Sony game division makes a profit
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That's a good point about all of the companies only effectively giving you the 'divisions' total, I notice the reports that MS's entertainment division made a profit where titled "MS XBox division makes a profit".. which isn't strictly true...
Nice to know that the PS3 is getting better though.. I think the fact Sony is having to work hard to get to where it wants to will only benefit us in the end..
Now that's a very interesting spin on it..
But,
The BR drive was largely paid for by the increase in RRP of the unit..
The PS2 I suspect makes a damn site more profit then the Zune does for MS.. which will skew any 'figures'..
And the MS entertainment division would have posted a profit some time ago if it wasn't for the *cough* RROD fund..
So, again, not trying to be a fanboy, but the PS3 is just about barely doing as expected.
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Who cares? At the end of the day, these companies' financial welfare has nothing to do with us. People who try to look at these reports to gauge console performance and such are clutching at straws. There was nothing like this back in the SNES/Mega Drive days, just debates about the actual games and consoles and how good they were. Microsoft fully knows that gamers for some strange reason care too much about these kind of things, and they take full advantage of it for their spin. They say they're the true winners and not Nintendo because they have the most profit in the entertainment division (despite the consoles being a tiny smidgeon of it). People lap it up left and right.
The slight increase in console cost at the start did not cover the cost of the BR drive. Look at the price of stand alone consoles.
You say MS may have made proit some time ago if it wasn't for RROD fund, well iirc their last quarter (the one they posted a profit) had Halo 3 in it. They can't get a Halo 3 so no wonder they posted a profit. We will see if they stay profitable.
Also don't know how much they got for Bizarre off activision, if anything. IIRC they didn't get anything for Bungie as they just went to being independant again.
Actually it has a lot to do with us. The financial well being of a company/division will influence product costs, and development for future costs.
I think Sega's financial wellfare had a lot to do with the punters who bought a Dreamcast and got kinda screwed. And also meant that they didn't make another console.
Soldato
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I'm sure that is the case to a point, but increasing productivity is usually a piece of cake for companies such as Nintendo.
A few months of short supply? Feasible.
Over a year of short supply? No chance.
If the shortages were genuinely because they were unable to raise the rate of manufacture to a high enough level, then we'd have seen some high profile sackings of the executives in charge of that side of the business.
The problem is, Nintendo are also in the hands of IBM and ATi. So who knows if they where having a hard time supplying the chips to them?
Ahh yes, so ive read it wrong in another words lol
Wasnt there talk about them selling the cell to other companies to be used in other projects to help make up the money.
Still not bad, financially its been bad for Sony, esp the whole episode with there faulty batteries that cost them a few hundred million to sort.
Im a 360 owner, but I still want plenty of healthy competition about!
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One of the major elements of business is to maximise profits, by not achieving that, Nintendo have failed in a crucial area.
Any sort of failure in Japan is frowned upon, even if in the grand scheme of things the business is a resounding success.
A supply chain is only as strong as it's weakest link.
Oh dear..
Stay profitable, you really believe what you are typing?
I'm all for debate, but I can't for the life of me see how anyone but a diehard fanboy could really come up with that conclusion..
MS have the highest attach rate by a mile, and have sold a complete shedload of consoles (~16 Million), at the moment they are making money big style... if you really think otherwise, that's your opinion, but I can tell you that it's very very far from the truth..
Sony are behind in getting to market, and it's hurting them, they are doing well enough, but no where near where they where expected to be, none the less, they should be in MS's position in 2009, if they are or exceed this, then I would say they are then doing well..
What MS will be like next year, well time will tell, the PS3 isn't going to overtake it for sales this year, they have got way too much ground to make up.. I expect the PS3 attach rate to increase quite well this year, after all it's simply software sales revenue that is generating profit.. the consoles will be sold at a loss for a while yet..
Are people really believing that the Wii has failed because it can't supply enough consoles?
I especially like the comments insinuating that becuase they are japanese they could easily over produce and create surplus stock if they wanted..
Here's some news, companies don't just have an endless supply of 'spare' manufacturing resource, with factories just laid bare waiting for this situation to arise..
