Sony Will Lose Money on Vita Hardware Sales

Eternal_Lament

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So long as their software sales are high enough, Sony could stand to take a loss in the PSV for three years while still sustaining it. Then again its not like this is an unheard of tactic. As I recall (I may be wrong) when the 360 came out it was losing profit in hardware because they were selling it for cheaper thn it was to make, but the consumers kept it going with good software sales. Look at it now, its done very well for itself and was a good investment on Microsoft`s part. Assuming Sony releases games that people actually want to play, they can certainly do well with the PSV.
 

ph0b0s123

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They won't loose as much money in the UK per device as they will operate the usual 1$ = £1 electronic devices exchange rate between the US and UK device pricing.
 

airwolfe591

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What I think will make the PSV successful is if they have full support for independent developers. Nonetheless I want the PSV much more than I want a 3DS and the whole smart phone craze I could get over personally, I'm fine with two functions on my phone. Calling and texting.
 

Baresark

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Andronicus said:
Baresark said:
Wow, and you would think these guys would actually learn from past mistakes. At times, when a company has large amounts of resources, they invest that resource poorly because they have so much of it (Look at Donald Trump). Releasing a handheld system when people are using smartphones more than ever is risky anyway, but to sell it without making a profit too, that's just ludicrous. You could make a substantial step up compared to the PSP and still sell it profitably. What's worse is, by the time they may become profitable, it'll be un underpowered peice of hardware again. If you look at the Xperia Play (the playstation phone), it is technically better than the PSP in ever single way, why not concentrate on that platform more?

I have no respect for these guys at all anymore. I haven't even gone to collect my free shit from the PSN outage, I'm completely over it.
So, what you're saying is, you lost all respect for Sony because...

...because they're putting more advanced hardware into their devices than they can afford? They want to give the customers all this technology cheap? How dare they!

They don't get make profit from consoles. They recoup losses from games.

Specifically, games sold in Australia.
You're thinking about it from the wrong angle. I don't respect poor business people. They damage only themselves and their employees by doing this. I am fine if they want to release said product, hell, if it has some worthwhile games I may even buy one. But, I can't respect people who throw money away. A good company takes risks with the feeling it will be profitable, money is made, the company expands, hires more people and wealth/quality of life improves for everyone. They are selling them at a loss and predicting profits years down the road, which is actually impossible.

It's a bad business decision and I have a hard time respecting that. That is the sole reasoning behind my comment, I'm not trying to be hurtful in any way.

Also, think about it this way. From a whole other angle even. They recoup costs by selling games. That means that for the life of the system they will be selling software at an inflated price to make up for said decision. Throughout the life cycle of the system, if you own one and play it regularly, you will spend a lot of excess money on the games this way. Anything that artificially raises the price of a good or service is bad for the consumer, which is you and I, and will result in less sales all around. It would be better for all people involved if they made a system that they could sell profitably for $250 and then good games were released for it at a lower price point, which in the end will mean you will spend more disposable income on games that way and everyone profits more. In turn, if they had good software sold at a reasonable or even low price point, more people would be interested in purchasing their unit, increasing the profitability for Sony.
 

ameeb

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Man, so even after halving the memory specs this thing's a big financial boondoggle for them? I wonder how much keeping the original specs would have caused the item to shoot up in retail price. I lost a lot of interest in the Vita (ugh, still feel dirty calling it that) after they announced the hardware strip-down, but if it had meant that the WiFi version was $300 instead of $250, but with twice the RAM and VRAM, I think I would have been more inclined to buy it.

Seems kind of insane to continuously plan products on the idea that eventually, they might turn a profit. Especially with how rapidly technology evolves these days.

tghm1801 said:
Quiet Stranger said:
Wait so the Wi-Fi one is better then the 3G? Also what's the difference between the two?
The $250 model doesn't have 3G, Wi-Fi only.
The 3G model ($300, I think?) has 3G and Wi-Fi, so you can pretty much access the internet anywhere with a signal.
Anywhere with an AT&T signal.
 

SwimmingRock

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ryo02 said:
wasnt selling at a loss common once upon a time?
I was never entirely certain those stories were true (people kept arguing both ways), but my first reaction to the thread title was indeed:"Oh, this again. Like every console of the last decade."

I'm sorry, but I don't see why we should care. People will buy a console if they want it and it's affordable. I can't imagine anybody thinking:"I wasn't going to buy this, but then I heard Sony's losing money on it and decided 'why the hell not?'." This would only make sense if you want Sony to lose money in which case you probably don't want their console.
 

Baresark

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de5gravity said:
I am just baffled by some of the comments here. Sony is not repeating the PS3 fiasco, and selling the Vita at launch at a low price, and you guys are not happy? It's not our job to worry about why Sony does whatever. As consumers, what matters to us is the end price point, and it's pretty good this time. "lost all respect for sony" what a joke.

