The writeup at ArsTechnica has all the gory details.Ã‚Â Sony has announced that the cost of some components for the PlayStation 3 have gone up.Ã‚Â After a US$231 loss for the division last quarter, Sony is warning of a greater loss than originally expected around the PlayStation 3 launch.
According to Merrill Lynch Japan, such a move could result in a second-year loss for Sony of US$730 million, and another loss of US$457 million in its third year. This would be in stark contrast to the PS2, which was profitable in its second year, to the tune of US$757 million.
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So if the game console business is getting so expensive, why do companies like Sony and Microsoft continue to chase it? Each company is looking at the long term benefits of having the dominant game console market share, and each company has additional reasons to promote its own console. Sony, on one hand, is clearly anxious to push the Blu-ray format in order to create a market for the high-definition movie standard they are promoting. Microsoft, on the other hand, likes the idea of the Xbox serving as an entertainment hub that links seamlessly to computers running the Media Center Edition of Windows.
Then there’s Nintendo, who have consistently turned a profit with their gaming hardware and never seemed to jump on the bandwagon of losing money selling high-powered units below cost in order to make it back with game sales and third-party license fees.
The rest of this year and early next will be interesting in the console business, I suppose.Ã‚Â I want Sony to do well with the PlayStation 3, but more and more it sounds like a troubled console, or at least a troubled launch.
[tags]Sony, PlayStation 3[/tags]