Is the PS2 hurting PS3?

[Groundbeef]

Well, its just out, the NPD #'s for September. It was a bloodbath for Sony, on 2 fronts.

First and foremost, was the explosive growth and sales of the XBOX 360. With a little game called HALO3, console sales topped 527,800 units. The Wii was at 501,000 units.

Game sales were an astronomical 3.3 MILLION units for Halo3 in the 6 days after release.

Next highest game was a Wii title at 274,000 units.

The Second major issue is the continued success of the PS2, with 215,000 units sold.
The PS3 managed sales of approximatly 119,400 units.

This begs the question, is the Sony support of the PS2 actually causing a drain on potential PS3 customers? And will the $400 NON BW compatible PS3 be enough
to draw PS2 consumers into the HD fold?

Here is a link, less anyone in shining armour wants to "verify" the info:

http://biz.gamedaily.com/industry/feature/?id=17836

MS was soundly beaten in the press for 1. Killing the Xbox when the 360 came out, 2. Not offering "100% BW Compat". But in retrospect, did they do it right? All new MS customers are buying the new system. And by Sony dropping BW compat, is it an implicit nod that perhaps MS was correct, and its not "necessary" to have it?

Not really looking for a flame war about what system is "best", just some basic questions about business decisions that have been made by both giants.

[GMichael]

It's hard to say who was right and who was wrong. Maybe a little of both.
But the PS3 has been available for how long? Less than a year? I think hat the numbers for the 360 at one were below what the PS3 is at now. Plus they still had/have sales of the PS2 to bolster up income for them.
Who knows what the long run will bring.

[kexodusc]

Good question -
I know my local Wal-Marts have been SOLD OUT of 360's for almost a month...Halo had something to do with that.

Personally, I truly believe that Sony is just not worried about the PS3 yet. And the market isn't terribly concerned either - just some MS fanboys/Sony bashers. It's not a feel good story for sure, but they haven't exactly hit a panic button yet at all. Some would suggest they're not even trying to keep pace with the 360's price strategies.

Considering the vast majority of sales of the console were going to happen a few years after the initial launch, Sony wasn't in a rush to lose money on each unit in the first year just to win a pissing contest that won't affect the final sales result much. Especially with the far higher-margin, strong-selling PS2 still doing well. They messed up the PS3 launch/development alright, but they're not going to chase magazine headlines and try to top charts if it means more money lost.

I know one thing - alot of those 360 owners are going to be buying PS3's in the next year or two - and as the price continues to drop. PS2 owners are going to want jump on board as well - and there's a lot of Sony fanboys just waiting for the right price-point.

I think Microsoft learned a lot about the business after XBOX, and wanted to get started on the next generation early to do it better - Sony wasn't under that pressure. We'll see - in a year or 2 if MS is still handing them their ass on a platter, heads will start to roll and things will get desperate. But they've already endured a year long slow start and Halo 3, so it's probably uphill from here?

[Sir Terrence the Terrible]

I read the report myself. I am careful balance the reality that any game machine, or multi media device that can play games will sell well when a highly anticipated game is released. This data also does not reflect the reduced price of the PS3 40 or 80GB machine.

When a exclusive game is released to the PS3, watch its sales jump as well. That is the way it works.

A bloodbath might be a little much to describe this. A bump would be much more accurate.

[Groundbeef]

It's hard to say who was right and who was wrong. Maybe a little of both.
But the PS3 has been available for how long? Less than a year? I think hat the numbers for the 360 at one were below what the PS3 is at now. Plus they still had/have sales of the PS2 to bolster up income for them.
Who knows what the long run will bring.

The original release date of PS3 was Nov 17, 2006. So we are just a few weeks shy of a year.

I agree that the PS2 is a money maker for Sony. The question is however, as Backward Compatiblity is being phased out, what is the incentive for NEW PS2 owners to then fork out more money for a system that wont play the games?

And, more to the point, several (not all, but I think about 75%) of all new PS3 games also have a counterpart for the PS2. Such hits as Madden 08, Fight Night 3, and others are widely outselling the PS3 version. What is the incentive for a consumer to move up to the PS3 if the "same" game is available for $10 less? We have seen instances where HD titles have sold more copies (300) in BR, than HD, and the price was $5.00 less. Not sure if that was the entire reason for the gap, but some (even on this board) suggested it might have been part of the reason.

I'm just wondering if part of the lackluster sales of the PS3 is because of the rather robust sales of the PS2 (typically outselling BOTH the PS3 and the 360). The 360 isn't having a cannibal problem because it (original XBOX) was phased out within 3 months of the 360 release.

