Now, the heavy weights have given it their best shot! They've all had their big opening days and dollars coming in. Time to sum up the points, pick up the pieces and clean up the rubble!
That battle was pretty much settled as Wii has an estimated 1 million Wii consoles already sold in Japan and the US alone in addition to another 50,000 sold across Europe with that much again sold in Australia. Compare that with Sony's meager 400,000 units in the US and Japan.
Now, yes Wii wins this round hands down but in Sony's defense I would have to say the war is far from over. Much of Sony's loss was due to logistics. Sony, being a company richer than many countries in the world, forgot the first rule of business: Supply and Demand!
Sony just didn't deliver more PS3s to the shelves. They lost mainly due to the large demand with no supply. If Sony had been able to deliver, things would have been different. But even with things the way they are, Sony probably made more money, although I don't have any figures, it's easy to calculate. Wii costs $250 and PS3 costs $600. So for every 10 PS3s sold, Wii has to sell 24 to match the price and still, PS3 is attracting customers with its graphics, online gaming features and Blu-ray DVD player, while Wii is luring customers in with its lower price tag and a motion-sensor that enables them to play virtual tennis and golf.
Let’s wait and see as the giants beat each other's brains out during the Christmas sales.
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Wrong! but its ok because I will let you in on a not so big secret, Sony lose about $200 on each PS3 they sell at the moment due to the parts inside the system, where as nintendo's Wii will makes a profit from Day 1. Now you can do the math with the real figures.
"Sony probably made more money, although I don't have any figures, it's easy to calculate."
You mean it's easy to misunderstand the entire situation and draw completely the wrong conclusions when you don't look into things.
I have to say milkshake is spot on, Sony are making their money in games and Blu-Ray licensing. I don't know the exact figure but $200 per console sounds about right as a loss, whereas the Wii is making a little money per sale.
If anything it's even more dire for Sony right now than the picture you painted. They need to sell millions of PS3's to get an install base to recoup money through the licensing, but with each sale it costs them money. That's all part of their plan from day one, but with a small install base developers lose out and the media war becomes harder for them to win.
It's safe to say Round 1 went to Wii, and if we call Round 2 Xmas and New Year sales i think we can safely say that one will be going to the Wii too.
The PS3 won't start fighting back until Spring, if it's not too late by then.
I agree whole heartdly with "milkshake" this article is totaly floored. If the Nintendo has out sold the Sony it means that Nintendo's development bills are dropping with every sale however the Sony will still be in debt even after their lapsed sales. So what if the PS3 Costs 3x the Wii all we need to know is the units sold and profit made and this means that Nintendo has whooped Sony in the opening sales. I would even go as far to say Nintendo will be catching the 360 as this also sells at a loss not as substantial as PS3 £200/$400 even with a years software sales the fact nintendo is moving into the black with every console sold this must mean only good things for Nintendo! Remember net income means nothing when there is no profit at the end of it! Bravo Nintendo!
I think some gamers have it in their mind that Wii MUST WIN, rather than Wii will win. It is true that they definitely won the November Sales race (and probably December as well) considering the PS3 is in short supply.
However, lets not forget one thing. Video Game markets demand big things from these companies and for the past 15 years, it has been based on technology and graphics! In the latter, the Wii lacks, hence the reason why Nintendo are 'aiming at a different audience'.
I personally think that's a wise move by Nintendo to emphasis this because if they didn't then there will always be a comparison between PS3 and Wii in terms of Graphics.
Nintendo's move to trade off graphics for a lower price-tag, however may be just an infatuation for consumers. I have the personal opinion that the Wii (after playing it for a few days) is a novel idea but will be constricted to its potential and nothing else. Gamers will demand more and more and Wii will not be able to deliver.
Here comes the big guns 360 and PS3. The Latter of which has already shown its might with strong games such as Metal Gear and Fight Night. Add the extra benefit of Motion Sensing (whether or not they copied Nintendo) and they've got themselves a powerful system capable of bypassing the Wii. Lets also not forget the potential of EyeToy.
I really do not believe the Wii will be successful in the Long Run. I think the long term winner will definitely be Sony because of the PS3's power, the Blu Ray, the success of PS2 and PS1 and PSP as well as it's brand name.
In this market, innovation counts! Not just in one department, but in everything you lay your hands on. Nintendo made a great System but I do not think it will become market leader (also considering the price being too cheap; Sony selling 1 PS3 in the Long Run will equal to 2 Wiis)
Oh god are you listening to anything being talked about. This is not a discussion about market share. This is about profits.