Baresark said:
Wow, and you would think these guys would actually learn from past mistakes. At times, when a company has large amounts of resources, they invest that resource poorly because they have so much of it (Look at Donald Trump). Releasing a handheld system when people are using smartphones more than ever is risky anyway, but to sell it without making a profit too, that's just ludicrous. You could make a substantial step up compared to the PSP and still sell it profitably. What's worse is, by the time they may become profitable, it'll be un underpowered peice of hardware again. If you look at the Xperia Play (the playstation phone), it is technically better than the PSP in ever single way, why not concentrate on that platform more?

I have no respect for these guys at all anymore. I haven't even gone to collect my free shit from the PSN outage, I'm completely over it.
How is Xperia Play better? It also does not have two sticks, it was not designed for real gaming, just Psone classics mostly. Smaller screen, and (duh) it's a phone! The battery life IF they had made it for intense gaming would be ridiculously short. You can't compare the Xperia Play and the Vita, they target different audiences.
I think they simply did not aim high enough with Play. It's got a powerful processor in it, faster than the PSP and PS2 combined, better graphic capabilities and substantially more system memory. As well as built in easy to use storage options that don't involve their poorly thought out pro duo sticks.

As far as your first statement, it's still repeating the PS3 fiasco. It's as expensive as the competition (3DS) but they sell it at a loss. But they will make up for that loss by increasing licensing fees, which will make the games more expensive. Over the course of the system life, consumers will have to spend more for individual products, which will make consumers buy less, and negatively effect the total profitability of the system and software publishers. Not only that, but consumers are adversely effected by the increased game pricing because there will be less games ultimately, and ultimately they will have fewer choices. The whole industry is backwards at this point. Instead of trying to provide more for less, they are providing less for more, usually. We see this with expensive games with 5 hours worth of play.
 

AlexNora

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I actually think the xperia play is more interesting then the vita just seems more functional to me.

Taking a loss with each sale? Anyone can tell you that's a bad business strategy.

But taking a loss I believe is what gave me halo and xbox live so I don't really care.
 

Baresark

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ryo02 said:
wasnt selling at a loss common once upon a time?
That is a popular myth. No good business sells at a loss. And then we are only talking about net loss, not individual item loss. Some department stores will sell certain items at a loss (like when something is on sale) in order to bring in the customer base.

But it was never "common place" to sell things at a loss. There is a common perception that you may be buying something for so cheap, they have to be selling at a loss, but that is really the feeling that you are getting your monies worth.

Sony, for instance, will sell this at a loss only because Sony has it's hands in everything, and the successful parts of the business will prop up the unsuccessful parts. I mean, it's a bad idea to choose to sell things at a loss versus an investment doesn't work out and you are losing money.
 

Skyy High

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Wow. Color me intrigued. Now I don't know which system (3DS or Vita) to get, it'll basically all come down to the games.
 

Smooth Operator

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It's still find it quite odd that they keep making these since they never take off, and it still has that horrid shape that turns your hands into cramp claws after playing it for just half an hour.
 

BoTTeNBReKeR

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I'm totally getting this Vita thingy. It'll be my first handheld since the Gameboy Advanced. Last handheld generation was shit if you ask me. Hoping this one will provide better stuff (thus far, it's looking good for Vita atleast).
 

Worgen

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Whatever, just wash your hands.
meh, Im still annoyed that there doesnt seem to be any way to transfer my psp games to it since I have them on umd, if it had some backwards compatibility then I might be interested but for now I dont care

this tactic isnt anything new for sony, they did the same thing with the ps3 and I think maybe even the original psp, I know that the 360 used the same tactic also
 

Kopikatsu

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Not G. Ivingname said:
-_-

Sony, Sony, Sony...

Have you learned nothing from Nintendo?

They have won the handheld market time and time again with hardware that is far below the technical abilities of their rivals. They always had better battery times, better support from third parties, their always selling first party games (mostly Mario Kart), always make money on every system sold, and now it looks like Nintendo is trying to figure out ways to bridge the gap between their 3DS and the WiiU. You LOST your last attempt at that. STOP.

YOU ARE WASTING YOUR TIME.
I take it that you've never played the 3DS? The battery life is probably like two hours.
 

Worgen

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Whatever, just wash your hands.
Kopikatsu said:
Not G. Ivingname said:
-_-

Sony, Sony, Sony...

Have you learned nothing from Nintendo?

They have won the handheld market time and time again with hardware that is far below the technical abilities of their rivals. They always had better battery times, better support from third parties, their always selling first party games (mostly Mario Kart), always make money on every system sold, and now it looks like Nintendo is trying to figure out ways to bridge the gap between their 3DS and the WiiU. You LOST your last attempt at that. STOP.

YOU ARE WASTING YOUR TIME.
I take it that you've never played the 3DS? The battery life is probably like two hours.
like 4 hours with the 3d on dude, altho you are right, this is the first time that nintendo has done crappy battery life so that could hurt it
 

Snotnarok

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Jonny49 said:
I would have thought that Sony need all the money the can get their hands on since the hacking fiasco.
Most companies selling consoles (starting out anyway) lose money on their hardware and make it up via game licensing. PS3 for a long time costed more than they sold it for. The only console recently that made sold for more than it cost was the Wii.

