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PS4 is doing great - but it's a different story for Sony

Amid the doom and gloom, PlayStation is doing well. During the quarter ending 31st December 2013 the Game business made a profit of $172m off the back of an impressive 64.6 per cent rise in sales year on year.

Sony will announce its financial results for the year ending 31st March 2014 on 14th May.

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xJumpManx814d ago

Sony needs to either sell the playstation brand to someone who has the financial where withall to really push the console or they need to abandon the other divisions. Sony as a brand name does not mean what it once did in most electronic circles. when I was younger the walkman was a must have item and trinitron name meant quality and brillance.

Yi-Long814d ago

The problem with Sony isn't quality or brand-reputation. it's simply pricing.

The quality of their phones, tablets and cameras are great, but especially the phones and tablets are simply too expensive.

You need to offer great value for money, which Sony does so well with the PS4, and PS3 and PSN+. And so that sells.

Sometimes a little less greed means much better sales, and so in the end, much more money.

They need to bring the prices of their tablets and phones down in order to really compete with the A-brand names in those departments.

UnbiasedOpinions814d ago (Edited 814d ago )

No it isn't, read this: http://kotaku.com/5960411/h... Sony let go ALL of their old talent who use to innovate and make all the famous products, all that talent moved to LG and Samsung, Sony is old news in consumer electronics now because of it, that's the main problem with Sony

Quote: "What happened is that Taiwan or Korea hired the retired Japanese engineers and field technicians for a very good deal, so they learned the Japanese technology very quickly. And in those countries, the manpower costs are very cheap. And with the Japanese high yen, all these things contributed to the fall of Japanese companies. I heard this from discussing with the local retailers. I heard these countries hired retired technicians. And you know, the most expensive part of the business is the employees; it is the labor force. But when it comes to technology they are also very important."

Saigon814d ago

@UnbiasedOpinions

I disagree with your opinion. Many companies do that, meaning bringing retired individuals into a company oversee projects, but the innovation still comes from the young talent. The old patron justs helps the project to run smoothly. Sony biggest issue is their pricing. A great example, is look at the price of their TVs, can you point out one that is a big screen (46 or greater) and cheaper than the most competitive brand. Its very hard to find one and its been like that for years. Recently their TV division is picking up, mainly because of being one of the first to the market with 4K, but they need to offer cheaper brands that people will be willing to buy with the same quality.

Some do not know this, but as far as their talent, Sony started a program, when they retired all of their old engineers, to bring in new talent straight from college while also working with some colleges on new concepts. Its working for them but its still going to be a while before they are truly successful with this direction. This is one reason why they choose not to sell off their TV section. They are seeing slow but steady results

This situation sort of reminds me what occurred with the automobile industry, specifically Ford. Many people stated a while ago that Ford was considered the 'Old Man's Car' because the style of their cars was tailored to the older generation though they used new concepts. Ford started a program that help them be innovative and catch up to the times. Sony is doing the same in their other divisions, specifically their TV.

@xJumpManx

Selling the PlayStation is not a smart move especially since it is not the problem. Selling your success doenst make you a success in other areas, it doesn't makes sense. Its like MS selling the Windows brand to make Xbox successful, that makes no sense to do that.

Sony Vaio was sh!t at one point, they sold it off and started a new computer brand that is doing much better. Right now their TV brand is the problem; they chose to rework the department and it is slowly improving and its going to take a while before it shows any signs of life.

Right now in my honest opinion Samsung is the tech giant right now when it comes to TVs and such. But I will state that I recently bought 2 Sony camcorders, one personal and one for work and I am planning to buy one of their DSL cameras. Mainly because of the quality and not the name.

Ju814d ago (Edited 814d ago )

@UnbiasedOpinions Of course it's cost. You basically confirmed that.

Quote: "And in those countries, the manpower costs are very cheap. And with the Japanese high yen, all these things contributed to the fall of Japanese companies"

All this contributes to the higher price of a Japanese made product compared to one which is made in Korea/Taiwan/China - some times ago, price wasn't important because quality was shitty. Sure, with the help of those engineers these countries cought up to the latest technology which now puts all emphasis on the price. Yen & Labor cost simply is a challenge to produce the same quality at a lower price. This is what Sony faces being a Japanese company.