Face the fact that even if PS3 doubles wii's sales in the long run the PS3 loses around $200 each console sold. Nearly the price of the wii.
They might sell 10,000,000 the first two years, but 10,000,000 * -$200 is -$2,000,000,000. That's bad.
So unless every PS3 owner buys around 4 games right away with the PS3 they'll have a lot of debt building up on them fast. And next you have to admit that Sony has lost a lot of market share to the 360 and Wii, The Wii is up to 1,000,000 already so soon, and the 360 has around 10,000,000 users. And with a lot of PS3's games actually having worse graphics for the same 360 game(results from the 360 vs. PS3 compare). The 360 is looking like a nice cheaper alternative to the PS3. Especially with rumors going around that Metal Gear might also be in development for 360 too.
I'm not sure the Wii will win market share wise but it will profit wise. It'll probably end up with Wii at 30% market share, the 360 around 30%, and PS3 around 40%(more or less); but you'll have to see that 30% is a huge step up from 15%, and a huge chunk out of Sony market share.
I rest my case
As everybody has pointed out already
1) Nintendo makes profit on every Wii, while Sony loses a LOT of money ($200-400) on every PS3... both companies are selling everything they make.
But much more important than that...
2) Every time a potential PS3 buyer this season can't find a PS3 becuase of their production shortfall... that potential buer may end up buying a Wii or an XBox360.
Market share is what's important to these companies. If there's only 400,000 PS3s, that means only 400,000 people to buy PS3 games... whereas Nintendo has 1.3 million Wii owners - 1.3 million people to buy Wii games.
Even without the issue of PS3 losing money on each console, the both companies make their money on games... and the games sold depend on the NUMBER of consoles sold, not gross revenues.
Isaiah.>
Do you not know that profits and market share are positively correlated?
You are making an ambiguous assumption about the PS3 in the long run. You're overly incorrect to suggest that the price of producing a PS3 'in the long run' will result in Sony losing $200 per unit. That's a gross overestimation. As demand for the product increases so will the supply. Consequently this will result in the PS3 being cheaper to produce. The same was said about the PS2..."Sony are losing money on the PS2", 'Sony this, Sony that'.
You can't base an estimate on current and historical figures. Calculating the results your way will lead to a 'current' estimate of future results. Your way does not take into account the future market.
Since the PS1 and the PS2 there have always been 3 competitors (4 if you include Sega). Sony on both counts in the past have been victorious in terms of market capitalization because of the innovation and smart marketing techniques. Consequently, they increase their appeal through the number of 3rd party games and hardware.
I think Sony will lose market capitalization this time around because of Nintendo Wii and the 360 leading the race because of a head start. HOWEVER, note that this only applies up to now. There is no way one can estimate who will be the outright winner until the PS3 is fully released in March 2007. One can only estimate this by using various models to calculate the Value of the companies (perhaps you have heard of the Fama French Three Factor Model?).
I do not know where you got the evidence to prove that Wii having 30%, 360 having 30% and Sony having 40% because you haven't backed that up with any logical explanation. Pulling something out of one's arse does not count I'm afraid.
At the end of the day, it's the Share Price that counts. Sony can sell 10,000,000 units and still lose money. But if their share price increases, then they've succeeded and move on to Stage 2: Making a profit for the stakeholders.
I rest MY case.
you all think you know whats going on eh? well.. the loss of profit of 200$ a unit on sony's part was planned out.. and for a multi-billion dollar company.. it is acceptable.. but you aren't seeing the whole picture.. the more ps3's you make the less you lose on cost.. its all a revenue function.. yes they stated that every ps3 made = 200$ lost, but they don't give away the assembly line secret.. they want it to sound bad.. yes they are losing some money, but it definitely isn't as much as your thinking. Plus Sony stated that they will be getting the parts cheaper soon enough, because the blu-ray company will be making more of them too. Universal Truth, the more you buy, the cheaper it gets.. and Sony is smart.. very smart.. They know that Microsoft can't compete with blu-ray, this isn't beta max and VHS. Blu-ray is a better format and will be cheaper soon enough, but both are highly expensive right now, and HD-DVD add on is 200 - 250$ for XBOX making it the same price if not more than the ps3. There is obviously too much time left in the race to find out who the winner is, when a new system launches.. it always gets messed up hype and reviews because its power hasn't been tapped into yet.. the ps3 is far more techinologically advanced.. and microsoft is feeling the pressure on them already.. In my opinion Sony will emerge victorious.. just remember.. the biggest element to winning this race.. is what wins.. Blu-Ray or HD-DVD, and Then you will have your winner..
