It's official: Sony f'ed up

[Iraira]

Sony has lost over $3 billion on the PS3
Mario and Master Chief seen hi-fiving.
In the company's fiscal 2008 annual report, Sony revealed that they've now lost roughly $3.3 billion (that's billion with a B) on the Playstation 3 since its launch. That breaks down to $2.16 billion in 2007, followed by a notably smaller but equally daunting $1.16 billion loss in 2008.

The reason? Pricing the console below its production cost. That's right - that hefty $599 you paid for the PS3 back when it first launched was significantly cheaper than the cost of producing it in the first place, and while the retail price has come down some, the losses keep piling up.

Investors have reason to sweat. In a statement, Sony claimed "the large-scale investment required during the development and introductory period of a new gaming platform may not be fully recovered." They went on to note that they've invested a great deal of money into R&D for the console, a sum they might not be able to recoup if the PS3 "fails to achieve such favorable market penetration."

http://videogames.yahoo.com/feature/sony-has-lost-over-3-billion-on-the-ps3/1223467

[Iraira]

Playstation 2 component incites African war
Console war reaches past the couch and into the Congo, claims report.

Has the video game industry dug up its very own blood diamond?

According to a report by activist site Toward Freedom, for the past decade the search for a rare metal necessary in the manufacturing of Sony's Playstation 2 game console has fueled a brutal conflict in the Democratic Republic of Congo.

At the center of the conflict is the unrefined metallic ore, coltan. After processing, coltan turns into a powder called tantalum, which is used extensively in a wealth of western electronic devices including cell phones, computers and, of course, game consoles.

Allegedly, the demand for coltan prompted Rwandan military groups and western mining companies to plunder hundreds of millions of dollars worth of the rare metal, often by forcing prisoners-of-war and even children to work in the country's coltan mines.

"Kids in Congo were being sent down mines to die so that kids in Europe and America could kill imaginary aliens in their living rooms," said Ex-British Parliament Member Oona King.

"SONY's PlayStation 2 launch...was a big part of the huge increase in demand for coltan that began in early 1999," he explained. "SONY and other companies like it, have the benefit of plausible deniability, because the coltan ore trades hands so many times from when it is mined to when SONY gets a processed product, that a company often has no idea where the original coltan ore came from, and frankly don't care to know. But statistical analysis shows it to be nearly inconceivable that SONY made all its PlayStations without using Congolese coltan."

http://videogames.yahoo.com/feature/playstation-2-component-incites-african-war/1231745

[Charles]

"..nearly inconceivable that SONY made all its PlayStations without using Congolese coltan."

Well, yeah, considering that tantalum is used in like EVERY FUCKING IC CHIP IN THE WORLD, I suppose they're right. But it seems particularly stupid to single out Sony.

[IkemenTommy]

And whoever was it that said video games incite violence?

[Taro Toporific]

Sony reports massive profit drop
Down nearly 50% on last year
Tuesday at 15:52 BST | techradar.com
Sony has revealed its financial report for the first financial quarter 2008-2009 today (April through to June this year) and it's not looking good for the Japanese consumer electronics firm.
Sony's last quarter's profit is down to a mere $326.9 million, nearly half of the $620 million Sony reported at the end of the same quarter last year.......


Via alim_boeana's flickr

[Kuang_Grade]

Nothing massively new here but I thought that this was a rather brutal assessment of the PS3's current situation in the US

http://online.wsj.com/article/SB123050978162738293.html
Hope Fades for PS3 as a Comeback Player
In Battle of the Game Consoles, Nintendo Wii and Microsoft Xbox Widen Leads Over Sony's PlayStation

...But early results from this holiday season aren't promising. U.S. sales of the PS3 fell 19% last month from a year earlier, while sales doubled for the Wii console and rose 8% for the Xbox 360, according to research firm NPD. Analysts say they expect PS3 sales for this month to be flat or lower than last year, while sales for its rivals are likely to rise. And Sony may not reach its goal of selling 10 million PS3 consoles in the fiscal year through March, analysts say.

The sales decline is a heavy blow to Sony, which was banking on the videogame division to provide a bright spot as its core electronics business is hit by the global economic downturn. Sony in May forecast that its games division would turn a profit this fiscal year after two years of losses since launching the PS3 in 2006. Meanwhile, poor sales of television sets and digital cameras are forcing the company to lay off thousands of staff and close factories.
...
Part of Sony's strategy hinged on selling the PS3 as a relatively inexpensive Blu-ray player. But prices of Blu-ray players have fallen so sharply recently -- new players are available for less than $200 -- that it's possible to buy a Blu-ray player and an Xbox 360 for less than a PS3. Meanwhile, the economic downturn has cooled sales of flat-screen TV sets and Blu-ray players this holiday season.
...
Last month, four of the five best-selling U.S. games were exclusive to either the Wii or Xbox 360, according to NPD. Sony's best-selling game during the month was an action shooter game, Call of Duty: World at War from Activision Blizzard Inc. But twice as many people bought the Xbox 360 version.