BTW: Europe faces the same problems, but at the end of the day, EU is a 500M market, while Japan is 90.

shivvy24814d ago

Yeah sonys I problem is pricing of their products, too damn high

jacksons98814d ago

@Yi-Long
Exactly, the problem is the Japanese currency the Yen has been very high making it more expensive for Japanese companies selling products internationally. Their government though this year took measures to lower the value of the currency which will result in better prices for everyone (well everyone except for the people of Japan) on their products.

Giul_Xainx814d ago

@unbiasedopinions

That article is true. But who is to say that Sony will never find talent like that ever again?

Hmmm?

The ps3 struggled and yet it SURVIVED. Sony knoss what they need. And the PS4 is a step into the right direction. They see how much of a success the ps4 is and soon dnough they will take what they learned and apply it to what they have left. The Viao was the worst division they had. The ericson is evolving. The bravia is being sold. But they are looking into cheap 4k rez TV's.

I know that 4k doesn't matter... but when you tack on something of great significance to the name of it, then it sells. Take HD for example.... HD has been used to sell trucks, light bulbs, toys, tools, and even services. The HD means something grand to the general public and people fall for this trap all ghe tjme. But moving on.

Sony is exploring different markets. They are selling the battery factory, but are egineering a mirrorless camera. Imagine owning a smart phone without that protrusion of another 1 to 2 mm from the back of the phone. You may not think this is such a big deal, but for production this would cut another cost for engineering a camera mold that doesn't compromise the strength, or water proof abilities.

scott182814d ago (Edited 814d ago )

Sony is just fine, shareholders are seeing that they were serious about change and restructuring. Things will be fine for them.

alexkoepp814d ago

Sony has been a sinking ship for a long time now. They shouldn't have any trouble selling off the PlayStation brand though when the time comes, I'm sure there will be a few companies that will try to snatch it up.

ZodTheRipper814d ago

Playstation without Sony would be a catastrophe. You must be seriously brain damaged to think this would benefit anyone on this planet.

No_Limit814d ago

Wait, so this article was disapproved for a few hours and fall off the face of the map and now it is back? What is going on here?

Sony as a brand, other than Playstaion, isn't a factor anymore in many other area of their business. I bought a Sony Xperia Z phone and while I think it is a cool phone, it is peanut compare to sales of the Galaxy S4/5. Some really bad business decisions and pricing really had cost Sony way back then. I really hope the recent layoffs and studios closure isn't related to their overall trouble as a company as a whole.

extermin8or814d ago

Sony's phone division is one of the profitable sections in most quarters of last year.... they've sold the pc business or are selling it soon. They really just need to fix the TV area that's been out of control and single handedly responsible for losses on a number of years....

ThatOneGuyThere814d ago

samsung's cameras are absolute trash. Their phones have horrendous build quality with sub-par reception. Their TVs are good, but so are everyone's. To be honest, Sony is still a brand to get if you're looking for some sort of quality in your electronics.

UltimateMaster814d ago (Edited 814d ago )

Let me explain a little something called globalization...

Sony is a Japanese company. Their main work-force (those that develop R&D are in Japan).
Just like Panasonic. Both companies partnered in R&D for 4K TVs for a year.

Here's why they are struggling. It's not because of the price "well, a little bit" it's because of the competition from Korea "Samsung" and China "LG".

They pay their employees pennies and dime in comparison to a Japanese company who's salary is just as high as the US and Canada.

Sony has it's own profit margins.
The problem lies in the retailer's profit margin.
Because Samsung ans LG's manufacturing cost are significantly lower, they can get the same profit margin as Sony AND being able to give the retailer a greater portion of the profits to them.
Example: If a retailer only gets 10% profit selling a Sony TV, when they could sell a Samsung TV and get 35% profit. They would try to sell as much Samsung TV over Sony's (or other Japanese Company)

If your product isn't being distributed, then it's not going to sell very well unless everyone would buy online (which isn't the case).

