off like DVD did Sony stands to reap huge profits.
Personally I do not see Blueray being the next big thing. Consumers are not going to shell out real money on HD yet. The players are expensive, the standards are confusing, and most people don't yet have a HDTV. It will be years before the number of households with HDTV reaches the critical mass needed to make Blueray a success. In that time, it is likely that there will be other options. Blueray may very well turn out like laserdisc and VCD did.
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Goolge is a very small program run on distributed hardware. WoW is a very large program run on dedicated hardware. Google can serve any request on any machine. If a machine dies they just replace it with a new one and service goes on. WoW must serve your request from a specific machine that is concurrently serving requests from thousands of other people. There is a world of difference here.
Apparently many employers do. It is quit common for hiring managers to read your profile on social networking sites so dont post anything that you would not want soemone else to see.
The real reason the Ipod is dominating the markey now is not the design, featuers, not the ease of use, not even itunes. The real reason is advertising. Apple entered a niche market that was fragmented between more then a half dozen different players (creative, rio, archos, iriver, samsung, philips, etc.) No one had a dominant market share or mind share. Apple then entered the market with a device that worked well enough for 95% of consumers and flooded the media with advertising. Before apple, if you were not activly looking for an MP3 player you probably could not even name a mp3 player. None of the other players used any mass market advertising strategy. Can you even think of a single TV commercial for an MP3 player before Apple came along? It was the advertising that made people want the ipod. Before they saw the add most people didnt even know about mp3 players. It was something thier geek buddy might have. After the add it becomes "Oh cool". Then when they go shopping for an MP3 player they ask for that thing they saw on TV. Its the only one they know anything about. When they see it they see "mp3 player" because thats the only one they HAVE ever seen that is what they expect all mp3 players to look like. They are not comfortable at all with other mp3 players because they have no information. In the end, they buy the one they are most familiar with, from a company that they know.
Actually telco boxes have been doing this for ages. Everythign runs off of a -40V main and you have 2 redundent supplies so that there is no single point of failure. The problem with computers is 12V is still too low of a voltage for global wireing. The wires would have to be huge. For a rack 1000 watts of power you; At 40V thats 25.0 Amps at 12 volts that would be 83.3 Amps. To put this in perspective: To handel 25 amps you would need 8 AWG wire (3.26mm diameter rated for 40 amps). To handel 83 amps you would need 1 AWG wire (7.35mm diameter rated to 110 Amps)
I do agree with you on the ps2. It was sold at a modest loss initially and became profitable later in its lifespan. The problem with the PS3 is it may not become profitable to make, ever. Since it comes with a hard drive, there wont be any profits from memory cards. Sony has not shown any unified online system so profits fron micropayments are questionable. So, Why won't the PS3 be profitable? Analists are predicting that each consol loses from $300-$500 (thats before the price cut). This number seems in the ball park because Blueray Players sell for $1000. Lets assume Sony is getting discounts beyond even what the analysts predict so the loses are only $200 per consol. That puts the total price of the consol at $700 for the base version. Lets look at the ps2 price history now: US$299.99 (October 26, 2000, Launch Price) (CAD$449.99) US$199.99 (May 14, 2002) (CAD$299.99) US$179.99 (May 13, 2003) (CAD$249.99) US$149.99 (May 11, 2004) (CAD$179.99) US$129.99 (April 20, 2006) (CAD$139.99) (from wikipedia) Over 4 years the price dropped by 50% If the ps3 follows the same pattern it will cost $250 in 4 years. Now the question is: Can Sony reduce the manufacturing cost from $700 to $250 in 4 years? I don't think they can. Here are the reasons: #1) Hard drive. As Microsoft found out, there is a minimum cost associated with a hard drive and it is substantial. Just because the price/Gig goes down does not mean the price per unit will. #2) Blueray drive. When the PS2 came out at the end of 2000 DVD players were already cheap. You could pick one up for less then $250 and the DVD format was clearly the way the market was going. The first DVD players and discs were already available in November 1996 in Japan and March 1997 in the United States. (from wikipedia) That is 4 years before the ps2 hit the market. The first Blueray Movies and players are JUST coming out now. If Blueray follows the same adoption rate as DVD then in four years Blueray players will still cost $250! I see no reason why Blueray will become popular any faster. In 4 years