Sony won't incur 'major loss' from selling PlayStation 4 hardware

"We don't have to make all the investment in-house," says Sony exec about PlayStation 4 hardware development.

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Unlike the PlayStation 3, Sony is not planning lose a major amount of money from selling PlayStation 4 hardware, the first-party publisher has said.

Speaking to investors in an earnings call today, Sony chief financial officer Masaru Kato said "we are not planning a major loss to be incurred with the launch of PS4."

The PlayStation 3's unique and expensive components had to be mostly developed in-house by Sony. "We made a lot of in-house investments to develop the [PlayStation 3 Cell processor]," said Kato, adding that "development of the chip saw the silicon processing and all the facilities invested by us ourselves."

Sony has never officially divulged how much money it loses on every PlayStation 3 sold, but numerous analysts have attempted to work out the deficit. The Wall Street Journal estimated in 2010 that Sony lost about $18 on each PlayStation 3 sold at the time.

With the PlayStation 4 launch later in 2013, however, Kato says "we have a team working on chip development, but we already have existing technology to incorporate, and also product investment and all facilities will now be invested by our partners."

"We don't have to make all the investment in-house," concluded Kato.

The PlayStation 4 features an APU developed in conjunction with AMD, containing an 8-core 64-bit processor and a custom Radeon GPU. The next-generation console also features 8GB of GDDR5 RAM.

During the system's unveiling in February, PlayStation 4 lead systems architect Mark Cerny also said the decision to use off-the-shelf computer parts would be more friendly to software developers than the PlayStation 3's bespoke Cell processor.

Elsewhere in the call, Sony confirmed previous expectations to make an annual profit of ¥43 billion (approximately $435m/£239m).

Discussion

155 comments
Jerian
Jerian

What I find interesting is they are basically saying they did the Cell Processor in House. If memory serves right though it was a joint venture with IBM and Toshiba. Still it was way ahead of its time, considering it was 7 spu's and even the new one is 8. Not much of a difference for the processor prob. Nice to see the higher Ram though.

PrplMnkyDshwsr7
PrplMnkyDshwsr7

saying this at an investor meaning is only saying "we've found a way to reduce the cost of production, and our profits will be higher because of it"  No where in the statement does it imply the cost will differ for the consumer.

MaskRisen
MaskRisen

As a PC enthusiast I am glad to see Sony making the right moves. Making this move is to reinforce the what console gaming is, having access to games at an affordable price. Bigger is not always better, but entertainment always is.

genjuroT
genjuroT

>.> not sure if the first sentence is quoting verbatim, or a typo.

jsmoke03
jsmoke03

good for sony.....but that doesnt mean that its cheap for the consumer.

monson21502
monson21502

of course not it will cost then 250 bucks tops to make and they will sell it for 399

Elann2008
Elann2008

From sources online, it seems like Sony has learned their lesson.  Simply put, they won't make the PS4 any more complex than it should be.  They might just break even, and sell on software.  

PS4 sounds good.  Xbox Infinity, not so good.

farcorners
farcorners

The PS4 launch might make their original launch of the PS3 look extravagant and wasteful.

KBFloYd
KBFloYd

cheap plastic like the slims confirmed?

ShinjiEx
ShinjiEx

Sony is smart selling pretty much a powerful PC that's more affordable and outclassed most people PC's

hadlee73
hadlee73

Its amazing how much money can be saved with parts that are not based on custom architecture, aye Sony?

Shango4
Shango4

And they shouldn't expect one, a lot of people including myself are excited about buying a PS4 almost as much as when the PS2 came out. They are talking more about JUST GAMING and making a platform for Gaming Companies to have excessive freedom to be more creative in Yes!! Making great & innovative games. They finally get their "PITCH" together. Games Games Games.....fun and new!! That's how you sell a game system. At least to me and my friends it is. I hope Microsoft does end up realizing this as well because as it stands they seem to be marketing more new multimedia and Windows 8 integration technologies for the next XBOX. I think It's too much of a detraction away from what a game system is. We have multimedia in smartphones,Tv's & tablets, CPU's etc. Yes consoles have some similar functionality but should that be the focus? That's the real hurdle for Microsoft this next generation. They've done it before but the same approach may not succeed when your competition both Sony and Nintendo seem to be refocusing on what the systems were intended to do in the first place, and pulling in more game creators and new developers, Not just reassuring the same old road tested few game brands that worked last cycle, but opening the platform and marketing to the collective creative community. For sure from Sony's pitch we should see alot more indie developers, and creative young freelancers on the system (some very bad im sure, but others will bring in a new era in awesome games). Sorry my thoughts run longer than the actual article. What do you guys think?

xolivierx
xolivierx

oh Sony, providing my life with a bit of hapiness =).

