Buy a PlayStation 3 and Sink Sony 441
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."
Analyst who? (Score:1, Insightful)
Where's my Slashdot article?
Even better... (Score:5, Insightful)
Strange (Score:5, Insightful)
Dan East
Microsoft theory tenuous at best (Score:3, Insightful)
"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.
Re:Strange (Score:2, Insightful)
selling razorblades is nothing new (Score:4, Insightful)
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 say Sony loses $400 on every box they sell. (Score:2, Insightful)
Re:Strange (Score:5, Insightful)
Think of a generic fast-food restaurant. Imagine they have a "value menu" with the Stinkburger Deluxe for only $0.99, but it costs $2.99 to produce. Drinks, however are $2.50 and cost about $0.15 to produce. Similarly fries are $0.99 but cost only $0.10 to produce. The restaurant will go out of business if every customer enters, purchases one Stinkburger Deluxe, and leaves. But most people aren't satisfied just downing a Stinkburger, they want fries and a drink too. That's the idea here; it's called the "razor and blades business model [wikipedia.org]."
So if no one buys a PS3, Sony obviously won't produce six million. If people buy them and buy NO games, NO blu-ray discs, and NO accessories (extra controllers, etc.) then Sony will be in quite a bit of trouble.
Re:"Save Sony?" (Score:5, Insightful)
Sony is too big, and has an vested interest in too many areas. Thus they cannot serve only the consumer in any of their divisions. As long as we see movies with the word "Sony" in the opening credits, we can be certain that Sony hardware will embrace DRM to the fullest extent possible.
If Sony could have their way, the only media and hardware channel between the movies they produce and the consumer would be Betamax®, oops, I mean Memory Stick®, oops, I mean UMD®, oops I mean Blue-ray®. And if someone is reading this 5 years from now, insert whatever DRM infected crap they're currently pushing at the end of that sentence.
Dan East
What? (Score:3, Insightful)
Re:The Console Makers Hate Me (Score:5, Insightful)
Kutaragi just doesn't get it (Score:5, Insightful)
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.
Re:they are sony minions I tell you! (Score:5, Insightful)
Re:"Save Sony?" (Score:5, Insightful)
Think about what you just said. "abandon DRM loudly and publicly." Go outside your home or office right now and run up to 10 people and ask them if they know what DRM means. Help them out even, let them know DRM stands for Digital RIghts Management but tell them nothing more. You'll be lucky to find one person who can tell you what DRM means. So how exactl would your suggestion help Sony again? And why is Apple so successful despite its use of DRM with iTunes?
Re:Even better... (Score:3, Insightful)
They get there money from games.
A PS3 is a cheap computer for the processing power. Not a bad system for Linux/BSD, and Sony doesn't make money off of those, if that's all you use. And that's all I'll use on a PS3 if I get one.
Re:they are sony minions I tell you! (Score:2, Insightful)
Economics 101 (Score:4, Insightful)
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.
Re:they are sony minions I tell you! (Score:4, Insightful)
Japan would block a takeover and bailout Sony (Score:3, Insightful)
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.
Just to nitpick (Score:2, Insightful)
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.
Perhaps not (Score:4, Insightful)
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
Re:Strange (Score:5, Insightful)
If Gamera the giant firebreathing space turtle lands on their offices, they'll bit in quite a bit of trouble too, and that's about as likely to happen.
Who the hell is going to buy a 600$ piece of electronic equipment out of spite with no intention of using it?
Knuth said it (Score:4, Insightful)
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)
Re:"Save Sony?" (Score:4, Insightful)
I'm not saying sony hasn't been stupid about other things, even in addition to the one's you metioned, (Mindisk, 8mm, rootkits, etc) but WTF do you people have against betamax?
Re:Who the hell wants Blu-Ray anyhoot? (Score:2, Insightful)
Re:they are sony minions I tell you! (Score:2, Insightful)
You're buying it for the GAMES right? Not for the freaking NAME BRAND, right? Sheesh, this wouldn't even be a discussion if Sony weren't trying to push so much useless crap into the console. (Who CARES about Bluray this early on, for example? Does it merit the price THAT MUCH to us? Hell no, I don't think so..)
And $100 games sounds impossible? $70-80 games have been seen in the past already.. It is VERY possible, a scary reality perhaps that you don't want to consider, but still possible.. No though, I doubt it will come to this, but it wouldn't surprise me in the LEAST if it did happen..
