Attention Doomsayers: PS3 Is Not Dying
January 8th, 2009 | Written by Michael Bunning | Topic: PlayStation 3, Rumors, Wii
In December, Sony announced that it’d be cutting 16,000 jobs and closing approximately 10% of its manufacturing plants. Coupling this announcement with October’s news that Sony was slashing its profit forecasts by 58%, rumors sprung up that SCE – and in particular the PlayStation – were going to be in trouble.
Then the Christmas season was upon us, and things quieted down.
It’s 2009 now though, so it’s time for the world to get back to the depressing business of, well, depression. The global economic crisis is bad news for everyone, even the games industry, which has traditionally been quite resistant to economic downturns. This isn’t the case any longer, though, and with games companies closing and thousands of jobs disappearing, the spectre of death has been conjured for the PlayStation 3 once again.
This Times Online article is what’s causing all the fuss. Company sources have told the Times that Sony is going to undergo a more radical restructuring in the near future. Apparently, Sir Howard Stringer, who took the reins of the company in 2005, has pretty much had his hands tied by the Japanese management, who didn’t want anything too major to happen. Since December’s doom and gloom stories, though, the atmosphere seems to have changed at Sony, and (according to The Times), Sir Howard will now be able to take a ‘gloves off’ approach, which will lead to ‘Sacred Cow slaying’ and ‘the abolition of several major divisions’.
Gamertell has taken the Times piece and applied some conjecture to it, coming up with the fairly sensationalist rumor that ‘Playstation 3 is possibly inching closer to an early “Game Over”’. On the surface, it’s not too far-fetched. If the Times’ unnamed sources are correct, and several major divisions are to close, then the PlayStation looks like an easy target: Sony is behind Nintendo and Microsoft in terms of console sales (if you discount handheld sales, anyway), the PS3 is still extremely expensive to manufacture, and it’s by far the most expensive console on the market. Compared to the last generation of consoles, Sony has fallen very far behind the competition. Why not get out of the race, if you’re losing so absolutely?
Well, the truth is, Sony isn’t losing so absolutely. For a start, Sony is denying that there’s going to be any more major restructuring. Of course, Free Radical was insisting that everything was hunky-dory days before it went under, so you can’t believe every press release you read. But even discounting Sony’s denials, there’s plenty of good news for SCE, if you go looking for it. The Christmas sales figures, for a start. Sony’s console sales were up 130% over Christmas, and 40% for the calendar year. Couple that with SCEE’s president David Reeves’s comment that the PS3 is on-target to make a profit in 2009, and things aren’t looking too bad.
It’s also interesting to look more closely at sales figures. While it’s true that the PS3 is installed in less homes than the Wii or the Xbox 360, if you look at global year-on-year sales, the PS3 wasn’t too far behind the 360 in 2008. Microsoft sold just over 11 million consoles, and Sony sold 10,347,225 PlayStation 3’s. Still less, but the ‘distant third place’ that Sony apparently occupies suddenly seems rather less distant. If you add sales of the PSP and PS2, Sony actually shifted 30,722,772 pieces of hardware last year. Even discounting PS2 sales (and that’s not a bad idea: although Sony doesn’t lose money on the PS2 sales the way it does on PS3, the PS2 can’t expect to continue selling anywhere near as well as it did last year), Sony shifted more than twice the number of consoles Microsoft managed. So it’s unlikely (though not beyond the realms of possibility) that Sony will get out of the console market any time soon.
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Comment by TonyP on the January 8th, 2009 at 1:04 am
I agree that everyone is making a mountain out of mole hill. First, the cuts? Everyone's cutting. Every industry is hurting. Whether a joke or not, even the porn industry is asking for a bailout from the government.
As for the PS3, I've had my share of tough words and opinions (See: The Fall of Sony: From #1 to (Barely) #2 – http://www.gamer20.com/features/347)but they are far from dying. In fact, I still think it's possible for them to weather the storm and squeeze past the 360 at the end of this cycle unless the 360 continues to improve its international sales.
