7/8/2005

Engadget has posted a news about Sony losing money on the sale of the PS3. So far, nothing surprising, as the first 2 years of a game console are usually in the red, and money starts to kick in from games royalties overcoming the development costs on the 3rd and 4th year.

Merrill Lynch Japan Securities has calculated the cost structure of putting a Sony PlayStation 3 on the shelf, and they’re expecting Sony lose $94 per unit selling each at an estimated $399 at launch. (…) They go on to predict a net loss for Sony of $1.18 billion the first year—way, way more than the $458 million they lost the first year on the PS2.

Put into perspective of another article that they had few weeks back, everything makes more sense now I suppose.

The PlayStation 3 won’t be coming with an internal hard drive, because “no matter how much [capacity] we put in it, it won’t be enough.” Glossing over for the moment the curious logic of imagining zero capacity is somehow better than “not enough,” we move on to the news that there will likely be at least several add-on HDD options available, both locally in a 2.5-inch drive bay and in the form of some sort of network drive.

So, if I understand well, Sony will sell very expensive devices cheap and lose money on every single one, while selling cheap optional-yet-mandatory hard drive on the side with a fat margin. Also, because the HDD are “accessorized”, it allows them to sell upgrades when games become fatter, and cashing in on existing users, later on in the life of the same device.

All that seem very smart, getting money later while starting low, so that consumers buy their PS3 without being frightened by a cost too high, right? Well, the PS3 will most probably not be that cheap to start with anyway ($399)… When asked about the high launch price of the console, Ken Kutaragi (the “father” of the PlayStation) answered: “Our ideal is for consumers to think to themselves, ‘OK, I’ll work more hours and buy it.’ We want people to feel that they want it, no matter what.” Sony Style…