OT: I'm never calling this thing anything besides PSP2, or just PSP. The name is simply stupid, the device however has potential for shooters now and that I'm excited for :U
 

mazimadu2

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Baresark said:
ryo02 said:
wasnt selling at a loss common once upon a time?
That is a popular myth. No good business sells at a loss. And then we are only talking about net loss, not individual item loss. Some department stores will sell certain items at a loss (like when something is on sale) in order to bring in the customer base.

But it was never "common place" to sell things at a loss. There is a common perception that you may be buying something for so cheap, they have to be selling at a loss, but that is really the feeling that you are getting your monies worth.

Sony, for instance, will sell this at a loss only because Sony has it's hands in everything, and the successful parts of the business will prop up the unsuccessful parts. I mean, it's a bad idea to choose to sell things at a loss versus an investment doesn't work out and you are losing money.
Ditto on that one.

If what you are saying is true, then the reason games cost $60 is because the consoles (specifically Sony and Microsoft) are selling at a loss and the manufacturers are mandating the high price of software to make up for the lost money.

This actually makes sense when you think about it. In the year before the PS3's release games where being sold at an average price of $50. The price jumped to $60 around the 2007 period when large numbers of quality games where being made for both consoles. Now this has trickled down into every part of the industry (with the sole exception of handled games which sell for around $40) where most new software sold cost about 5-10% more than it would have 6 years ago.

Sony's business decisions have harmed the industry in many ways and it is just a matter of time before consumers (and investors) begin to notice.
 

Andronicus

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Baresark said:
Andronicus said:
Baresark said:
Wow, and you would think these guys would actually learn from past mistakes. At times, when a company has large amounts of resources, they invest that resource poorly because they have so much of it (Look at Donald Trump). Releasing a handheld system when people are using smartphones more than ever is risky anyway, but to sell it without making a profit too, that's just ludicrous. You could make a substantial step up compared to the PSP and still sell it profitably. What's worse is, by the time they may become profitable, it'll be un underpowered peice of hardware again. If you look at the Xperia Play (the playstation phone), it is technically better than the PSP in ever single way, why not concentrate on that platform more?

I have no respect for these guys at all anymore. I haven't even gone to collect my free shit from the PSN outage, I'm completely over it.
So, what you're saying is, you lost all respect for Sony because...

...because they're putting more advanced hardware into their devices than they can afford? They want to give the customers all this technology cheap? How dare they!

They don't get make profit from consoles. They recoup losses from games.

Specifically, games sold in Australia.
You're thinking about it from the wrong angle. I don't respect poor business people. They damage only themselves and their employees by doing this. I am fine if they want to release said product, hell, if it has some worthwhile games I may even buy one. But, I can't respect people who throw money away. A good company takes risks with the feeling it will be profitable, money is made, the company expands, hires more people and wealth/quality of life improves for everyone. They are selling them at a loss and predicting profits years down the road, which is actually impossible.

It's a bad business decision and I have a hard time respecting that. That is the sole reasoning behind my comment, I'm not trying to be hurtful in any way.

Also, think about it this way. From a whole other angle even. They recoup costs by selling games. That means that for the life of the system they will be selling software at an inflated price to make up for said decision. Throughout the life cycle of the system, if you own one and play it regularly, you will spend a lot of excess money on the games this way. Anything that artificially raises the price of a good or service is bad for the consumer, which is you and I, and will result in less sales all around. It would be better for all people involved if they made a system that they could sell profitably for $250 and then good games were released for it at a lower price point, which in the end will mean you will spend more disposable income on games that way and everyone profits more. In turn, if they had good software sold at a reasonable or even low price point, more people would be interested in purchasing their unit, increasing the profitability for Sony.
In a perfect world, yes, it would be nice to have cheaper games and cheap consoles. But this is not the perfect world which you are theorising. It doesn't work that way. From a business sense, it's perfectly reasonable to sell consoles at an artificially lowered price, and then artificially raising the price of the games. What they need to do is get the console into the hands of consumers as quickly as possible. Sony might not be making any profit if people are buying the system a lower price, but they're certainly not going to be making any profit if people simply aren't buying their products in the first place. So they lower the price of the console so people think "wow, that's a great deal, and it has some pretty good games too. I should grab one".

Of course, what do the customers do then? Well, they have a games consoles, so they need to buy some games, don't they. And they only games available are these ones at a raised price. And games are things Sony can consistently make profit on. It's hard to make a lot of profit when the consumers are only buying one PS Vita, especially if you're still trying to keep the price as low as possible to stay competitive. But if every person who buys a PS Vita buys several games for the consoles at even a slightly raised price, that's a LOT more profit.

I understand what you're saying. It would be nice not having to get anally raped every time I try to want to buy a game. But do you honestly think that the retailers are going to sell cheaper games anyway? Even if they could pick them up at a lower price than normal, they're just going to jack up the price so they get more profit than the other games, because they know that's how much people are willing (not necessarily happy to, but willing) to pay for their games.

And don't pretend that Sony are some greedy company who are scheming to get your money. This is what all the companies do. Maybe not this exact way, but to them, the bottom line is always the number one priority, and they'll do whatever they can think of to make that number as big and round as possible.