[gkanai]

New book review in the NYTimes.

It was in the mid-1990s that Sony dropped Playstation into the console market -- a graphics powerhouse that featured games for adults as well as for kids. Playstation was a huge success, selling more than 100 million units. Its 2000 sequel, the Playstation 2, was an even bigger one.

For the system's ambitious third iteration, though, Sony wanted an entirely new processing architecture. Most computer processing chips are built on the foundations of the chips that are already in use. Designing a new chip from the ground up is a costly and time-intensive process. So in 2001 Sony partnered with Toshiba and IBM to create the so-called Cell processor -- a chip so powerful that it would redefine PC-scale power.

David Shippy, as it happens, was in charge of designing the brains of the Cell, the processing core. In "The Race for a New Game Machine," he and his co-worker Mickie Phipps tell the story of the whole effort to build the Cell. They also describe how the project went off the rails, ending up with IBM engineers creating the processing chips for two rival videogame consoles and, along the way, delivering to Sony Corp. one of its greatest business failures.

http://online.wsj.com/article/SB123069467545545011.html

or

http://www.careerjournal.com/article/SB123069467545545011.html?mod=most_viewed_day

This reminds me of the debacle surrounding Sony's purchase of Columbia which was detailed in Hit and Run: How Jon Peters and Peter Guber took Sony for a ride in Hollywood

From Publishers Weekly
This is basically the story of two boys who never grew up, but ended up running Sony-owned Columbia Pictures into the ground. Peters, whom the Los Angeles Times described as a "seventh-grade dropout and reform school graduate who began his show-business career as Barbra Steisand's hairdresser-boyfriend-manager," was a master at self-promotion; only semi-literate but able to count well enough to make it big in Hollywood. Bostonian Guber earned several academic degrees before "going Hollywood," somehow managing to indifferently run several studios and make high profits and only a few good films. This book will leave film fans drooling at charges that Peters hired Heidi Fleiss's prostitutes as gifts and that he either bedded or assaulted his numerous conquests (Jacqueline Bisset and Lesley Ann Warren, among others).

[halfnip]

Back in Japan you'd only see the local stuff (Sharp, Hitachi, Sony) out on the floors, but being back here in the US now, it's amazing to see how far Sony have slipped. Taking TV sets for example, the Samsung's and LG's are FAR better than the shit Sony and Sharp are producing these days and it's not even close...

[Blah Pete]

Nothing massively new here but I thought that this was a rather brutal assessment of the PS3's current situation in the US

The Sony PS3 was a good chunk of my business in Japan. Not only does Sony make the ICs for the PS3 but also two Toshiba factories. All have stopped production line since about last February and have not placed any new orders in about a year. if something breaks they just take a part of a tool from a line that is down. There is no budget for external repair services.
There is a rumor that Sony is trying to sell the factory (300mm Semiconductor line) but there aren't many nowadays as most potential buyers have their own 300mm lines idle.
This is one of the main reasons my company is re-locating me back to the US this month.

[IkemenTommy]

Blah Pete, you are truly fucked.

[gkanai]

Taking TV sets for example, the Samsung's and LG's are FAR better than the shit Sony and Sharp are producing these days and it's not even close...

Most of the Sony Bravias use Samsung LCD panels, so they're basically the same product with different software and marketing (and pricing.) So the Samsungs are not "FAR better" as they are the same panels.

[IkemenTommy]

And on top of that, Samsung technology is all a derivative (copy) of Sony and Sharp's intellectual properties.

[Catoneinutica]

And on top of that, Samsung technology is all a derivative (copy) of Sony and Sharp's intellectual properties.

The copiers copied. Sounds pretty karmic to me. That said, up to, say, the late 90s, Sony was the gold standard of the global electronics industry. I would've thought that a good, conservative investment play in 1999 would've been to buy stock in Sony and Toyota. But now Sony, and with it the rest of the stagnant J-electronics makers, has been knocked off its pedestal, and even even big-pimpin' Toyota is stumbling.

-catone
-I'd never buy an American car, but I like to flummox my lefty friends with the fact that Toyota and the other J-carmakers run sweatshop-labor operations straight out of Dickensian London, while the American makers are fully unionized. "The Toyota Way" - heh. They've really been showing their fangs lately.

