There is an old saying in the video game world. You have to give away the razor to sell the razor blades. This is in reference to selling consoles for less than they are worth in order to sell games. It makes sense. People buy one console, but twenty games. The only sticking point is how much that undercuts costs. For Sony, $3 billion since its launch.
In order to stay competitive, said Sony, it had to invest large amounts of money in research and development to introduce the PlayStation 3 into the market, and these sorts of expenditures don’t always get recouped, especially if a platform “fail[s] to achieve such favorable market penetration… resulting in a significant negative impact on Sony’s profitability
In a nutshell, Sony has to eat the losses. No one can debate the power inside the PS3. Selling them for 300 bucks was a necessity to stay active in the market. Its now coming back to bite Sony in the ass.
Thanks EHT for the news tip.
But how much was in earning from the Cell processor via the STI arrangement?
And also realize the “razor blades” are also in the form of BluRay movies?
thats a bigger loss than anticpated,
good point keith on bluray movies
I read somewhere that the chip they had to enable backwards compatibility was too much so they had to exclude that out and it GG’d them. Then the lack of sales impacted them even more.
when the hell did they sell PS3s for $300??
Str8Nasty, I was going to ask the same thing. I paid $500 for mine on New Years just after launch.
@Keith – Blu-Ray movie sales may eventually justify these losses, but to date, Blu-Ray is also driving losses at Sony as they had to absorb the losses of building new production facilities while sales are still stagnant at less than 1% of DVD sales.
How much were the (fuckin gimped) 20GB SKU’s?
i wish these shits were $300, then i might buy one..
I dunno, at $500, I feel like I got my money’s worth out of it as a blu-ray player alone. Add in that the games are starting to get very good and it’s a worthy buy.
ali bin rashid