[GMichael]

The original release date of PS3 was Nov 17, 2006. So we are just a few weeks shy of a year.

I agree that the PS2 is a money maker for Sony. The question is however, as Backward Compatiblity is being phased out, what is the incentive for NEW PS2 owners to then fork out more money for a system that wont play the games?

And, more to the point, several (not all, but I think about 75%) of all new PS3 games also have a counterpart for the PS2. Such hits as Madden 08, Fight Night 3, and others are widely outselling the PS3 version. What is the incentive for a consumer to move up to the PS3 if the "same" game is available for $10 less? We have seen instances where HD titles have sold more copies (300) in BR, than HD, and the price was $5.00 less. Not sure if that was the entire reason for the gap, but some (even on this board) suggested it might have been part of the reason.

I'm just wondering if part of the lackluster sales of the PS3 is because of the rather robust sales of the PS2 (typically outselling BOTH the PS3 and the 360). The 360 isn't having a cannibal problem because it (original XBOX) was phased out within 3 months of the 360 release.

Again, it's hard to say. If the PS2 was discontinued today, would all of those potential customers buy PS3's? I think that a large number of them would buy Wii for the price. That's why they are getting the 2 instead of the 3 right? Some might even buy 360's. So I guess what I'm saying is that the PS2 sales have been cutting into everyone's sales to a point.

[Sir Terrence the Terrible]

I think it would be a stupid move for Sony to phase out the PS2 while it is selling so well. You use those sales to continue to develope and expand the PS3 through marketing. As soon as the two machines sales become equal, then it is time to phase out the PS2. That way you offset any loses from the PS3, and allow it to push bluray sales until PS3 exclusive titles hit the streets.

Keep in mind, the PS3 is being marketed on two fronts, the 360 is not.

[Groundbeef]

I think it would be a stupid move for Sony to phase out the PS2 while it is selling so well. You use those sales to continue to develope and expand the PS3 through marketing. As soon as the two machines sales become equal, then it is time to phase out the PS2. That way you offset any loses from the PS3, and allow it to push bluray sales until PS3 exclusive titles hit the streets.

Hmm. Well, I can't say I disagree, but it is interesting to see the difference in sales methods between Sony and MS. I would have to say that for MS at least, the sales of XBOX were not near that of the PS2, so the risk of killing the project in lieu of the 360 wasn't so great.

But I have read on the various boards that some (gamers) are buying the PS2, because the same titles are out for it vs PS3. For Sony, I see that as an issue because then developers have less incentive to make PS3 games as the installed base is much lower. That is one of the major reasons for so many high profile defections of previous Sony exclusives (GTA to name the biggest) to either MS exclusives/dual format releases.

[topspeed]

The reason the PS3 hasn't taken off is simple: No software. The console has no "killer ap" like Halo, and it needs one badly. HD graphics will only get you so far; it's about the games and the playability. Wii is a perfect example of fun over technology. The graphics in my Wii games aren't as good as the archaic PS2, but the interface is so good, you really don't care. I saw a preview of Wii Olympics and can't wait for it come out!

I think once the PS3 hits $300, I'll buy one. However, at that point it will be more as an excellent BR player that happens to play games rather than the other way around.

[Sir Terrence the Terrible]

You can get games on both platforms, however one is in standard definition, and the other can upscale that standard definition to HD like resolution. If I had a HDTV, I would pick the PS3 in a heartbeat. If I did not have one, then the PS2 is a no brainer.

When games come out that are optimized for the PS3, then the emphasis will shift towards the PS3.

[kexodusc]

Sounds like there's a consensus here - Sony hasn't exactly flooded the market with their brand of killer game titles.

My sense is that PS3 took a bit more than Sony hoped for just to develop, so the contingency plan was to keep servicing the PS2 and to offset any losses, while building and establishing the Sony brand until such a time that the PS3 is ready for an inexpensive mass production run supported by good titles.

Seriously, they knew MS had their asses licked for the first year - so why bother trying at all?
Think we're going to see the 360/PS3 war last a lot longer than the XBox/PS2 war did...as in, there could be a few extra years in this generation.