[sublight]

Sony used to be our biggest client, but now they make up just a tiny part of our work. Good riddance, really. So many of the people we had to work with from there combined a colossal sense of entitlement with appalling inability to decide anything. The only thing that made working with them worthwhile was how obscenely we billed them, and even then our boss finally had to take one of their marketing people aside and say "go away, and never call us again. We're sick of dealing with you."

Still, I find myself distressingly attracted to Sony's new DSLR line (bought from Konica Minolta). I got to try out the Alpha 700 for a couple of months last year and was honestly very impressed with it. Unlike many other Sony products, it behaved itself even though I had no other Sony hardware or software at home or work. My current DSLR is still fine, but I'm leaning toward making my next one a Sony.

[gkanai]

My current DSLR is still fine, but I'm leaning toward making my next one a Sony.

The top-of-the-line A900 is getting rave reviews.

Sony A900 and Canon 5D MKII The New Market Leaders Duke it Out

That plus the fact that Sony fabs the chips for Nikon, says some interesting things for the future of the DSLR industry.

More than anything else, I'm really excited by the future of HD video on DSLRs. I think it will give new life to DSLRs and will hurt traditional camcorders.

[halfnip]

Most of the Sony Bravias use Samsung LCD panels, so they're basically the same product with different software and marketing (and pricing.) So the Samsungs are not "FAR better" as they are the same panels.

Have you seen the Samsung 120hz series next to whatever Sony says is comparable side by side? Please don't tell me they are the same because it's pretty obvious to the naked eye that the Samsung's are CLEARLY (no pun intended) better in picture clarity.

I used to have nothing but Sony's, but there are much better out there for a lot cheaper these days..

[omae mona]

The top-of-the-line A900 is getting rave reviews.

Sony A900 and Canon 5D MKII The New Market Leaders Duke it Out

That plus the fact that Sony fabs the chips for Nikon, says some interesting things for the future of the DSLR industry.

Thanks gkanai. I really don't follow much in consumer electronics nowadays outside of cameras, but this is clearly one area where Sony is doing the right thing. This camera's a pretty big deal]here[/url].

I think they still have a little ways to go - at a price point slightly higher than the Canon 5D MKII and a much smaller lens product lineup, it's a hard sell for brand new buyers unless one of the particular features (e.g. faster frame rate) is important. But it's a clear win for consumers who own Minolta lenses and want to upgrade to a full frame dSLR. If Sony continues to expand the lens lineup, we may start to see pros shooting with Sony cameras before long.

[Mulboyne]

...I would've thought that a good, conservative investment play in 1999 would've been to buy stock in Sony and Toyota...

Sony used more debt finance than other Japanese consumer electronics companies so it has mainly been viewed as a growth stock rather than one for value investors. A conservative play along the lines of Toyota would have been been Fuji Photo or one of the component companies like Murata. Without wishing to sound like I work for Hindsight Securities, I can remember a couple of analysts suggesting that 1999 would be a good year to sell Sony because they had announced Playstation 2. The rationale was that earnings from Playstation 2 were now being factored into the stock price and so, to justify moving even higher, Sony needed a new product - which wasn't there - or Playstation 2 had to exceed already high expectations. The basic analysis turned out to be correct but any investor selling too early was deeply unhappy because Sony went on an internet-fuelled rise rise in late 1999.

[gkanai]

A conservative play along the lines of Toyota would have been been Fuji Photo or one of the component companies like Murata.

Murata I can understand, although I think they spend too much on marketing for a components company.

But Fuji Photo? Were'nt they saddled with (and still) the challenge of moving from film to digital?

http://finance.google.com/finance?q=TYO:4901

[FG Lurker]

I recently sold all my Canon gear and bought a Nikon D700, a 24-70/2.8, 70-200/2.8 VR, 105/VR macro, 50/1.4, 85/1.4, and an SB-900. I have regular access to other interesting Nikkors such as the 8/2.8 fisheye, Noct 58/1.2, and some long telephoto primes.

The raw number of pixels is now irrelevant to me. Much more important (again, to me) are noise and dynamic range and the D700 is incredible in these areas.

I'm also very impressed with Nikon's metering, flash system, and overall control layout.

[FG Lurker]

But Fuji Photo? Were'nt they saddled with (and still) the challenge of moving from film to digital?

Yes, but that move didn't really start until the Canon 1D (4mp, Nov 2001) and the D60 (6mp, Apr 2002).

In 1999 film was still king and no one really thought the move to digital would be as quick or as total as it turned out to be.

[Mulboyne]

But Fuji Photo? Weren't they saddled with (and still) the challenge of moving from film to digital?

http://finance.google.com/finance?q=TYO:4901

That would be more relevant for a growth investor than a value investor. Certainly, though, most conservative investors should have avoided taking any new tech positions in 1999 because valuations were so rich on account of the global technology bubble. There were some, however, who decided there really was a new paradigm and threw out all their old metrics.