There are things they can do, like parallel up suppliers, great for doubling your supply, it takes a while, and I'm sure it's been done, but we are probably talking 10 times the demand originally anticipated.. that's almost impossible to cater for, and more importantly a logistical nightmare, there are no companies in the world I know of that have anywhere near that 'spare' capacity that can be brought online within a short time span..
If you wish to downplay Nintendo's phenominal success, fine, but that's just you being rather silly..
Just to comment on your statement that "One of the major elements of business is to maximise profits".. that is true, however, it's not in a companies interests to build/commit large amounts of capital to create the production facilities (that take 12 months to get online) just to have them sat dormant when demand subsides.. that's suicide.. lets leave the financial and supply chain management to the experts..
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They stopped making it as it was constantly making them a huge loss.
The main loss was in the graphics chip used, nVidia charged them the same amount all the time IIRC. So nVidia would charge the same for the chip on the first ever xbox as they would on the last made. Think they did something like that.
There is probably other huge factors in it as well.
Josh
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I am an expert, fully CIPS (Chartered Institute of Purchasing and Supply) Lvl 4 qualified, and have worked in purchasing and supplies for nearly 5 years now.
I'm not just plucking these ideas out of the air, I've studied enough supply chains (Largely Japanese, due to them pioneering most modern supply chain types) to know what I'm talking about.
Well I think its doing EXACTLY as expected, considering the high price compared to every other console release and Sony forcast 11 Million units sold by the end of Mar 08, and they have sold 9-10 Million upto December, thats pretty good going when the wii has done phenomenally and the X360 with such a huge bc of games
Good, well can you explain to me where they would get their production capacity to fulfill demand, how long it would take to get online, and the use of it after the fact? I'm all ears as I am not CIPS lvl4 qualified and don't mind being told something new? but I really can't see how they could have done markedly better and how they've failed miserably because of it..
The key thing is Sony's forecasts are the 'revised' ones, the original forecasts where higher.. so it's underperformed on it's original estimates and just about met it's revised lower forecast.. that's OK, but not great.. which is all I was pointing out.. The Wii and the 360 I believe have exceeded their original forecasts, that is all..
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They could easily contract out the work, the demand is so great that any capable manufacturers would be clambering over each other to get a slice of the pie. In fact I'd be surprised if some of the smarter ones hadn't done a cheeky bit of reverse engineering to see what the manufacturing involves and then approached Nintendo themselves. I'd imagine a short term contract would be best in this instance, to ensure that if sales did suddenly dip, they'd only be committed to an amount of systems that they could shift over time.
These things take a surprisingly short time to set up, especially in Japan, so I'd say (without knowledge of the complexity of the manufacture) they could have the first systems off the production line in the space of about 5 months max.
Some things to consider is that Sonys orignal forecast was done with respect to shipping out of the factory, now they count ship to store, so the original numbers will be a lot higher. Also microsoft cut there forecast last year
The only company that has reached forecast so far is nintendo, and as we know they exceeded it.
Unless I'm wrong, Nintendo are producing over a million a month, thus to outstrip demand, we are talking lets say 0.5 to 0.75 million extra a month?
Just tell me any 'supplier' that has that capacity that can be brought on line in 5 months? I believe from my experience, that we are talking a top end supplier's total capacity required for those figures.. and then tell me they wouldn't want serious setup costs and/or inflated unit prices with some serious contract in place.. they aren't going to empty their factory just to produce Wii's for a short term contract unless it's for the right price, and I imagine that wouldn't look good on the Nintendo profit plan.
And they aren't going to use 'several' suppliers with smaller quantities on short term contracts either, that's going to be multiple setup costs, higher unit costs, quality issues, etc, etc, I'm sure MS and SONY never do this either..
Then of course there's the risk element, the analysts have no idea if it's a fad or whether it will continue, it's caught people by surprise, so I imagine Nintendo are not willing to take the risk of investing enough for a complete 'factories' worth of production to be made available..
I'd say that Nintendo have maximised the production facilities they already have and won't commit to more suppliers due to a combination of the management of several suppliers, increased unit cost and the lack of a good low risk sales forecast.
I really don't see this as mis managed to the degree you do, I think you are applying black and white rules to the situation based on SCM knowledge, when it's partly very high volume SCM and partly an uncertain sales forecast.