While we're on the topic...
Kex's mother in-law just bought him a shiny new Xbox 360 - originally I had last year's model but never opened it. Thank goodness for Futureshop's exchange policy - yesterday I swapped that model for the new bundle they just released that came with 2 extra games and a free version of Guitar Hero II...big reason I wanted the new console - HDMI.
(thanks to Beefy for answering all my 360 questions :thumbsup:)
So the wife and I had a duel that Marty Friedman and Dave Mustaine would have been proud of last night :5:

Now I'm off to buy 20 some feet of ethernet cable so I can take this baby LIVE...:cool:

Could a PS3 be in Kex's near future???? :idea:

[L.J.]

Now I'm off to buy 20 some feet of ethernet cable so I can take this baby LIVE...:cool:

Could a PS3 be in Kex's near future???? :idea:

Show off :prrr:

[topspeed]

I was at a friend's house for a BBQ on Saturday and the kids wanted to play Madden on the 360. Unfortunately, it crapped out on Friday and now they had to send it back in to MS. The interesting thing was that three other guys there all talked about the best way to send it back as they all encountered the same problem. They were so nonchalant about the process, it was a bit unsettling. Have our expectations receded so much that we have a cavalier acceptance of faulty engineering?

[GMichael]

I was at a friend's house for a BBQ on Saturday and the kids wanted to play Madden on the 360. Unfortunately, it crapped out on Friday and now they had to send it back in to MS. The interesting thing was that three other guys there all talked about the best way to send it back as they all encountered the same problem. They were so nonchalant about the process, it was a bit unsettling. Have our expectations receded so much that we have a cavalier acceptance of faulty engineering?

This is the main reason I'm looking at the PS3 instead. I'm sure MS will work out the bugs. I may be back once that's done.

[kexodusc]

This is the main reason I'm looking at the PS3 instead. I'm sure MS will work out the bugs. I may be back once that's done.
Yeah, that's supposedly all taken care of now...
My brother bought a machine 2 years ago, had it crap out...with no receipt, no fuss, no questions asked they replaced it for him and paid shipping.
That is NOT the MS I know, but good for them.
If I had to choose a console based on quality, I'd pick Nintendo...as it is, Nintendo wasn't the one that appealed to us the most.
Ya pays yer money, ya takes yer chances.
Sad when Sony becomes one of the reliable ones in any electronic device market.

[djo2]

A lot of people bag on Sony for being arrogant. I believe that arrogance, in a multi-national corporation, would necessarily mean being blind to market realities and I don't believe this is the case with Sony. They are in these markets for the long haul and that leads me to the following conjectures:

1. Sony realizes that the videogame market isn't zero-sum.

Unlike home theater or personal computing, someone buying an xbox360 or Wii doesn't necessarily mean they won't buy a PS3 as well. Sony bought their own movie studio (MGM/Columbia) to ensure that, no matter what deals other studios cut with other hardware technology platforms, there will always be Blu-Ray exclusives because people are less likely to own two different video playback formats than they are to own two different console gaming platforms.

2. Sony is invested in the PS3 for the long time horizon.

Both the PS1 and PS2 were initially expensive and difficult to code for. Over the lifetimes of those platforms you saw developers gradually learn the tricks and squeeze more performance and innovation out of them than they did initially (compare Wipeout to WipeoutXL on PS1). It's going to be a few years before developers really learn how to make a PS3 sing. Right now they're saying that, even though the PS3 hardware should outrun the xbox360 (e.g. Folding@Home) in the real-world you're not seeing much difference. This will change.

3. Backwards compatibility can be sacrificed.

Gamers are used to running multiple platforms. The initial presence, and recent dropping, of backwards compatibility is entirely related to availability of software. Sony said (and I take them at their word on this because it makes sense) that they now feel there are enough titles for PS3. A year ago, you weren't going to see mass adoption of PS3 because there were few games. To keep from pissing off people who bought them and then couldn't play the latest games, backwards compatibility was a smart move. It wasn't designed to encourage people to pull their PS2s from their rigs, especially since there was (and is) still so much PS2 sales and development happening.

[Groundbeef]

First, I would like to take this opportunity to say "Hi". It's nice to have some new views on the board. Don't be intimidated, and stand up for your views. Plenty of folks are quite passionate in their opinions, so don't take offense to any dissenting views. Second, it's nice to see another gamer face here on the boards. Plenty of A/V lovers, and a few gamers (Kex, Topspeed, Myself, Wooch, and others I have forgotten to add...Oh, yeah, Sir. Terrance-He's the biggest game player on the board :) )




A lot of people bag on Sony for being arrogant. I believe that arrogance, in a multi-national corporation, would necessarily mean being blind to market realities and I don't believe this is the case with Sony. .