When there is a sale, the retailer got the TV at a very low "cost price" (That's how much the retailer paid for the TV, not the price he's selling it to you), he has a much higher flexibility in the final price of the TV and significantly reduces the risk of selling a product at a lost.

Sony is remedying the situation by having their lower-branded TV manufactured by a sub-division company that are in those "lower end" salary.
While keeping the High profit margin TVs still made from Japanese R&D.

==========Conclusion
I know it's a lot to process.
But it's more a distribution problem than it is branding.
All that is fueled because of the cost to manufacture the TV and Salaries difference between those countries.
======

On top of that, the Japanese Government is reclaiming higher income tax from Japanese companies "especially electronics" ever since the Tsunami incident. In part to repay the loaned R&D investment and that could be used to reconstruct the country. Which isn't good for Sony since they have to find a way to lower the cost rather than hiking it to repay the government. That's despite Sony offering charity to those in need.

Klad814d ago

It is price, but it is also other things. Sony's competition is fierce! Their brands are now stronger! Sonys brand for other tech isn't as strong as it once was. Sony isn't growing, they are shrinking in size. right now, they are jack of all trades, master of only one....THE PS4!

Talidan814d ago

Good technology is no longer a market of just geeks and nerds, meaning quality and power does not equal sales.

Companies need to be "hip", the products seen as "cool", not just well-made and worth the money, at least when they're the size of Sony.

Beats by Dre, a mediocre brand of headphones that sell like hotcakes all because they are designer. It's all about designer electronics now, from celebrities and companies that push that attitude, like Apple.

Many phones are better than iPhones, but does the majority care? No. They want the name, the prestige, and the recognition. There's no prestige with "Sony" labeled on a pair of good headphones.

Xperia? What's that? Bravia? Is that a new Starbucks size?

Tech giants cannot rely on quality anymore. Value helps close the gap, but it's name recognition that matters most these days. Gamers don't care as much, that's why the Playstation brand is doing well. We just want games and the power to play them, with the four options we have: PC, or one of the three consoles.

Any other arena Sony plays in, there's too much competition and without name-power, Sony just doesn't shine as bright.

xXSilentXx814d ago

The quality of their phones, tablets and cameras are great, but especially the phones and tablets are simply too expensive.

Really? common man samsungs cheap plastic cost more then any Xperia out there.

user1439414814d ago

Bring in Mark Cerny and Yoshida to market the TV and BluRay players and I can guarantee they would sell lots more.

sonypsnow814d ago

PS3 is partially responsible for Sony current state.

For $599 launch price, they could just make it a true Eight-Core cpu with more Powerful GPU and Unified Ram, similar to PS4 .

Instead they lost money on the over-engineered "Cell" architecture and JRPGs terrible on it.

Thankfully PS4 follow traditional PC architecture, which they should have done it 10years ago. All the best PS4.

FFXI101814d ago

@Yi-Long

I agree with you, I think their pricing is one major issue. Especially when you walk in to say..Bestbuy and you look at HDTV or Home theater system. Sony's product usually cost higher than Samsung, LG and other brands.

For someone like me, as much as I love the Sony brand, I just couldn't justified/or afford to spend extra hundred dollars when I could get something else similar with cheaper price.

I hope they could learn from PlaysStation division and do better. It'd be sad to see them go away.

ArmrdChaos814d ago

While price is an issue that's not their main problem. Their main problem is they are upside down on product development. They build items with tech they have fallen in love with and then try to find a market for it. INSTEAD they should be finding markets they want to sell within, determine what price will make them successful in said market, and then develop the product to that price line with the best features they can come up with. Only then would they be competitive.

Gekko36813d ago (Edited 813d ago )

The story covered by Reuters, paints are clearer picture of this story.

Key figures are putting the blame straight at the feet of current Sony CEO Kaz.

It seems his reign over Playstation was not a good enough skill set to handle to job of CEO and the decisions he's made have ranged from Questionable to Down right Dangerous.

The sooner they find a CEO with global insight and a steady hand the better the state of Sony Corp.

r1sh12813d ago

Outside of the Playstation - Sony has very little brand reputation.
The mobile division is making massive strides at coming back strong - they actually do have really great phones and tablets but the sony version of the android is quite clunky - read the reviews.

