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» Kutaragi refutes $1 billion PlayStation 3 hole will bring SCE to its knees
From spong.com: [QUOTE] Analysts have warned that the release of the PS3 could backfire on gaming giant Sony Computer Entertainment, bringing the Sony subsidiary to its knees. Merrill Lynch Japan has stated it expects Sony to lose more than $1 billion on hardware manufacturing alone during its next-gen console's first 12 months on sale, a figure that may prove unrecoverable. Merrill Lynch Japan Securities, quoted in the latest issue of Toyo Keizai, states that it expects core production costs of PlayStation 3 to be around $500, with the machine likely to ship at $399 - equating to a loss of around $1.18 billion in the first year the machine goes on sale. It should be noted that these losses are based purely on manufacturing costs and do not factor in the colossal marketing budget SCE has undoubtedly prepped for it's next home console launch.
Toyo Keizai goes on to publish comment from SCE head Ken Kutaragi, who understandably refutes MLDS' analysis; "Whether consumers think a product is expensive or cheap all depends on the balance between its appeal and price," said Kutaragi, again hinting that the PlayStation 3 may indeed be a pricy piece of kit. "Our idea is for consumers to think to themselves, 'Right, I'll work more hours and buy it.' We want people to feel that they want it, no matter what. When Nintendo was selling its 16-bit machine at around 12,500 yen ($114), we sold the first PlayStation at 39,800 yen ($364). The press was saying that it was expensive, but it was a huge hit. It's the same thing with the PlayStation Portable from last year. The Game Boy Advance is a similar handheld gaming machine, and it costs less than 10 thousand yen ($91). On the other hand, our PSP had cost 25,000 yen ($229). And there were people lined up overnight to buy it, and it sold out on the day of launch. It all depends on whether people want it. Of course, I'm confident that PlayStation 3 is a product that people will definitely want." [/QUOTE]
Read More: spong.com
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