Can Sony Survive?
After Sony announced job cuts for it's electronic departments, Katsuhiko Mori, fund manager at Daiwa SB Investments, said in an interview with the BBC: "Sony doesn't have any core businesses that generate stable profits". But can the Playstation 3 console help Sony?
Although some people may point out that since the Playstation 3's release in 2006, the console hasn't actually made a profit, and this is because of the simple fact that Sony are selling the console for less than it costs them to make it. And it's been like that since the release date, Sony dropped the price of the console on purpose so that they could try and break into the market.
However, it may seem odd, but Sony has done this with every console that they have released, the Playstation 1, Playstation 2 and even though the competition this time is incredibly tough, they are doing it with the Playstation 3.
Their plan is that they released a high specification console into the market at a loss, but because of the spec, the console will last many years, making them profit some years on. But can it work this time? With the high pressure competition from the Xbo 360 and the new market created by the Nintendo Wii, will Sony manage to cover their losses?
The problem is that Sony will not reduce the price of the console until they begind to make a decent profit. However as the consoles price is alot higher than the other consoles on the market, they won't get a huge section of the overall console sales, which, in turn will cause them to loose money for longer.
Although it sounds a bit rough for Sony at the moment, they do have one advantage, Blu-ray. It was lucky for Sony that after the DVD battle, Blu-ray came out victorious. If HD DVD had won the DVD battle, it would have been even worse for Sony has their console would not have any edge over it's competition.
So, at the moment, it's not looking good for Sony, also, with their release of their new online community, Playstation Home, already being shot down by Microsoft and EA. Both of them have said that Sony's attempt at an online community is outdated and not directed.
Senior manager at Xbox 360 game console division, Aaron Greenberg, said: "When they unveiled it, it seemed innovative. I think what’s happened is now here we are a couple of years later and we feel beyond that. It feels like 2005 tech in 2008.”.
Hawkins said "I can't tell if they're going towards this mass market idea…or if they’re being lured into essentially trying to compete with Warcraft or Second Life”.
After Sony spent alot of time, money and effort on their new social community, it has just been shot down, personally, it just seems like an idea of earning money, there are several things within the world that requires money to buy, and they also have sections of the world which are sponsored by different companies like Red Bull. I'm sure that all gamers will hate being spammed with adverts while they walk around.
Overall, the future is not bright for Sony, they are relying on a exspensive console to make them money, but because the console is exspensive, it turns off buyers, but Sony won't reduce the console price until they make money from it. Who knows what position Sony will be in if their console doesn't start to sell more units.
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