Hirai claims PS3 platform profitable, explains new logo
SCEI CEO says console's hardware costs still exceed retail price, but console earns an overall "gross profit" when software, accessories are included; new "PS3" logo aims to "reset thinking."
Even before last week's announcement of the $299 120GB PlayStation 3 Slim, Sony Computer Entertainment was talking up its improved manufacturing costs. In July, Sony Corp. CFO Nobuyuki Oneda told analysts that his company had reduced the PS3's production costs by 70 percent since its November 2006 launch. When that figure is applied to estimates from industry research firm iSuppli, it means that Sony would spend around $252 to manufacture each $299 console--generating a theoretical $47-per-PS3 profit.
Alas, according to SCE CEO Kaz Hirai, iSuppli's estimates are more than a bit off. When asked by the Times of London if Sony still loses money on each PS3 it sells, the executive said, "If you're just talking about the hardware alone, the quick answer is 'Yes.'" However, he went on to say that when PS3 software and accessories are taken into account, the console is generating money for the Tokyo-based electronics giant.
Said Hirai, "I think the better indicator is to look at the business as a whole platform, to ask 'Are you profitable in terms of the hardware, software, and peripherals?' And the answer to that question is 'Yes, on a gross profit level since the last fiscal year.'" However, Sony Networked Products & Services, the division of Sony Corp. that SCE is part of, posted a quarterly operating loss of ¥39.5 billion ($415.6 million) from April to June.
Besides confirming that Sony is planning a spring 2010 launch for the PS3's motion-sensing technology, Hirai discussed the console's new logo, first revealed in May by pictures leaked from the PS3 Slim assembly line. Instead of bearing the words "PlayStation 3" in the much-derided font from the Sony-produced Spider-Man films, the new console simply has "PS3" stamped on the side in sleeker, more futuristic letters. Hirai told the Times the change was both pragmatic and philosophical.
"On a practical level, when you have PlayStation 3 spelt out, the aspect ratio was such that if you wanted it on a billboard it became tiny," explained Hirai. "It didn't work in terms of visibility."
On the more esoteric side, the executive wanted the new logo to represent a connection to PlayStations past, which used the "PS" and "PS2" logos. He explained, "I wanted to send the message internally that we are resetting the thinking, going back to our roots. What better way to do it than by resetting the logo?"
Hirai also conceded that the throwback to the original PlayStation and the PlayStation 2, both of which have sold more than 100 million units, was more than cosmetic. "I think the PS3 had a bit of an identity problem," he said, referring to the prelaunch emphasis on its multimedia functions, including Blu-ray playback and Web browsing.
"When I came back to Japan in November 2006, one of the first things I did was to go out with a very clear message that said the PS3 is first and foremost a video game console, before we talk about any of the other great things it can do," emphasized Hirai. "Once we've done that, then we can talk about all the other things that it can do in terms of the non-game video content, whether it's the video delivery service or the catch-up TV service or the movie rental service. But none of that makes much sense unless we can say first and foremost it's a great video game console."
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