The biggest loss leader is the TV business - the competition is just doing better.
Sony will be fine though, Kaz has done a great job getting rid of some bad businesses.
Sony still has a little more to do.
BEst thing - ring fence playstation into its own brand so Sony's losses do not affect playstation itself.
THen the profits can sort out the rest of Sony

PeaSFor812d ago

2013's losses are less than a quarter of 2012's. Now that they've tossed their computer money pit, gotten most of their restructuring costs out of the way (including their overstock of PC parts), and gotten the very successful PS4 out on the market (which helped PS turn a $172M profit in its first six weeks of release), 2014 should be the first good year for Sony financially in a long time. Things are looking up now.

+ Show (20) more repliesLast reply 812d ago
modesign814d ago

no one could afford the playstation brand.

Drithe814d ago

Yep. You can get better quality TV's for 1/2 the price. I remember when someone from Sony said about the ps3, "This is a luxury model car" or something like that, and sold it for that price of 600 bucks. It too up until the last few years, and a price drop of 250, for the PS3 to amount to anything.

The other tv companies were hungry. They worked hard, made better tvs, and sold them less than Sony and are beating them.

Sony will have to do the same to win the market back.

End of line.

VforVideogames814d ago

'no one could afford the playstation brand' you are right, Samsung offers the same electronics with equal quality or better for le$$, and then they have all this expensive accessories for vita that's one of the reasons its not selling well, and then they have the rights for movies like spiderman all sony is doing is reboots same stories different characters , I think this is a sign of desperation.

osprey19814d ago

Ok I know the ps4 is selling very well. But just because that's doing well doesn't mean the company on a whole is, it's haemorrhaging money in a lot of other area of the company, eventually this will lead to cost cutting measures and staff redundancies like any other company in financial trouble. Now I dunno if this will affect the ps4 in anyway, if anything they may be forced to halt or postpone any kind of price drop.
Sony on a whole is losing money faster than they can make it. Something needs to be done or the PlayStation brand may have to be sold to another company, id wager there would be a load of companies interested in buying in the unlikely event they do.

scott182814d ago

HA! MS wishes Sony was DOOMED so they could buy a good console business.

TheRedButterfly814d ago

I can think of a couple companies that could afford it... Apple and Microsoft could buy it with their pocket change.

andibandit813d ago

Other than Apple, MS, Google and Amazon, and problably a whole bunch of other companies.

+ Show (5) more repliesLast reply 813d ago
UnbiasedOpinions814d ago

1.3 BILLION in Loss's that's substantial, they have about 150 Billion in assets but they also are about 120 Billion in debt or something like that, not good for Sony, Kaz Hirai failed to make tough decisions 2 years ago

Ron_Danger814d ago PersonalAttacksShow
TheEnigma313814d ago

The company is actually looking a bit better since Kaz came to power.

Ron_Danger814d ago OffTopicShow
marlinfan10814d ago OffTopicShow
Ron_Danger814d ago OffTopicShow
Shnooze814d ago

@Ron_Danger

"You stated something I disagree with. Fanboy!"

WilDRangeRrfc814d ago

Sony are worth 16 billion down from 180,MS made 20 billion in three months OUCH

scott182814d ago (Edited 814d ago )

Of course they have debt and losses, why else would they get rid of loss making products and restructure. Why do you feel the need to reiterate this so often? I love how Sony has to be DOOMED now because there console business isn't DOOMED anymore like last gen...

Things change fast, look at apple and Nintendo, it's doesn't take much. And MS should pray that their PC operating system monopoly holds, because they always make second rate products.

Anon1974814d ago (Edited 814d ago )

Sony's supposed to have debt. They run a bank. Every single dollar that is on deposit with Sony Bank, Sony Financial, Sony Securities, etc, is money that's marked in the "debt" column. As their banking business grows, as the deposits on hand grow, the money in the debt column goes up as well. Look at the debt of any bank or financial company.