They sure are not arrogant now. But 1 year ago? Please. When you suggest that your new system is so great that rather than be concerned about the $600 price tag, customers should just get a second job to pay for it....thats arrogant. They were clearly blind to the market realities that consumers were simply not ready to pay a $200 premium for a GAME system that had no games at launch, and long on promise, and short on delivery. The recent price cuts are indicitive of the ass whopping they have taken in the year since launch.




1. Sony realizes that the videogame market isn't zero-sum.

Unlike home theater or personal computing, someone buying an xbox360 or Wii doesn't necessarily mean they won't buy a PS3 as well. Sony bought their own movie studio (MGM/Columbia) to ensure that, no matter what deals other studios cut with other hardware technology platforms, there will always be Blu-Ray exclusives because people are less likely to own two different video playback formats than they are to own two different console gaming platforms.

Thats a tough one to call. I think that Sony was/is MUCH more invested in the success of BluRay than MS is of HD-DVD. But by the time the war is settled, there is a very good chance that HD on Demand will be the market choice. You may be a Sony man, but you can't really argue with the success of MS MarketPlace, and the total dominance in HD/DL market. It's beating all other D/L formats, and not looking back. That cant be good for either HD format in the long run.

Also, its more likely that a consumer will buy a Wii as a supplemental to either a 360 or a PS3, rather than a PS3 or 360 owner buying the other system as well. Both financial, and "fanboy" loyalty I suppose.




2. Sony is invested in the PS3 for the long time horizon.

Both the PS1 and PS2 were initially expensive and difficult to code for. Over the lifetimes of those platforms you saw developers gradually learn the tricks and squeeze more performance and innovation out of them than they did initially (compare Wipeout to WipeoutXL on PS1). It's going to be a few years before developers really learn how to make a PS3 sing. Right now they're saying that, even though the PS3 hardware should outrun the xbox360 (e.g. Folding@Home) in the real-world you're not seeing much difference. This will change.

This is the same as all consoles. I love this talking point from Sony. As if the 360 is finished, and all tricks have been squeezed out of it. This is just a consolation line from Sony players who are ticked they have very little to show for their investment. In the last week it was announced that BlackSite (a PS3/360 title) will have several features missing from the PS3. One of them will be voice support for online games. Tell me that gamers are willing to "wait till next year" again and again. Several games have had features cut just so the PS3 can play them. And don't toss out Folding@Home as an answer for gamers troubles. If I want my game machine to be a dedicated research machine fine, but it's certainly not what I bought it for. Its for GAMES, and media center capablities. Both of which the 360 is killing the PS3. But don't worry, I'm sure "next year" things will be better.



3. Backwards compatibility can be sacrificed.

Gamers are used to running multiple platforms. The initial presence, and recent dropping, of backwards compatibility is entirely related to availability of software. Sony said (and I take them at their word on this because it makes sense) that they now feel there are enough titles for PS3. A year ago, you weren't going to see mass adoption of PS3 because there were few games. To keep from pissing off people who bought them and then couldn't play the latest games, backwards compatibility was a smart move. It wasn't designed to encourage people to pull their PS2s from their rigs, especially since there was (and is) still so much PS2 sales and development happening.

This is also funny. Talk about a 180. Sony gamers savaged MS when the BW compatiblity was LIMITED at lauch. All the wailing and nashing of teeth, about how bad MS was treating its consumers...blah..blah..blah. And now all of the sudden, "its no big deal". Kinda like how Rumble was so (How did Sony put it? Oh yea..) "Last Gen". And then 2 months ago you would have thought Sony had found the Arc of the Last Covenent when Rumble was brought out of the celler. Its funny how a little lawsuit makes you say funny things.

[L.J.]

Well, I guess we won't see that guy again :ciappa:

[Groundbeef]

Well, I guess we won't see that guy again :ciappa:

I certainly hope we do. Just imagine the welcome if the had posted in "Speakers" how much his Bose system kicks ass, coupled with his Monster Cables.

[GMichael]

I certainly hope we do. Just imagine the welcome if the had posted in "Speakers" how much his Bose system kicks ass, coupled with his Monster Cables.

And that, would be that.

Thanks for drpping by djo2. I enjoyed your post.

Welcome to AR.

Mike

[L.J.]

I certainly hope we do. Just imagine the welcome if the had posted in "Speakers" how much his Bose system kicks ass, coupled with his Monster Cables.

I think this guy kinda just showed up just to say whatever and leave it at that. Alot of Bose threads seem to be like that as well.