Are you serious?
What does the selling price have to do with making your argument?
PS3's are sold at a $270 loss
Wii's are sold for an undetermined profit.
When the PS3 reaches 1 million units manufactured and sold Sony will have lost $270,000,000 million. 270 million
the 600,000 US Wii units alreay sold have been caculated as a 190,000,000 million
190 million profit.
At the current royalty price. it is estimated that it will require the sale of 15-20 PS3 games to break even. However this number is offset by any Blueray movies witch also pay royalties to Sony.
The long term furture problem is the high development cost raising the profit bar for 2nd tier developers to 500k units from the typical 100k-200k units profit bar for PS3.
So when it comes down to it if your not EA, Konami, Capcom, SquarEnix or the like your not making games for PS3 in the near furture.
Sony is obviously banking on making Blueray the dominate standard and there using the game developers to sell there movie disk format.
The unanswered questions will the PS3 reach crital mass of units sold, where the average 3rd tier developer can make a profit before, the launch momentum settles and all three systems are judged by the games not the names.
the actual critical mass figure is debatable, however for this generation Microsoft believes it to be 10 million units.
as the cost of manufacturing comes down for sony, MS will definitely lower its selling price forcing sony to reduce its price to be competetive. this will mean that sony will continue to lose a very large amount of money even after its development costs come down. sony is not in a very good situation.
I completely agree that sony is in deep trouble. Out of the 3 systems, the ps3 is notoriously difficult to develop for. Namco stated that they need to sell AT LEAST 500,000 games just to break-even. But theres a problem, theres not even that many ps3 out yet. This being said, a lot of game developers are holding back to look at sony's situation. If the situation eventually looks favorable, then they'll jump in. Yet some other game developers are jumping ships over to the XBOX360, y, because developers are in the business to MAKE MONEY. this means that sony will be losing a lot of exclusives. I know for a fact that Grand theft auto 4 and Metal Gear Solid is going to be on the 360. Thers a couple others but i can't recall at the moment. Some potential game include: Devil May cry 4, Final fantasy 13, etc.
Now the ps3 is losing about about $240 on every 60gb unit sold and about $300 for the 20gb unit. Nintendo, on the other hand, is making money from the start. According to sources, it cost them about $170 to produce a wii, with a profit margin of about 12.50 for retailers. Nintendo is making about $70 per console sold, and production cost will continue to go down. because Nintendo is the cheapest of the 3 systems to develop for, along with it's innovative controller, a lot of game developers are excited about the wii. According to a survey of game developers, the nintendo wii was the dominate choice, mainly because its a revolution in gaming. More games for the library would in-turn boost console sales. You will expect to see a lot of wii-exclusive games coming, mainly because of it's ingenus controller.
Seriously, Market share don't mean jack sh*t in this industry, well maybe a little. These company are in the business to MAKE MONEY. From experience, Companies that set too much emphasis on market share are bound to fail. Its about making profits, and Nintendo is the king at this. Seriously, if you don't believe me, look it up, Nintendo has been the most profitable console/game company for the last DECADE!! and they accomplished this despite holding a measly 15% market share with the lackluster Gamecube.
On a another note, The Nintedo ds absolutely rape the sony psp. The ds is like GOD in japan. hundreds of people are lining up to buy the ds lite, and I'm taking about right now their doing that. Personally, i was frustrated with the psp's ridiculously-long load time( I was playing that pok3r game on the psp). Seriously, It was soooooo long that I wanted 2 unleash the dogs of hell upon sony for making such a crappy system. :)
The nintendo wii will go down in HISTORY as the console that opened up a whole new way to play. I'm personally excited to see what the next console will be like after the 360, ps3, and wii.
Whew, i think i got everything out of my system, thx for bearing with me!!
"Seriously, Market share don't mean jack sh*t in this industry, well maybe a little."
errr. Thanks for making me read that sentence and concluding that you are a contradictory fool.