Also, the very business of running a financial company, an insurance company, etc is issuing and trading in debt instruments, which...again...goes into the debt column. It's how they make money. That's why when you see actual financial and stock analysts discussing Sony, the amount of debt on the books never enters into the equation...because they're supposed to have it.

Looking at the amount of debt on the books and comparing a company with a financial arm against a company that has no financial business is apples and oranges. If you look at a breakdown of Sony's debt, the vast majority of it is related to their Financial business, because debt is what makes the wheels of the financial industry turn. Just have a look at the size of the world's bond markets. They dwarf the stock markets. Reading analysts stock reports on Sony, Sony's Total Debt/Total Capital is considered "in-line" with where they should be for the business they're in, and Return on Equity is considered above the average for the industry.

On a side note..what does this article have to do with gaming? There was no mention of the PS4 in Sony's press release, leading up to their earnings release in a couple of weeks. Are we submitting every financial article related to MS and Sony's financials now? I can get Nintendo, because gaming is pretty much all they do, but gaming is only a small part of Sony and MS.

+ Show (6) more repliesLast reply 814d ago
B-radical814d ago (Edited 814d ago )

They need to sell there tv's which they should of stopped making years ago and cost them I think it was a loss of 7 billion to date and that's just on the tvs! Sony wouldnt be able to stay afloat on just ps4 but its the only thing showing a profit really.

With a cut in yearly spending funds cut to 250 million a year We gamers can only hope Sony see the potential in giving playstation enough money for first party developing.

With all the studio lay offs its easy to think its sonys others business ventures causing all this which is unfair for playstation imo but that's business

Edward75814d ago

@ Daniel potter

It may be a profit for that section of a division, but look what is making money yet.

Look at this , not from a gaming site,

http://www.reuters.com/arti...

THEY DONT EXPECT A PROFIT FROM THE PS4 for at least another year.

nope111814d ago

Well, when i hear the name "Sony" the first thing that comes to mind is; Video games.

Which is why i think Sony should leave their other divisions and stay as a gaming company.

jimbobbeers814d ago

No, when I hear "PlayStation", I think video games, when I hear "Sony", I think meh.

Ol_G814d ago

if they did that you think they could hold their own?
I honestly don't think so the way they are moneyhatting a lot of stuff (thanks microsoft :s ) makes it impossible to just drop everything and say we are only doing games from now
If you look back from 2006 till now and you see the yearly losses they post since ps3 it's a bit difficult to say they should be gaming only when the ps3 almost killed them ps4 is going well but let's not forget that's after 9 years of losses and counting cause next fiscal year they already predicted giant losses

mcstorm814d ago

Ol_G is right. Sony need to cut their losses as such in the markets they are never going to be big in. One of them was the computing side. This has now been sold off and they are looking at changing the TV side. The tablets and Phone side of sony is now on the up but its going to be a bumpy ride before they are clear. Sony cant afford to run the PlayStation division on its own and this would also put them in the same league as Nintendo. If things don't go right in the gaming side when that's all you do (Sega, atari ect) it is all down hill from there.

I think Sony will come out of this low as they are making the right moves now but I also its going to be another 10 years maybe more until they are fully on their feet again.

rainslacker814d ago (Edited 814d ago )

Sony's name isn't the problem. While they do offer a lot of budget items, most of their electronics are some of the best available. Their biggest problem nowadays is that their price doesn't line up with the competition for the same/better quality. However, their top of the line models are usually the best one can get if you can afford the price of entry.

Sony just stood still too long in the market riding off their brand name while other companies clawed their way to the top tier. Since Kaz took over they seem to be looking at ways to re-invigorate their brand and actually competing again.

While they aren't in the best of situations right now, it appears that some people are way too quick to write them off. They have the means, and apparently the desire to return to their previous status they had during the 80's-90's.

Gotcha5814d ago

@nope111
When i hear name sony things come to mind as here comes another damn spider-man or smurfs movie.
ha ha... Playstation not going to save Sony from their woes.

Sheikh Yerbouti814d ago

I know we number over 100 million as a market, but we are still relatively small compared to the market share of TVs, cameras, computers and other consumer electronics.

