[gameprogrammer] Re: Multithreaded humor and musings

On Thu, 2005-06-30 at 12:10 -0500, brianevans wrote:

> Couple all this with the news that Sony will be selling the Playstation 3 
> at a substantial loss, per Gamespot: 
> http://www.gamespot.com/news/2005/06/28/news_6128295.html .  "Merrill Lynch 
> Japan predicts Sony will lose more than $1 billion on hardware during its 
> next-gen console's first year..."  And you really start to get the feeling 
> that Sony is betting the farm here.

I know a billion dollars seems like a lot of money... but to companies
like Sony and Microsoft losing a billion on hardware is no big deal and
is not even vaguely a case of "betting the company". It is normal for
console companies to lose money on the console for a year or more while
they make money selling the games.

Remember, the Gillette company made a fortune by giving away razors and
selling blades. The same principle applies to consoles and games. My bet
is that Sony could cut the price of the PS3 in half and still make a
profit from selling games. OTOH, is there any evidence that MS has ever
made a profit from selling the XBox or the games? MS can afford to lose
money on the XBox for a very long time and still expect to make a profit
in the long run.

A billion or two to introduce a new product that generates a revenue
stream the size of what Sony makes off of the PlayStation? Just a cost
of doing business.

                Bob Pendleton



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