Comment by juu on the January 8th, 2009 at 2:13 am
These doom and gloom people want to see Sony drop out of the console war. I think most of them are bitter Dreamcast/XBox fans who solely believe Sony was the reason why both consoles left so early when the PS2 was hitting it's stride.
It seems, furthermore that they're just happy to see Sony in third place.
Sony isn't going anywhere and the Playstation brand isn't going anywhere.
Comment by Fred on the January 8th, 2009 at 2:25 am
LOL It's not the London Times! It's a UK-wide paper and it's called The Times. You Americans amuse me
Comment by TonyP on the January 8th, 2009 at 2:35 am
Actually, our writer is from the UK. Odd that he wrote it that way.
Comment by TheForgotten0ne on the January 8th, 2009 at 3:09 am
Yes!
Finaly someone actually say that it's not doomed. I'm so tired of reading people writing, the PS3 is dead, I belive I have read 5 or 6 articles about it in the last few months. It's just silly, people totally forgett the PS2 and PSP. It's still making Sony Money, the PS3 will become cheaper, and it's not unlikley to happend to soon either. As the PS3 is getting cheaper to make, the price will drop.
Comment by TonyP on the January 8th, 2009 at 3:24 am
Though I doubt Sony will want to drop the price since they're finally close to making profit on each PS3, they will have to stay competitive.
Comment by TheForgotten0ne on the January 8th, 2009 at 5:20 am
I think you could say that they would lose more money on keeping the price then on dropping the price
Comment by ChrisWanker on the January 8th, 2009 at 6:52 am
Despite the economic stance of the world and any job cutting, money loosing, unable to reduce pricing that Sony faces… It will be the Internet that kills the PS3 with its "Doom and Gloom" faster than anything. Otherwise, they aren't doing all that bad, not great… but NOT that bad!!!
Comment by jellybalboa on the January 8th, 2009 at 9:06 pm
maybe, people have hatred towards the ps3 because maybe they just cant afford it
Comment by frank polsey on the January 8th, 2009 at 9:08 pm
yep i think youve hit the nail on the head
Comment by gogo on the January 8th, 2009 at 9:12 pm
or maybe they really love the ps3 but because the price never came down and it was still financially out of their reach, so that love they had turned to hatred and now thats why u see all that sony bashing
Comment by steve o on the January 8th, 2009 at 9:17 pm
you ps3 fanboys talk alot of shit, but u know what on a serious level jellybalboas and gogos comments make alot of sense to me, in a way it does actually apply to me, coz y the fok should i buy an overpriced ps3 when i can buy an xbox which duz the same shit, and y have they priced it so much, who da fok do sony think day are.
Comment by TonyP on the January 8th, 2009 at 10:10 pm
Sony doesn't have the PS3 priced they way they do because of any assumption that they're good enough to price it that high, it's because they have to price it that high or they'll bleed more money than they already. When the PS3 first game out, it cost a hell of a lot more to produce it than what they were selling it for so they were losing a ton of money on each PS3 sold. Now, they've finally got the cost of production down to about the same price as for what they sell it for.
PS3 Hardware May Finally Be Profitable in 09; Price Cut Possible?
http://blog.gamer20.com/2008/12/ps3-hardware-may-…
The big problem is that it's kind of hurting them in the overall console race. I wrote about it in-depth in another article here on Gamer 2.0:
The Fall of Sony: From #1 to (Barely) #2
http://www.gamer20.com/features/347
Comment by JacobS on the January 9th, 2009 at 5:49 am
Sony picked a horrible time to bring out the most expensive mainstream console ever though. While Nintendo lost their position by playing it too conservatively, they at least were able to turn a profit. Sony overshot everybody and is paying the price.
Comment by USA BOB on the August 18th, 2009 at 1:50 pm
Bollocks to the UK!! WAAAAAANKERS!! WAAAAAAAAAAAAAAAAAAAAAAANKERS!!