[GonetoEarth]

Apple should just by Sony! Then again, why take on that much trouble?

[gkanai]

I recently sold all my Canon gear and bought a Nikon D700, a 24-70/2.8, 70-200/2.8 VR, 105/VR macro, 50/1.4, 85/1.4, and an SB-900.

You didn't buy the 14-24 2.8 G? That's Nikon's best lens since the 105/2.5 ...

Ok, I'm insanely jealous as that's what I'd want my setup to be.

[Catoneinutica]

You guys talking about about buying the Sony A900 over Canon or Nikon's offerings makes me conclude the obvious: that Sony is cannibalizing Canon and Nikon's market share with its move into DSLRs. METI can't be too happy with this. Far better for Sony to poach customers from a perfidious gaikoku company.

edit: disclaimer: Nikon guy

[Catoneinutica]

Sony used more debt finance than other Japanese consumer electronics companies so it has mainly been viewed as a growth stock rather than one for value investors. A conservative play along the lines of Toyota would have been been Fuji Photo or one of the component companies like Murata. Without wishing to sound like I work for Hindsight Securities, I can remember a couple of analysts suggesting that 1999 would be a good year to sell Sony because they had announced Playstation 2. The rationale was that earnings from Playstation 2 were now being factored into the stock price and so, to justify moving even higher, Sony needed a new product - which wasn't there - or Playstation 2 had to exceed already high expectations. The basic analysis turned out to be correct but any investor selling too early was deeply unhappy because Sony went on an internet-fuelled rise rise in late 1999.

I did absolutely no due diligence, and was only thinking out loud; Sony came to mind as an interesting J-company at the time because of the PlayStation 2 which you mention, and in 1999 Sony, Honda, and Toyota seemed to have Apple-quality brand recognition. Tempora mutantur.

J-companies haven't interested me since the early 1990s, when it became obvious that the money was to made in software and creative industries, not in J-style widget-making. The Chinese can make a widget, any widget, for less. As for the few remaining widgets they can't, well, they're getting there quickly.

[FG Lurker]

You didn't buy the 14-24 2.8 G? That's Nikon's best lens since the 105/2.5 ...

Ok, I'm insanely jealous as that's what I'd want my setup to be.

The 14-24/2.8 is an incredible lens but I don't like the bulbous front element. There isn't much way around it of course, apart from making a really bizarre looking (and crazy-ass expensive) 14-24 with a 105mm+ front element!

The AF-S 17-35/2.8 is also a killer lens and I may end up picking up one of these used. The 14-24 is very, very tempting though.....

I was a die-hard Canon user for many years and had quite a lot of "L" glass. The Nikon system is incredible, I don't see myself going back to Canon unless Nikon completely self-destructs (happened before...) or Canon starts designing photographer-friendly equipment, better wide lenses, and some sort of technology that Nikon refuses to match (IS, USM...)

[gkanai]

I was a die-hard Canon user for many years and had quite a lot of "L" glass.

I'm a hardcore Nikon owner who is currently a bit jealous of the Canon 5DII's HD video capability.

The new Canon 5DII with the 1080p HD video is pretty freaking insane. Have you seen that movie Reverie taken by Vincent Laforet?

The D90 only has 720p HD. And no external mic jack. I think DSLRs are going to kill off the high end of the camcorder market. Who wants to buy another device if your DSLR is going to take amazing HD video and you can interchange lenses.

[gkanai]

The 14-24/2.8 is an incredible lens but I don't like the bulbous front element. There isn't much way around it of course, apart from making a really bizarre looking (and crazy-ass expensive) 14-24 with a 105mm+ front element!

The AF-S 17-35/2.8 is also a killer lens and I may end up picking up one of these used. The 14-24 is very, very tempting though.....

Get the 17-35 first, as they're quickly being scooped up by D3/D700 owners. You can always get a 14-24 later.

That said the 14-24 will beat the 17-35's image quality hands down. The 14-24 beats even the 14mm fixed focal length Nikkor. It's literally the best super wide angle zoom on the market for any SLR.

[FG Lurker]

I'm a hardcore Nikon owner who is currently a bit jealous of the Canon 5DII's HD video capability.

The 5D II's 1080p quality is very impressive but from what I understand there are some very serious limitations: The sensor gets hot very quickly which limits video to only a few minutes at a time, the internal mic sucks ass, there is no continuous AF in video mode, and you can't manually control the aperture for video mode either -- no cool DOF effects. So while the concept is good the 5D II implementation is lacking IMO.