Can The Playstation 3 Save Sony?

After Sony announced job cuts for it's electronic division, Katsuhiko Mori, fund manager at Daiwa SB Investments, said in an interview with the BBC: "Sony doesn't have any core businesses that generate stable profits". But will the Playstation 3 console save Sony?

Although some people may point out that since the Playstation 3's release in 2006, the console hasn't actually made a profit, and this is because of the simple fact that Sony are selling the console for less than it costs them to make it. And it has been like that since it's release, Sony purposely reduced the price below their manufacturing costs so they could break into the market.

Although this may seem rather odd, Sony have used this tactic every time they release a console, even though the competition was tough, the did it with the Playstation 3.

Their plan was to release a high specification console at a loss which will last for many years, but will make them a profit later on. But will it prove to be successful this time? With the high pressure competition that Microsoft creates while selling the Xbox 360, and the new type of market that the Nintendo Wii creates, will Sony manage to make enough profits to cover their losses?

The problem is that Sony will not start to reduce the price of the Playstation 3 until they start to make a profit. However, as the consoles price is very high, alot higher than it's competition, Sony won't make a proportion of the overall console sales, which will cause them to lose more money for longer.

Although all that sounds a bit bleak for Sony, there is one upside that they have, Blu-ray. It was lucky for them really that Blu-ray came out on top of the DVD battle. If HD DVD had won the battle, it would have not given the Playstation 3 any edge over it's competition.

So, at the moment, it's not looking good for Sony, also, with their release of their new online community, Playstation Home, already being shot down by Microsoft and EA. Both of them have said that Sony's latest attempt at creating an online community is not directed and out of date while moving in no direction.

Aaron Greenberg, a manager at Xbox 360 game console division, stated: "When they unveiled it, it seemed innovative. I think what’s happened is now here we are a couple of years later and we feel beyond that. It feels like 2005 tech in 2008.”.

Hawkins said: "I can't tell if they're going towards this mass market idea…or if they’re being lured into essentially trying to compete with Warcraft or Second Life”.

After Sony has spent alot of time and money on their new online community, it has just been shot down, personally to me it just seems like an idea of earning money, there are several things within the new world that requires money to buy, and they also have sections of the world which are sponsored by different companies like Red Bull. I'm pretty sure that not all gamers will want to be spammed with adverts while walking around.

Overall, the future is not looking good for Sony, they are betting that the Playstation 3 will sell enough to make them money, which it currently isn't, so they won't reduce the price of the console until it is, but because the price is too high, buyers are being turned off. Who knows what position Sony will be in if their console doesn't start to sell more units.

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