Re:they are sony minions I tell you! (Score:2, Insightful)
Cool links. [blogspot.com]
Re:they are sony minions I tell you! (Score:2, Insightful)
For one thing, Sony has announced that the low-end model will also have the HDMI port - this was the biggest difference between the two SKUs. Now, the only differentiating features between the 2 PS3s is a larger HDD, wireless controller (vs. the wired controller) and the 9-in-1-media reader (for your camera's media card.)
Second, Sony announced a price drop on the 360 low-end unit for Japan, dropping to about $430. No word on if this discount will apply for the US or European markets or not. But if it does, it will make the low-end PS3 cheaper than buying a 360 + the HD-DVD add-on drive, which is expected to sell for about $170.
At any rate, I agree - you buy these things for the GAMES. I will probably buy a PS3 eventually - but I can certainly wait until a decent library has accumulated, and maybe the hardware's gone through a price drop (or 2.) The same goes for the 360. I'm still in wait-and-see mode for the Wii.
And $100 games - sure why not? They already go for about that much overseas. So long as people continue to buy, the prices will remain that high. Me? I'll wait for the price drops.
Re:What would Microsoft do with all that content? (Score:4, Insightful)
Re:"Save Sony?" (Score:2, Insightful)
Re:they are sony minions I tell you! (Score:5, Insightful)
Of course, on the other hand, MiniDisc was actually successful in Japan... so something has to be said about Sony's mindshare there.
Re:Kutaragi just doesn't get it (Score:3, Insightful)
This part of the quote really turns the rest of the quote around for me. The idea that the PS3 costs too much, but I should work harder to buy it-- you're right, that sounds silly and insulting. However, that last part that I emphasized gives it all a different context. I think he's really just saying that they're aiming to make the PS3 so fricken good that $600 won't seem like an unreasonable price.
You might argue that he doesn't really mean it, and you can argue that Sony will fail at this aim. However, I don't mind the idea in the abstract. There are lots of instances where I appreciate someone going the extra mile, and I'll pay extra to get the high-end/high-quality version.
Re:Kutaragi just doesn't get it (Score:2, Insightful)
Re:What would Microsoft do with all that content? (Score:3, Insightful)
And the Audi I have now was $2400, and has 200,000 miles on it... and has had parts fall off of it at track events.
Only my wife has a "new" car - and that one was still ~2 years used when we bought it.
As an aside, I do more OSX support than Windows - my wife has an iBook (one that's had a failed disk and 2 failed screens, mind you, i've written on my MSDN blog in detail about the OS X bootup sequence (which i had to figure out when debugging a botched patch install on my sister-in-laws powerbook). The notion that linux or OSX is a magic bullet for compuers having problems is frankly hillarious. I don't mean to sound like I am pulling rank but I've got plenty of professional and "the guy in the family" experience supporting all three (yes, i made my dad put up with running linux when i was in highschool and all of the support that that entailed).
And one (presumably) difference between you and I is that when I run across something that trips up a family member with an MS product, I track down the appropriate people at work and ask them if that's really the best we can do, if it's the right behavior for customers, and so on. It is at least as effective at getting things fixed as undirected complaining on slashdot
Finally, anytime i make a post that plainly states who i work for, i get plenty of AC's responding with negative remarks. The negative remarks are fine - but are people so unsure of themselves or their arguments that they are remaining anonymous? It's not like I can pick up the phone and have your computer explode remotely if you say something nasty to me on slashdot.
(I'd send an email. Phones? Who even uses those anymore
Re:What would Microsoft do with all that content? (Score:3, Insightful)
Actually, those corporations would be forced to adapt or go out of business. We'd live in a country where employees have a major say in how a company operates.
In reality, the company just hires someone who doesn't give a shit.
Re:What would Microsoft do with all that content? (Score:2, Insightful)
That might be the most impressive straw man I've ever seen.
Elitism? What elite? I assert that you are judged by the company you keep. I assert that if you work for a company, you are giving them your imprimatur, to one degree or another. I assert that if your employer is doing something that is incompatible with your values, integrity dictates you find another employer. If you do not, that says something about your values.
Is integrity elitist?
Re:What would Microsoft do with all that content? (Score:4, Insightful)
I'm not talking about being a martyr. I understand needing to pay the bills. I am saying, however, that your credentials work against your rhetorical stance. You benefit from MS's DRM practices. You might not like them, but you are reaping the rewards.