It may seem sony are going to lose out in the long run with all this crap about losing $2 billion, but remember microsoft did the same thing with the original xbox? i.e.: they sold the console at a loss to get an installed user base, which meant more games, which meant more consoles sold, cheaper consoles, then those same users would go on to buy the 360. It's business.
In defense of PS3 let me state the facts that are being overlooked. Sony is a very smart company, do you realize that besides it's heavy duty processor and the Blue Ray built internally there is a factor not being spoken here. If you do enough research on Blue Ray you should come across an article that will tell you that the potentialstorage is upwards of 200gb. This is obviously great for games.
Soooo - The processor is only being utilized at 30% with games like Resistance. This is the biggest Trojan horse in terms of technology. Imagine as the games utilize more of the processor and Sony allows developers to tap into that higher storage platform?
That's not my point yet. What people are forgetting is that with the Blue Rays potential capacity at 200gig, think of what that will do for the coputer industry alone, putting aside the big debate about the movie industry.
Reguardless of what all these non-techies think, the Blue Ray is a savior for sony becuase of the following factors...
-Possible 200 gig of burned storage in computers ( We all need that)
-High Definition Movies
-And last, a scalable storage solution to last the gaming industry a good 5-10 years before an upgrade is needed.
Most of you are thinking short term here, Sony is definetly thinking long term, and so is Dell, IBM and many other manufacuters already building Blue Ray into their products.
Umm, what does HD have to offer in the long run? It would mean thatMicrosoft and that camp would have to introduce yet another format to really compete with Blue Ray, long term. By then it will be too late, Blue ray's will cost under $100.00 and we'll all be buying them, for computing, gaming and entertainment.
Whooohh - I've been meaning to tell this croud that for a long time. How could you disagree with this factual information. I think all those cheapo's out there just want to defend their $250.00 investments in the Wii, it's how they compensate and justify for their bad decision to buy one. You Wii owners ultimatly knwo it's just a matter of time. Nintendo will have to build yet another system to eventually compete, and you'll have to buy all over again, see - it doesn't pay to be cheap does it?
Hey guys I think your all kind of forgetting one basic idea. I know its important that these companies get profit, i mean after all thats what there going for. But say if after some while the ps3 starts making profit and the continues doing the same. And then lets assume that each company have made the same amount of profit. Now which company would have sold more consoles? It would obviously be Nintendo because they would generate less profit on average. Now this means that they have a lot more consoles out than the ps3 and then that means a lot of 3rd party companies would become interested in this console. The more consoles there are out the more a certain game title sells on that console. So if the wii gets a lot of units out then a lot of companies will flock to the wii and not so much the ps3 (lets leave the 360 out for now) because they'll make more money. This iturn is positive feedback for nintendo since if they have more people making more games for them, even more people will buy the wii. This is exactly what happened with the ps2 and why it destroyed the competition. Right nintendo is on the path that sony had with the ps2, and it sony doesn't take some durastic measures then it could be a complete opposite of the last console war.
jee,
You make a very valid point. The problem with the Wii is it is a fad. It does not have the longevity to live very long. The technicla specs just arent there. For one it can only output 720X 480 resolution. And since flat screen TVs produce roughly 1900X1200 resulution, you have to stretch that picture three times it's size, making for a very blury and jaggy image.
Read the rest of the comment:
http://www.waleg.com/techgadgets/archives/010303.html
sorry but i think that you are wrong. The wii is not a fad as it has been sold out for two years. Yes i maybe biast as i am a nintendo fan and i am not saying the ps3 is bad but i just think you have not shown the good points of the wii as there are many.
Please do at least a little research before posting.
@espostal: do you even know how many people have ONE HDTV let alone two? Even if parents have an HD most likely the kids will not. So right now Wii's video output is not a huge deal.
Even on high res pc monitors, do you know what kind of games people are playing right now? Desktop Tower Defense, chess, and card games. Simple flash based 2D games. Graphics aren't the main thing anymore, especially for the masses. People want innovation, gameply, and quick time sinks. Look at the DS...
You know, I find it amusing how most people fail to bring up the most important thing for any console - the games. The Wii will do fine since not only does it possess all of Nintendo's in-house developers, but it attracts third-party developers with teams that want do more creative projects that would be not only easier to do on the Wii than on the others, but more welcomed. The Xbox is currently picking up all the guys who were going to go exclusive for Sony but felt put off by the dismal performance of the PS3 thus far and/or the difficulty of programming for it, not to mention everything they had before.