[Groundbeef]

I think this guy kinda just showed up just to say whatever and leave it at that. Alot of Bose threads seem to be like that as well.

Well, thats a bit of a shame. It's nice to have new folks stick around, and like I said at the beginning of the response, don't take any threads personally. Most people around here are pretty set in their preferred equipment.

[djo2]

Sorry guys. Can't just hang on the forums all day. Gotta pay the mortgage.

Looks like your assumptions mean you'll probably be surprised to learn that I don't own a PS3. (Nor anything from Bose.) The only piece of Sony gear in the entire house *is* a PS2, but it hasn't been turned on in almost a year. The upcoming Rock Band has me leaning toward picking up a new gaming system because of how much I've loved playing Guitar Hero at friends' places. Overall, not much of a gamer. No games installed on my computers, and as mentioned, the PS2 collects a lot of dust.

Also, back to Sony/PS3, I don't think that arrogance from the marketing department (of which there has been plenty) should be extrapolated to indicate arrogance from the rest of company. Their engineers are pretty amazing, and regarding the "just a consolation line from Sony players" about the platform having legs, well... First, since I don't own a PS3, can't really apply that to me. And second, the PS1 and 2 demonstrated this, the original Xbox really didn't have a lot of people saying how much the programming improved over the lifespan of the platform. Microsoft deliberately chooses to use current and previous generation hardware to make it easier to program and cheaper to buy. Neither approach is right or wrong, and obviously the MSFT approach gets a lot of hardware and software out into the market in a hurry, while the PS 1 and 2 had much longer lifespans than the original Xbox in part because there was enough power in them to keep them viable against the competition over a longer period of time.

(I'm coming at this from an engineering perspective, not a gamer perspective. Again, neither being the "right" one, just different ones.)

------------

I guess I skipped the customary introduction:

IT Guy
2001 Subaru Imprezza Outback Sport
Marin FPS Mountain Bike
37" Westinghouse 1080p LCD
Oppo 970HD 1080i DVD player
DIrecTV H20-100
Anthem AVM-30 Pre-pro
Mac Mini (G4 now, Intel by this weekend) Media Center
Gefen HDMI/DVI Switch
Mackie HR824 / HR624 / HR626 monitors

[L.J.]

Well, I stand corrected. Welcome aboard DJ. You don't have to hang around ALL the time. Just drop by every now and then.

[Groundbeef]

Sorry guys. Can't just hang on the forums all day. Gotta pay the mortgage.

Didn't you get the memo? Intel/MS pays us $419 for each response on the board. You just have to forward this forum to 7 of your closest friends, and have them forward to 7 more. Look in your mail in 3 weeks, and I swear you'll have a check too. This is no lie, try it!!



Looks like your assumptions mean you'll probably be surprised to learn that I don't own a PS3. The upcoming Rock Band has me leaning toward picking up a new gaming system because of how much I've loved playing Guitar Hero at friends' places. Overall, not much of a gamer. No games installed on my computers, and as mentioned, the PS2 collects a lot of dust.

Also, back to Sony/PS3, I don't think that arrogance from the marketing department (of which there has been plenty) should be extrapolated to indicate arrogance from the rest of company. Their engineers are pretty amazing, and regarding the "just a consolation line from Sony players" about the platform having legs, well... First, since I don't own a PS3, can't really apply that to me. And second, the PS1 and 2 demonstrated this, the original Xbox really didn't have a lot of people saying how much the programming improved over the lifespan of the platform. Microsoft deliberately chooses to use current and previous generation hardware to make it easier to program and cheaper to buy. Neither approach is right or wrong, and obviously the MSFT approach gets a lot of hardware and software out into the market in a hurry, while the PS 1 and 2 had much longer lifespans than the original Xbox in part because there was enough power in them to keep them viable against the competition over a longer period of time.

(I'm coming at this from an engineering perspective, not a gamer perspective. Again, neither being the "right" one, just different ones.).

Thats ok, secretly I have been putting my eye on a PS3. Not for the games, but as a cheap BR player. But my wife would kill me as we have gifts for the kiddies to get in December.

And not to belabor the point, but the original XBOX had MUCH more power than the PS2. Graphically it was far superior (consider GTA3 on both platforms...XBOX killed the PS2). And the online environment? Forget Sony, MS had that nailed. And an installed storage? Again the nod goes to MS. Sony had the token HD, but it was never to be used again after Final Fantasy (7 i belive). However, as far as installed base goes, Sony was heads and shoulders above MS in sales. It was MUCH easier for MS to kill the program because the base was so small. For Sony the base is HUGE, so why kill the golden goose? But that brings us back to the original question. At what point does continuing to support/develop for the PS2 cut into PS3 installation?

