Alex Zaharov-Reutt
Tuesday, 09 February 2010 14:15
Opinion and Analysis
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After years of staggering losses, Sony has reported that it has made a ‘quaterly profit’ while still suggesting it will lose money over the full year, while reports say the PS3 is now costing the company only $18 per unit losses rather than the $37 per unit it was losing previously.
A report in the
Wall Street Journal (subscription) has quoted the CFO of Sony, Nobuyuki Oneda, as believing that the company’s losses have “bottomed out” and that it expects the company to do “fairly well going forward”.
Although Sony still makes some
very sexy gadgets and dramatically improves them year after year, the Godzilla of the Japanese electronics industry has found making actual profits a very difficult endeavour.
Although it’s nice to see a reported “quarterly profit”, in the same breath we learn that full year losses are still expected to occur, thus turning a profit into a loss at the same time.
The PS3 is one of Sony’s major electronics categories, but unlike Apple, or Nintendo, which make an actual profit on every gadget sold, Sony has been unable to match this simple secret of success.
Yes, we know that selling consoles at a loss is supposed to be made up by selling games and accessories at a profit, but why intentionally put yourself on the back foot in the first place, when competitors have found a way to make equally entertaining entertainment devices and experiences that add dollars to the corporate bank account, instead of draining them away?
Sure, the concept of a “loss leader” is well known and understood at retail, but Sony can’t upsell you a more advanced PS3 – it can only upsell you additional games and accessories.
But this forces you to rely on fantastic sales of games and accessories, something that isn’t guaranteed – while the PS3 owner has a multimedia and gaming device that works whether endless new titles are purchased or not.
Staggering losses can’t be sustained forever, and one can only hope that Sony learns from its mistakes in relation to any future PS4.
Continued on page two, please read on...