Isn't this comparable to saying, "Well, you live in the United States, so your position against the current government is essentially invalid where it counts." ?LOL (Score:2, Insightful)
Don't be stupid. (Score:2, Insightful)
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.
Re:What would Microsoft do with all that content? (Score:3, Insightful)
How many other countries would keep a leader who has 2/3 of the country wanting to linch him according to approval ratings before he started shouting Sept 11th again. He has committed actual CRIMES and no one will impeach him. I do not exactly feel my opinion matters much here
Political asylum in the EU anyone?
Re:What would Microsoft do with all that content? (Score:3, Insightful)
We could argue all day about whether he is being effective in his efforts, whether his family could live happily on a smaller paycheck, whether his current project is really going to benefit society, and a whole bunch of other things. It's difficult, though, because peoples' values differ, because we're all masters of rationalization, and because we generally don't like it when our lifestyle choices are questioned, especially by strangers.
You're never going to find any large, complex organization which does nothing but good all the time. Nor are you going to have a lot of success convincing people that they should jump ship at the first sign of corruption. But I sympathize with you; we've become rather too comfortable with corporate evilness, and that's at least partly because so many of us have a job or own a tiny bit of stock in the companies. And if a company's misdeeds will reflect on you personally and professionally, it's an incentive for you to demand the highest standard of behavior from that company.
Sorry, just feeling rambly today.
Re:they are sony minions I tell you! (Score:3, Insightful)
Haven;t you read how that reason people don;t seem to care that gas prices are up is b/c of credit? If people used cash and spent money thay actually have, $500 may be steep. But with plastic, people don't seem to realize that it is actually money
Just my 2 cents.
Re:they are sony minions I tell you! (Score:1, Insightful)
The REAL way to sink Sony... (Score:3, Insightful)
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.
Evermore's economics (Score:3, Insightful)
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.
Re:they are sony minions I tell you! (Score:3, Insightful)
I just walked into the TV room. My roommate was watching the Mask of Zorro, and I was wondering why it was fullscreen (instead of widescreen). It was a VHS tape.
No difference in quality that I could tell, except once towards the end, there were lines visible on the screen, for less than a minute. Oh well, better than what happens when a DVD degrades.
No, the benefit of DVD is that it's digital. You can navigate easily via chapters, and fastforward/rewind as fast as you want. You get tons of extra features (commentary, deleted scenes, etc) which, even if they existed on the VHS tape (not likely), would not be as easy to find. You have to rewind a tape; you can just pop out the DVD. You can have multiple soundtracks (other languages, commentary), subtitle tracks (enable/disable subtitles at will, choose CC vs subtitles), even video tracks (angles, I think sometimes black and white vs color), all on the same disc. This is very nice for anime, too -- distribute one disc, purists will watch with Japanese audio and English subtitles (or no subtitles if they understand Japanese), people who hate subtitles will turn them off and watch with the English dub.
Really, need I go on? In fact, we're willing to take a LOSS in quality for this kind of convenience, which explains why piracy and fansubs can work, even if it looks much worse than old VHS tapes.
That's debatable. Most people can sort of tell the difference, but don't think it's worth spending any more money on.
That, itself, is a problem. The problem also lies in the standard. If your particular model of PS3 is found to have an exploit, new blu-ray discs could be issued which would brick your shiny new PS3, or any other Blu-Ray player they choose.
Yes, I'm sure. $500 + $100/game? Or have the numbers changed lately? Because it seems like everyone who wants a new game console is buying a Wii.
Or are you referring to the actual processing power of the thing? Those of us who care so deeply about how good our games look have either already bought an Xbox 360 (and are hurting for cash), or have already bought and are continuously upgrading a PC. I know this doesn't apply to you, and certainly there are exceptions -- given an infinite amount of money, most gamers would buy all three, and some gamers do have a huge amount to spend.
Regarding Blu-Ray, you just told me "there really is no competition." But sure, show me an alternative that I can play over a DVI cable, to my existing LCD monitor.
Read again -- parent wasn't complaining, merely stating reasons for not wanting one.
Sorry, you were talking about a "deal" above? I guess you weren't talking about processing power. Actually, I suspect the PS3 will beat the 360, but not by nearly enough to matter. Remember the Xbox vs the PS2? DVD playback was just one of many things to love. Another is how much cheaper the PS2 was.