I can't disagree between engineering and marketing. I own several Sony products, 37" plasma, and a DVD camcorder, portable DVD player... But engineering isn't making public statements. Marketing is, and they have in the past been plenty arrogant.



------------

I guess I skipped the customary introduction:

IT Guy
2001 Subaru Imprezza Outback Sport
Marin FPS Mountain Bike
37" Westinghouse 1080p LCD
Oppo 970HD 1080i DVD player
DIrecTV H20-100
Anthem AVM-30 Pre-pro
Mac Mini (G4 now, Intel by this weekend) Media Center
Gefen HDMI/DVI Switch
Mackie HR824 / HR624 / HR626 monitors

Hey, do you have the new HD channels by DirecTV yet? Mine just began rolling in a couple of weeks ago. I'm up to about 40 HD channels, and its SWEET.

And thanks for responding. Now, I'm going out to the mailbox to collect my check.

[kexodusc]

However, as far as installed base goes, Sony was heads and shoulders above MS in sales. It was MUCH easier for MS to kill the program because the base was so small. For Sony the base is HUGE, so why kill the golden goose? But that brings us back to the original question. At what point does continuing to support/develop for the PS2 cut into PS3 installation?
.
The installed base only plays a small part in it. Early on it was more significant, but as time goes on the value of the PS2 compared to the PS3 potential shrinks. PS2 is years removed from it's peak too, it's not like it's a giant cash cow they just CAN'T get away from. You'll see games continue to come out for awhile I suspect, but this industry has proven repeatedly that consumers will adopt a new generation of machine. If the installed base was a deterring factor, Super Nintendo never would have taken over from Nintendo, etc. I think of the PS2 as a saving grace on Sony's CE bottom line rather than a negative factor on the PS3. You're right - Xbox wasn't a money maker for MS to begin with so they were quick to move on to their second effort.

The bar keeps going up and when Sony finally releases some must have games there'll be Sony brand fans champing at the bit to get there hands on a PS3.
Whether Sony makes much money of it will remain to be seen, but millions of those things will sell.

GB - how much profit has MS seen from the 360?

[Groundbeef]

GB - how much profit has MS seen from the 360?

Not, sure. I'll get Bill on the horn and ask. I'll post when I get an answer.

[GMichael]

Not, sure. I'll get Bill on the horn and ask. I'll post when I get an answer.

Well? What's taking so long?

[Groundbeef]

Bill was too "busy" to take my call. Arrogant bastard. The best # I can come up with is from Nov. 2006. At that time, MS had driven the cost of the console down 40% from launch, and was making approximatly $75.00 per console. I would assume since then costs have been driven down further.

Now, after the price drop, I think MS is still making money, but it's not easy to find on the net. They have to be better than Sony, but again, its pretty hard to say.

Back in January there was a report that the XBOX division had sales over $2.6 Billion, and a small loss of $296 million. Thats like 1 day interest on their on hand cash reserves!

The division should be in the black by the end of 2007 according to both analysts, and MS.

If you want links, here they are:

http://www.joystiq.com/2007/01/25/microsoft-profits-down-xbox-360-revenues-up/

http://www.techspot.com/news/23612-microsoft-makes-tiny-profit-on-xbox-360-hardware.html

[Sir Terrence the Terrible]

Oh, yeah, Sir. Terrance-He's the biggest game player on the board )

Actually I am far behind you my cowmeat friend. You know how I feel about games, so kindly note the mistletoe located conviently at my coattails :ciappa:

There is no way in the world MS will be in the black by the end of the year taking hits like this.

http://www.engadget.com/2007/07/05/xbox-360-warranty-extended-to-three-years/

This is not 2005, this was this year. A billion dollar hit hurts companies even the size of Microsoft. What is worse, they don't know what the problems are. That means they may have to set aside even more than this.

http://www.xbox.com/en-US/support/systemuse/xbox360/resources/warrantyfaq.htm

[kexodusc]

Bill was too "busy" to take my call. Arrogant bastard. The best # I can come up with is from Nov. 2006. At that time, MS had driven the cost of the console down 40% from launch, and was making approximatly $75.00 per console. I would assume since then costs have been driven down further.

Now, after the price drop, I think MS is still making money, but it's not easy to find on the net. They have to be better than Sony, but again, its pretty hard to say.

