Every day we’re hearing of a company running through a round of layoffs or going out of business, it’s really not a happy time. Sony is not immune to the economic troubles either. Sony is talking restructuring and that involves a potential head count reduction of 16,000 jobs due to plant closings.
This leaves Sony with some hard decisions. Restructuring can mean drastic changes that effect all their product lines. The PlayStation 3 isn’t currently a shining example of high profit margins. The console needs time to reduce its overall cost, chip sizes and bring profitability. Is it in danger?
“Sony’s not in a position to halt all domestic production but it has to do something that drastic,” said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management. “If it announces plans to move production overseas while keeping only planning and development functions in Japan, that would be a positive.” (gamestooge)
The yen is losing value in our global economy making it more difficult to export the product and build any type of profitability plan. “A source said this month the company will likely suffer an annual operating loss of about $1.1 billion, its first such loss in 14 years” (news.yahoo.com) All this noise is making CEO Howard Stringer contemplate Sony’s involvement as a “software only” company, making us recall the changes at SEGA to this same result.
The Financial Times reported Sony will unveil details of its restructuring steps on Wednesday or Thursday. It said Chief Executive Howard Stringer was meeting with resistance from some executives to shifting the company’s focus to software from hardware and cutting jobs in Japan. (news.yahoo.com)
Is this just a case of a fearful executive trying to lay plans for a more stable future? Software is easier to develop, pays for itself quickly and becomes pure profit as it ages. Hardware requires constant upkeep at manufacturing facilities, chip reductions and a boat load of quality planning for first shipment. Would Sony go full software?
Let’s face it, Sony isn’t SEGA, they’ve been developing hardware for consumers since anyone can remember and they’ve been doing it with quality and market penetration. It seems absurd to think they’d forgo hardware designs in replacement of a full software solution to the problem. In addition, Sony has already invested a large amount of cash into seeing PS3 through it’s 10-year plan and letting that die now is realizing a huge loss on investment.
If Sony pushes through the economic and maintenance course, the PS3 will become highly profitable, much like the PS2 last generation (with a slower ramp up for sales). Even if they break even after ten years it seems a lot better than throwing all the effort away.
Perhaps Howard Stringer is talking “software” for the next generation home console? You think Sony will create a PlayStation 4?
Hey guys. I’m back from commenting retirement forced to do so once again by your grim opinions on my favorite console 🙂
@Vita
The Vita isn’t going anywhere. While I already said that I partially agree with Jordan that there is no constant flow of exclusive games, I still can’t say that this means that there is nothing to play on the Vita. Especially now with the cheaper version and the PS4 Remote Play, people will think again about buying one. Heck, if Jonah is considering getting one… maybe… By the way – http://en.wikipedia.org/wiki/Category:PlayStation_Vita-only_games sure, there is crapware there but there’s at least a dozen perfectly good, big games.
I also think Borderlands 2 isn’t really a system seller but it’s a well-known title that will make people look at the Vita and I believe that once you play it for a while, you realize how good of a system it really is for on-the-go gaming.
@PSNow
Obviously, people will,in general, not pay a subscription to play PS1 games, but PS3… I bet there are many people who would rather sell their PS3 and get PSNow for PS4 than keep the two consoles. It’s obvious to me that Sony shouldn’t be aiming at the latest releases to be available via PSNow. It’s going to be tough but if they play it right, they might be able to pull it off. I wonder if the games people own digitally will be available via PSNow for free… Also the ones obtained from PS+.
@QOTW
I didn’t really introduce anyone to video gaming. However, I convinced two friends to get a PS+ subscription for their PS3. I guess this counts. I also introduces some friend to board gaming and we meet regularly to play but this is easier since it’s intrinsically a more social activity.
Hey guys,
Don’t have too much to add this time but I’ll answer the QOtW.
I think I can say my wife and I introduced our daughter into Gaming. She loves to play Minecraft, Sims, Fable, and some other web based games.
Great show guys and keep up the good work. I also like it when you have 3 man team going with Paul or Dan.