it is estimated that only 55% - 65% of US households will own at least 1 HDTV. Blueray also hase competition from HD-DVD. Competition from HD-DVD is sure to slow adoption of both formats leading to higher component costs. HD-DVD might kill off Blueray all together. HD-DVD is cheaper and easier to manufacture. Blueray could go the way Betamax. Sony does not exactly have a good track record when it comes to picking winning formats. Finally there is the off chance that both Blueray and HD-DVD will fail. The question is: Does Blueray offer enough of an advantage to consumers that they will abandon DVD? It is possible that Blueray and HD-DVD will both fall the way of Laserdisk and VCD. They could be suplanted by a new format in the next few years that offers better value. A breakthrough in video compression or Video on demand could kill both formats as they flounder around waiting for HDTV penetration to go up. #3) More competition. Both Microsoft and Nintendo are looking much stronger this round. Microsoft already has a good userbase started and Nintendo will beat Sony to market and ship more units this year. Can Sony maintain thier current market share even though they are starting out with the smallest userbase? Personaly I think Sony has no where to go but down this generation. High price and unit shortages are going to leave a sour taste in many consumers mouths this holiday season. I dont think people will be happy to swallow Sony's premium pricing on games either. It is especially bitter when you realize these are the same games you played on the PS2, only prettier. In the last two generations Sony has beaten Nintendo to market and won some good mindshare but this time around things are different. Sony is last to market and, with the success if the DS over the PSP, Nintendo is the company everyone is talking about now. It seems like dejavu. Nintendo comes out with a less powerful but more unique and affordable offering to Sony's much more powerful, but more traditional and much higher priced media center offering. If Nintendo can come up with another game, like Nintendogs, that realy clicks with people and shows off the potential of the Wii, Sony could be in deep trouble.
No consol maker has ever made a profit by selling units at a loss. What exactly makes this tried and true?
Idiots keep quoting the razorblade thing. Guess what. The razor is just a handle. Its is the CHEAP part of the package. You can afford to give those away because the next time someone buys a blade you make a profit. Sony only makes about $10 per third party game sold. If they are loosing an extra $85 per consol sold that means they must sell an additional 8 games before they break even. This mean the consumer has shelled out more then $900 and you have yet to see any profit. Here is the worst part. The average attach rate for a consol is only 9-10. The highest attach rate has been the PS1 at 13.2 games per consol (as of June 2005 in Japan) and this is only after a decade of being on the market. What does this mean? If Sony losses $100 per consol they will probably NEVER see a profit. And we are only talking about hardware here. This does not take into account the cost of marketing, shipping, QA, or the initial development costs.
The dirty secret of the consol business is HAVING A LARGER INSTALL BASE DOES NOT SELL GAMES!
Here are a list of attach rates from the last generation.
GameCube (End of 2005)
Japan - 6.693
America - 9.838
Other - 8.550
Total - 8.945
PlayStation 2 (End of 2005)
Japan - 8.454
America - 11.222
Europe - 9.294
Total - 9.885
Xbox (Unofficial, End of 2004)
Asia - 4.706
America - 9.773
Europe - 8.200
Total - 8.945
What does all this mean? The average consumer will only buy 9-10 games! The time you own the consol makes no difference either. (The PS1 average attach rate is only 9.3, The NES rate was about 8, SNES 7) Each consol sold has a total expected revenue from games of only $100.
So what exactly are Microsoft and Sony doing?
Microsoft is simply trying to buy mindshare. They expect to eventually make money on selling services over Xbox live and software that ties your Xbox to your PC (running windows) and your set top box (running Media center). They are willing to pour money into the black hole because in order to sell you high margin item at a later date. Microsoft has the financials to support this indefinably by using their profits from Windows and Office.
Sony is a different beast. Sony intends to make money off of Blueray royalties. As it stands, if Blueray fails (like betamax, Memory Stick, Atrack, and UMD) Sony will be in deep financial trouble. On the other hand if Blueray takes off like DVD did Sony stands to reap huge profits.
Personally I do not see Blueray being the next big thing. Consumers are not going to shell out real money on HD yet. The players are expensive, the standards are confusing, and most people don't yet have a HDTV. It will be years before the number of households with HDTV reaches the critical mass needed to make Blueray a success. In that time, it is likely that there will be other options. Blueray may very well turn out like laserdisc and VCD did.