IanNottinghamX
IanNottinghamX

Thats an unrealistic statement to make in this economy...

lifegee13
lifegee13

I prove my point, a Ps4 is cost efficient for high power gaming. And if you have a pc that's 1300 dollars, the next Xbox and ps4 will top that

demonkingx5
demonkingx5

don't quot me on this but the PS3 cost 900$ to make & it sold for like 600$ for a while that's a huge lost especially since there was no games & its launch was worst than the wiiu 

mattress805
mattress805

If it's around $400 or a little above that, i'll pick one up day 1. Sony got a lot smarter this time. All the developer comments so far have been positive for the PS4. I remember mostly critical comments prior to the PS3's release, by developers. John Carmack of Id said at E3 in 2006 that, "Sony makes developers sweat blood to program for its' console." Using off the shelf innards on PS4 is a wise move.

stev69
stev69

So the fact that Sony have produced a console at a more cost effective level than the previous one, the consumer can then expect a more reasonable price tag no? I would be interested to know what the profit margins for either product will be in comparison on release.

DJKrayz_basic
DJKrayz_basic

Sony was idiotic with the release of the PS3... $500-600 models...?  no wonder they had such a rough start...  i really hope they do a better job this next time around...

Megavideogamer
Megavideogamer

Sony did lose a lot of money with the Playstation 3. The launch models and the PS3 models up to 2010. So with the new superslim PS3's Sony must break even by now. Glad that the Playstation 4 is not going to cost Sony in the long run. PS3 have sold 76 million Sony has lost money on them for 6 years. Playstation 4 using standard off the shelf computer parts.

wdma
wdma

Blu-ray drive, Wireless rechargeable controllers and Cell Processor were all new tech at the time  which cost tons of money especially the Blu-ray.

But now Blu-ray are cheap and they are using off-shelf CPU so it will greatly reduce the cost of the PS4

bluefox755
bluefox755

I dunno, PS3 did pretty damn good when it was losing money...I look forward to what they can do when they're actually making money.

Johnson94
Johnson94

Now with the reassurance that Sony would actually start to gain profit again, what we can expect from Sony with the money? Securing several game titles to be PS4 exclusives?

Dannystaples14
Dannystaples14

@MaskRisen You my friend have just restored my faith in gamers. It seems not all PC fans are elitist assholes.

Dannystaples14
Dannystaples14

@Elann2008 Why don't you wait till you have actually heard something about the Xbox before making that call?

hartsickdiscipl
hartsickdiscipl

@ShinjiEx   Why do people keep saying stuff like this generation after generation?  Will they never learn?  Even if new consoles are slightly ahead of your average gaming PC at launch, they are miles behind within 1-2 years.  

Pikdum
Pikdum

@lifegee13 Those numbers are incorrect. I built my PC over a year ago for $700 and it's nearly as powerful as what I've seen of the PS4 specs so far.

malec_1
malec_1

@lifegee13 Nope.

A $1.3k computer would have an i7, >=16gb ram and a top of the line discrete video card. It would easily be better than a custom bulldozer APU.

I think the PS4 and new Xbox will be high end performance wise, but your statement is false and displays an ignorance of computer hardware.

Now if you stated the PS4 and new xbox would be more powerful than a $400-$500 PC, you would have been absolutely correct.

HowlPendragon
HowlPendragon

@demonkingx5 Truth. That was mostly due to the expensive RSX graphics chip and producing their special Cell processor.

minty_cbo
minty_cbo

@DJKrayz_basic This system will probably be somewhat expensive for a console aswell...(It's all computer parts...)

Supabul
Supabul

@wdma 

Ain't PS4 using a custom AMD Processor, its not exactly of the shelf

Landsharkk
Landsharkk

@Johnson94 Where is the reassurance that Sony will gain a profit again?  Just because they are going to make money off each PS4 console sold doesn't mean they are going to make a profit.  

They might make $1 profit per console, but end up spending $50 per console when factoring in support, infrastructure, and advertising costs.  So, while the console and hardware itself might be sold at a profit, overall I doubt it's going to be anywhere near enough to bring Sony financials into the black.