Back in January there was a report that the XBOX division had sales over $2.6 Billion, and a small loss of $296 million. Thats like 1 day interest on their on hand cash reserves!

The division should be in the black by the end of 2007 according to both analysts, and MS.

If you want links, here they are:

http://www.joystiq.com/2007/01/25/microsoft-profits-down-xbox-360-revenues-up/

http://www.techspot.com/news/23612-microsoft-makes-tiny-profit-on-xbox-360-hardware.html
Yeah, most of the stuff I've seen suggest MS is expecting to make it's fist penny in the division in the last quarter of 2007 largely because of Halo 3. Some are think it might fall back to Q1 08 but whatever.

Scary to think that you can sell, what? 40 million consoles, millions of games, and still not see a penny of the division.
Just goes to show these guys can lose $5-$10 billion and carry along like it's all peaches and roses. I suspect most users could care less about profitability, but I do see a fair bit of "my console's parent company has a healthier balance sheet than yours" mud slinging from time to time. Funny part is, the worse it gets, the easier it seems to be sell this industry as a new opportunity when trying to raise capital.
Don't kid yourself about MS cash reserves - no question they've got a lot of money and can raise even more in a hurry, but just because they can doesn't mean they ever wouldl. Doesn't work that way.
MS execs get more pressure and death threats for failing to exceed earnings than most other company execs get for failing to meet them. It's not what you've done, it's what you've done for me lately, and if they think investment returns in that business line aren't as good as another opportunity they'll pull the plug. Doubtful to happen now that 360 is on the verge of profitability and this 7 year long trip is starting reap rewards.
Anyway - just read an article that basically states this is looking to be the first generation where all the major consoles make a ton of money. Which could be interesting to watch, if profitability is good, gaming prices, or console prices could drop considerably. Here's to hoping...

[Groundbeef]

Actually I am far behind you my cowmeat friend. You know how I feel about games, so kindly note the mistletoe located conviently at my coattails :ciappa:

You are too modest. 3 time world champion Quake player, Voted "Most Likely to Pwn U" in 2007, and I remeber you when Fran Tarkentin interviewed you after your world record breaking run with PacMan in 1987. What was it 37 hours on 1 quarter?

In fact, a song was written about you Sir Testicle, heres the link:

http://video.google.com/videoplay?docid=1329362959167995041&q=tripod

Listen to it again, its WELL worth it!



There is no way in the world MS will be in the black by the end of the year taking hits like this.

http://www.engadget.com/2007/07/05/xbox-360-warranty-extended-to-three-years/

This is not 2005, this was this year. A billion dollar hit hurts companies even the size of Microsoft. What is worse, they don't know what the problems are. That means they may have to set aside even more than this.

http://www.xbox.com/en-US/support/systemuse/xbox360/resources/warrantyfaq.htm

I gotta be honest on this one. I am not sure how the Billion set-aside slipped my mind, but you are 100% correct. MS will probably not show any profit in games this year. Had the set-aside not been made, they would have been in the black this year.

As far as not knowing what the problems are, they are aware of the issue. Tech geeks have identified a lack of proper ventilation resulting in solder liquifying, and coming off the connections on the board. The newer consoles (refurb, and new in box) have a larger heat sink- as identified by tech/game sites tearing some open. Also, I don't understand some of the lingo, but a smaller chip is being used. Its like 65nm, versus 90nm, and it generates less heat, and is smaller, resulting in better air flow.

They won't have to set aside more, as return rates are way down, and continue to fall. Short of this board, its really not an issue in the gaming arena. I havn't seen a story about it in weeks.

[kexodusc]

I gotta be honest on this one. I am not sure how the Billion set-aside slipped my mind, but you are 100% correct. MS will probably not show any profit in games this year. Had the set-aside not been made, they would have been in the black this year.
Semantic, but I've heard conflicting reports that MS was going to drop a B-note hit on the 07 fiscal year statements - I'm guessing there could be some retroactive adjustments to previous quarters, and of course future quarters as a few million more get sent in. So if the full billion isn't charged to 2007, they could still be profitable sooner rather than later - mind you, they may just take the bath in 07 to make 08 look like pure gold. Come to think of it that's a pretty good strategy - worst case scenario, PS3 catches fire and takes the sales lead for 2008, MS fires back with it's strongest earnings report ever...