Comment by TonyP on the August 18th, 2009 at 2:20 pm
Granted, no one foresaw the economic crises we're in now way back when the PS3 was released. I do think it was a mistake though since it abandoned the principles that made the PS2 successful.
While the site is under construction, a copy of my editorial"The Fall of Sony: From #1 to (Barely) #2", on it is still around at http://www.gamer20.com/features/347, here's the basic gist:
"What’s ironic is that it was Microsoft who trumpeted the strategy with the original Xbox that inspired the strategy of the PlayStation 3. Rather than release slightly worse hardware at a lower price, Sony invested millions into its Cell processor technology and all of the other components that caused the PS3 to retail as high as $599 at one point. Sadly, even with the high price Sony was still selling them at a loss.
What’s unfortunate for Sony from a business perspective is that it got so caught up in a graphical penis-measuring contest with Microsoft, that it lost sight of the fact that it didn’t need a multi-core, 8 SPE pixel generating doomsday device. That’s not how it won the last console war and it’s why that even in the event they stay on course to take the #2 position behind Nintendo, they will still have lost this generation.
Now it’s reasonable to assume that at least a fair percentage of the 140 million PS2 owners were “light” owners, buying the occasional game here and there, but in this generation have opted for the Wii to fulfill those gaming needs. What Sony did, however, was totally alienate that consumer, and now it’s feeling the pain. "
Comment by TonyP on the August 18th, 2009 at 7:20 pm
Granted, no one foresaw the economic crises we're in now way back when the PS3 was released. I do think it was a mistake though since it abandoned the principles that made the PS2 successful.
While the site is under construction, a copy of my editorial"The Fall of Sony: From #1 to (Barely) #2", on it is still around at http://www.gamer20.com/features/347, here's the basic gist:
"What’s ironic is that it was Microsoft who trumpeted the strategy with the original Xbox that inspired the strategy of the PlayStation 3. Rather than release slightly worse hardware at a lower price, Sony invested millions into its Cell processor technology and all of the other components that caused the PS3 to retail as high as $599 at one point. Sadly, even with the high price Sony was still selling them at a loss.
What’s unfortunate for Sony from a business perspective is that it got so caught up in a graphical penis-measuring contest with Microsoft, that it lost sight of the fact that it didn’t need a multi-core, 8 SPE pixel generating doomsday device. That’s not how it won the last console war and it’s why that even in the event they stay on course to take the #2 position behind Nintendo, they will still have lost this generation.
Now it’s reasonable to assume that at least a fair percentage of the 140 million PS2 owners were “light” owners, buying the occasional game here and there, but in this generation have opted for the Wii to fulfill those gaming needs. What Sony did, however, was totally alienate that consumer, and now it’s feeling the pain. "
Comment by TonyP on the August 18th, 2009 at 7:20 pm
Granted, no one foresaw the economic crises we're in now way back when the PS3 was released. I do think it was a mistake though since it abandoned the principles that made the PS2 successful.
While the site is under construction, a copy of my editorial"The Fall of Sony: From #1 to (Barely) #2", on it is still around at http://www.gamer20.com/features/347, here's the basic gist:
"What’s ironic is that it was Microsoft who trumpeted the strategy with the original Xbox that inspired the strategy of the PlayStation 3. Rather than release slightly worse hardware at a lower price, Sony invested millions into its Cell processor technology and all of the other components that caused the PS3 to retail as high as $599 at one point. Sadly, even with the high price Sony was still selling them at a loss.
What’s unfortunate for Sony from a business perspective is that it got so caught up in a graphical penis-measuring contest with Microsoft, that it lost sight of the fact that it didn’t need a multi-core, 8 SPE pixel generating doomsday device. That’s not how it won the last console war and it’s why that even in the event they stay on course to take the #2 position behind Nintendo, they will still have lost this generation.
Now it’s reasonable to assume that at least a fair percentage of the 140 million PS2 owners were “light” owners, buying the occasional game here and there, but in this generation have opted for the Wii to fulfill those gaming needs. What Sony did, however, was totally alienate that consumer, and now it’s feeling the pain. "