HowlPendragon
HowlPendragon

@Johnson94 Exactly. Its already been getting some of the best exclusives. Hopefully this only means it gets more of the same great quality titles.

racerxgundam
racerxgundam

@Dannystaples14 @MaskRisen they are just A$$h@les...lol

Jerian
Jerian

@HowlPendragon @ShinjiEx Right, 6+ core proc with 8g ram and any graphics card worth a damn with a 360 for windows controller and viola youve got a PC/PS4/ & XBOX Infinity hehe....notice i didnt say Wii U, that one is still unique

Elann2008
Elann2008

@HowlPendragon

Lol, and that comment deserves one.  Nvidia will already release new GPUs that will outclass the unreleased console hardware in a month.

Sure, it will outclass most non gaming PCs haha.  Most gaming PCs are as good as the PS4, and many are better.  Just sayin'.

Not to say that the PS4 isn't a good console.  It will be good for a while, and PC games will probably see much better multi-plat versions.  

The most important thing is that these console games take advantage of multi-threaded optimization.   Long gone are the days of 1-2 CPU core threaded games.  

Sefrix
Sefrix

@malec_1 This. As far as price vs. performance is concerned PS4 is a fantastic deal (if the price does fall there) but you can still, and always will be able to, build a PC that can run it better.

HowlPendragon
HowlPendragon

@minty_cbo @DJKrayz_basic I can't see it being more than $500 for the high-end model though. At least I hope not.

CaptainBerserk
CaptainBerserk

@Landsharkk  Every console sold is a base installed, they real profit comes from games royalties.   

Gallowhand
Gallowhand

@Landsharkk @Johnson94 Selling each console with even a tiny profit margin is better than selling each with a loss.  Even if they break even, they would still be ahead of where they were during the current gen.

AshTrai
AshTrai

@Cypress131 @Chico86_basic I'd be surprised if it didn't turn out to be far easier to hack the hardware as a result of using more standard parts.

Ultimately though, it's gonna happen no matter how hard it is. Both the 360 and ps3 were continually hacked despite dozens of firmware updates to try and stop it.

Cypress131
Cypress131

@Chico86_basic @Cypress131 

That says nothing to what kind of security they use.

The PS3 was extremely secured not because of it's cell architecture, but instead because Sony spent a great amount of work with white-hat security teams.


Until we have our hands on the PS4, we have no idea how hard they've locked it down. Even with familiar x86 architecture, the security can be pretty extensive.

minty_cbo
minty_cbo

@HowlPendragon  $500 sounds about correct for the "High end" version. (though all that means is a larger hard drive...)
$500 will build you a low-end AMD computer tower..

HowlPendragon
HowlPendragon

@xolivierx Nice little trip you took me on there :p

I think $400 would be a great price, but I could see them including a 500GB HDD on that one and *fingers tightly crossed* a 1TB HDD model for $450 or $500.

HDMI would be nice too, but I doubt they will include it since most people will likely already have a couple. It would be more wasteful than useful I think.

xolivierx
xolivierx

@HowlPendragon 399$ would be an ok price. But then again it will probably come with either a crappy game or zero game. It'd be great if an HDMI cable was included, and a demo disc. Do you remember them demo discs we use to have? haha I played the sh!t out of the demo disc included with the PS1, then I had a game 3 weeks after. Oh dear demo of ESPN, Jumping Flash, Battle Arena Toshinden and Twisted Metal, how many sweet sweet hours have you provided me with.

Gallowhand
Gallowhand

@HowlPendragon That's true, but keep in mind they will be technically 'in the red' before they start due to the R&D costs, which still have to be clawed back somehow.  That could be hundreds of millions of dollars.  So they still have a long way to go before they will realise actual 'profit'.

HowlPendragon
HowlPendragon

@Landsharkk I think you're leaving out the fact that people buy at least one game per console that they buy. You rarely hear of anyone buying a console and not buying anything else to go with it. If not a game then some digital content, or an accessory or an extra controller.

So the little profit that will come from each console plus the game/accessory purchases for it should translate into net gain.

Landsharkk
Landsharkk

@Gallowhand @Landsharkk @Johnson94 I totally agree with you there.  I just think it's way too soon to think Sony is suddenly going to be making a profit as a company just because they make a few bucks per PS4 sold.  

Confidence in Sony is good, but blind confidence (like we are seeing on the comment section) is dangerous.