As far as not knowing what the problems are, they are aware of the issue. Tech geeks have identified a lack of proper ventilation resulting in solder liquifying, and coming off the connections on the board. The newer consoles (refurb, and new in box) have a larger heat sink- as identified by tech/game sites tearing some open. Also, I don't understand some of the lingo, but a smaller chip is being used. Its like 65nm, versus 90nm, and it generates less heat, and is smaller, resulting in better air flow.
Another reason why I wanted my console from the latest batch...

[Sir Terrence the Terrible]

Semantic, but I've heard conflicting reports that MS was going to drop a B-note hit on the 07 fiscal year statements - I'm guessing there could be some retroactive adjustments to previous quarters, and of course future quarters as a few million more get sent in. So if the full billion isn't charged to 2007, they could still be profitable sooner rather than later - mind you, they may just take the bath in 07 to make 08 look like pure gold. Come to think of it that's a pretty good strategy - worst case scenario, PS3 catches fire and takes the sales lead for 2008, MS fires back with it's strongest earnings report ever...


Another reason why I wanted my console from the latest batch...

From what I understand, the bil has to be taken in 2007, and they are prepared to set aside more to handle any future problems. While some think they have nailed down the problem, issues seems to be cropping up with even after the switch to 65 nano chip. While problems are certainly not at the level of 2005-06, they are so steady even this year that they have been forced to take this action to avoid any class action lawsuits that might have occured.

[kexodusc]

From what I understand, the bil has to be taken in 2007, and they are prepared to set aside more to handle any future problems. While some think they have nailed down the problem, issues seems to be cropping up with even after the switch to 65 nano chip. While problems are certainly not at the level of 2005-06, they are so steady even this year that they have been forced to take this action to avoid any class action lawsuits that might have occured.
There's always some flexibility and creative ways to restate earnings where warranty expenses are involved. Though MS may very well choose to do absorb it all in one year - that way they don't have a prolonged drag on performance. This way they'd have one brutal year, and maybe come out looking like champs in 08 if 08 performance is good.
I don't know how MS's accountants record these things, so we're just speculating now, but they could certainly apply portions the refunds component the 1 billion they're giving to people who paid to have it fixed against earlier periods, and of course not all of the warranty claims are going to be filed in 2007 anyway, so there could be some 2008 expenses too. Might even be more than 1 billion when this is all said and done. Might be less is there's people that don't capitalize on the offer. Time will tell.

[Groundbeef]

From what I understand, the bil has to be taken in 2007, and they are prepared to set aside more to handle any future problems. While some think they have nailed down the problem, issues seems to be cropping up with even after the switch to 65 nano chip. While problems are certainly not at the level of 2005-06, they are so steady even this year that they have been forced to take this action to avoid any class action lawsuits that might have occured.

I am seriously NOT looking for a fight, but I am just wondering where you are getting your info? I surf the game boards quite a bit, and belive me they ***** and whine even on the best of days. But I am just not hearing/seeing this "steady" stream of complaints. If anything there may be a rise as consumers drag their previously dead machines out of the closet, and utilize the new extended warrenty, but I am just not seeing reports of dead NEW machines.

Also, if someone is gonna sue, this set-aside isn't gonna stop them. I'm frankly suprised there hasn't been more in the courts, but perhaps it just hasn't reached a critical mass.

I would have to say though, I think they are going to take the writedown in 2007. The demand for repairs is there, and they might as well take the hit while in the red. Just make next year look better. I'm no accountant (although I did sleep in a Holiday Inn Express), but it would seem the more prudent action.

[GMichael]

(although I did sleep in a Holiday Inn Express),.

Could you tell me what stocks to buy?

[djo2]

Could you tell me what stocks to buy?

http://finance.yahoo.com/q/bc?s=AAPL&t=2y&l=on&z=m&q=l&c=

[djo2]

Didn't you get the memo? Intel/MS pays us $419 for each response on the board. You just have to forward this forum to 7 of your closest friends, and have them forward to 7 more. Look in your mail in 3 weeks, and I swear you'll have a check too. This is no lie, try it!!.

Heehee. Funny stuff.


And not to belabor the point, but the original XBOX had MUCH more power than the PS2.

I should hope so. 2 years is what, like 50 in computer years?


Hey, do you have the new HD channels by DirecTV yet? Mine just began rolling in a couple of weeks ago. I'm up to about 40 HD channels, and its SWEET.

I'm in a townhouse and haven't bothered with the hassle of getting approval from the association for the bigger antenna. I got the HD DirecTV box because all of my video switching and in-wall wiring is HDMI - no analog.