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In Reply to: Re: USD 499 for the cheapest SONY PS3 is hardly Ferrari prices ! posted by Charles Hansen on February 14, 2007 at 12:23:28:
Your SACD statements still make a negative impression on me, so maybe you need to study writing :-)For small High End electronics companies, the recent years have been difficult, with CE, SACD, Rohs, WEEE, class D and now Blu ray.
Not to mention new versions of HDMI, and the yearly fees.Because I sold GamuT in 2003, I live happily without the above, so you cannot tempt me :-)
You ignore, that the SONY PS3 is a game console. USD 50 DVD players do not play games.
A relevant alternative would be the much praised oppo DVD multiformat player at USD 149 and a X-box 360 game console at USD 299. Total USD 448 versus SONY PS3 at USD 499.
This is the choice consumers make today. And for the many millions of owners of many PS2 games at USD 50 for each game, the choice is clearly SONY PS3, because it can play their old games.
This is the reality of mainstream today.SONY can sell PS3 at a loss, because SONY get money from the game companies.
Follow Ups:
< < Your SACD statements still make a negative impression on me > >I guess the truth hurts.
< < A relevant alternative would be the much praised oppo DVD multiformat player at USD 149 and a X-box 360 game console at USD 299. Total USD 448 > >
That might be relevant if normal people that bought DVD players cared about SACD or DVD-Audio, or wanted to buy a game console at the same time. But in general, that's not the case. Your example would be like comparing a car with a navigation system to a car without a navigation system plus a separate navigation system. For those small percentage of buyers that need it, it would make sense. But that is not the vast majority of purchasers.
< < SONY can sell PS3 at a loss, because SONY get money from the game companies. > >
Actually Sony *has* to sell the PS3 at a loss because it would be completely unsaleable at $1000. So they have no choice. What remains to be seen is how long they can continue to lose money. I think it will be many years before their manufacturing costs come down to the point where they stop losing money. We'll see how long they have the stomach for bleeding. Don't forget that Sony stopped selling SACDs because they got tired of losing money.
no matter how you want to avoid it, a game consoles that play Blu ray and DVD is worth much more than a DVD player to a lot of people.Your argument about USD 50 for a DVD player versus USD 499 for a SONY PS3 is simply wrong.
My math teacher said it this way: The price of the apple do not matter, when you want to buy and eat a coconut.Similar a DVD player cannot be sold to people, who want a game console.
You also fail to understand how much money SONY made on the PS2.
It gave SONY about 50% of the total company buttom line.
So SONY have a very good reason to stay committed to PS3.Secondly the profit comes via the games companies.
So SONY can sell PS3 at a loss, and still make a profit.
This business model is well known in printers, the profit comes from the ink sales.
However long term Blu ray is not more expensive to build than a DVD. So profits will come from Blu ray player too. That is the reason Panasonic and Samsung make Blu Ray players. They see no profit in making USD 50 DVD players.
When a technology have become a cheap commodity, the big companies will try to force a new format with better profits on the buying public. Small companies get hurt everytime.
Get used to it. It will happen again and again.
< < When a technology have become a cheap commodity, the big companies will try to force a new format with better profits on the buying public. > >This is the last resort of of dying behemoths. You weren't around in the US during the '60s, but an interesting thing happened here. The giants of the consumer electronics industry at that time (RCA, Zenith, GE, et cetera) had been dominating their market for nearly 50 years. Then in a matter of a few years, they got slaughtered and either went out of business or were dismantled.
Why? Because the Japanese companies made products that were less expensive and offered performance that was "good enough" for the average consumer.
And now the same thing is happening to the Japanese companies. The fact that PS2 contributed 50% to Sony's bottom line a year or two ago only shows what terrible shape they are in. They don't make money with TV's, or computers, or Discmen, or DVD players or any of what should be their core businesses. Instead, they are reduced to trying to stay at the forefront of that most faddish of products -- video games.
For a while, they made money selling DVD players. Then when it became a commodity, they couldn't keep up with the Chinese. Why? Because the Chinese companies are making products that are less expensive and offer performance that is "good enough" for the average consumer.
So you see, history is repeating itself. It's only a surprise for those that don't study it. (If you really think I'm wrong, why don't you go ahead and invest your life savings in Sony stock?)
For Sony (and you) to think that they can save themselves by offering higher performing products at a higher price is pure foolishness. That would be like thinking that if only RCA had offered a high performance TV 35 years that cost 5x what the Japanese models did that they would still rule the world of consumer electronics.
The funny part is that you think what Sony is doing is a *good* thing. You are probably one of those kind of guys that happily waits in line to buy the latest abortive fiasco from Microsoft, thinking that it will somehow improve your life. And you happily give Bill Gates even more of your money.
< < Small companies get hurt everytime. > >
Only the ones that make bad decisions. Our business was up 40% last year, which was up 50% over the year before that, which was up 40% over the year before that.
Sorry about Gamut and your aborted SACD player and all that.
There is nothing new for me in your last post.The big CE companies in USA could have stayed in the CE market, just
the companies in Europe did. Perhaps Europe were more clever?Look at Europes trade balance versus USA ?
The japanese produced TVs in Europe for many more years, using local parts. So did Philips, Thomson and Grundig.
And Bang&Olufsen still produce in Europe.In Europe quality is still king, just look at Audi, Porche, Mercedes, BMW.
Look at French and Italien fashion clothes, womens handbags, food and wine.
People all over the world prefer to buy it because it is expensive.
Even in China :-)The big USA manufacturers do not seem understand the concept of quality and a higher price as a positive sales argument.
Your own growth is caused by high price, elegant design and quality.
Very much like an European car.If you tried to go low price, you would fail fast.
GamuT had the best sales ever in July 2003, just when I decided to sell the company. SACD never hurt GamuT.
I sold to end a 14 year long battle with our governement over an illegal act done by the government in 1989. The European court ruled in my and many others favour, but we never got our money back from the Danish government, because the total amount was 7 billion USD, or 5% of Denmarks GNP at that time !
I do not buy Microsoft products, unless I have to. My father developed the largest computer software on punchcards in his time.
Good software keep on being used, remember year 2000?
To sell new "improved software", you have to make bad software :-)
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