There's more TV's to be sold in some small countries than PS4s in the US. LOL!!!

+ Show (4) more repliesLast reply 814d ago
OttoniBastos814d ago

Yeah sell their most successfull and profitable device! that is a excellent idea!

GiggMan814d ago

Yeah that is hilarious. Sell Playstation and then what? Profit?

Lol.

Lior814d ago

Avatar costs as much to produce compared to what sony has in the bank

sonic989814d ago

they offer math 101 classes at the universities you know

avengers1978814d ago

No company will get rid of there most profitable product, they will sell off other divisions. Sony has been letting go of other things like office buildings, viao, and such... And has a pretty hefty amount of re-tooling there business from top to bottom, and if done properly they will most likely turn things around. Playstation helps them profit wise, so I don't see that going any where any time soon, but if they do sell it you can bet however buys it will keep the brand alive since it's a leader in the market.
The combined sales of PS1, PS2, PS3, and PS4 are around 350 million consoles that's a lot of consoles.

Drekken814d ago

Here come all the couch financial analysts trying to share their suave business knowledge with the internet. Please tell us more!!

MorePowerOfGreen814d ago (Edited 814d ago )

The Couch folk may have some better ideas than Sony had.

This Sony financial issue explains why Sony was so desperate last E3 when they trolled MSFT and the general planting of propaganda trolls all over the web. Also instigating their fanboys to go on the attack was a tactic.

I hope Sony doesn't rely on PS4 too much, that situation can change at any time for the worse.

This topic is probably the initial reason why Sony is so dependant on 3rd party games and PC ports etc. Closing studios and major devs leaving Sony is a telling sign. I would not expect too many huge AAA exclusives from Sony this gen.

rainslacker814d ago

@MPOG

Yeah...cuz E3 is all about talking about a companies financial status. That's really what gamers want to hear.

"This topic is probably the initial reason why Sony is so dependant on 3rd party games and PC ports etc"

What? Think you got Sony confused with another company.

Drekken814d ago

PowerofGreen... You have been such a valuable commenter on this site since I can remember. Never change. Your insight is great... for when I need a laugh.

tgunzz814d ago

The financial analysts have always been here, just more in the xb articles...

+ Show (1) more replyLast reply 814d ago
CorndogBurglar814d ago

I must admit that I'm not the best when it comes to numbers, but why on earth would Sony sell the only area of their entire business that is returning a large profit?

If they were to sell Playstation off, sure they would get a one time, large amount of money. But all their other areas of business would still be tanking. So again, why would selling the Playstation help them at all in the long run?

gamedebater814d ago

this guy is just bashing sony he doesnt make sense. hence all the dislikes.

gamedebater814d ago

Sony needs to lower there tv and latptop prcies to compete against Samsung. GAME SET.... WIN.

Not same Price but $50 - $100 more to be comparable.

iceman06814d ago

THIS!!! Sony has been stubbornly arrogant in those markets for years. They have held on to the 80's perception of the Sony, which it doesn't have anymore. People aren't willing to pay more for a brand when they can simply get something comparable for cheaper. It's a new day. Sony has just now started to realize this. They need to have a competitively priced alternative to what Samsung, Vizio, and LG offer or they are going to get trampled in that market as well. They can keep the "high end" for enthusiasts, but they need that middle ground as well.
Playstation is great. It's the other divisions that hadn't really adjusted to the times.

JasonKCK814d ago

Sony will soon no longer make TV's or PC's. So there is no need to lower the price unless it's a fire sale.

christocolus814d ago (Edited 814d ago )

Ive seen big corporations come out of stuff like this and im hoping sony does too. i do enjoy sonys products and ive bought all the playstation home consoles and enjoyed some really cool sony exclusives.

I hope sony does come out of this, i may be more of an xbx fan but i certainly dont want any one company monopolising the market cos such a thing would kill the competitive spirit which drives innovation.

i also secretly wish both companies would come together to create a console..sonys hardware expertise and MS software genius would result in a killer console with an amazing online network&the greatest games ever..well thats just a dream for now.

I wish Kaz and his team at Sony all the best.