RSSPSP Shipments Decline 72%, Hurt Sony Q3 Earnings
By Scott M. Fulton, III | Published January 30, 2007, 12:06 PM
The sharp rise in demand for high-definition televisions and steady uptick in digital cameras more than offset what would otherwise have been bad news for Sony Corp. yesterday, precipitated by its computer gaming division: Over the holiday quarter, the company shipped 71.7% fewer PlayStation Portable units and 23.3% fewer PlayStation 2 consoles worldwide than during the 2005 holiday season, while at the same time it was ramping up PlayStation 3 shipments to North America, Japan, and Asia.
Sony's PS3 shipment goals may have been adjusted once or twice, but the company finally did manage to ship 1.84 million units before the end of the year.
But those aren't sales, and as anyone in the book publishing business will tell you, you can't monetize based on what leaves your warehouse - especially when some of it could come right back. Sony's fiscal third quarter earnings report, released yesterday, shows clear signs of the same trend Microsoft warned about last week: a possible softening in global demand, specifically for video games.
While it was an accepted fact that Sony would lose money on its initial PS3 sales, due to the high manufacturing cost relative to its suggested retail prices, the company had expected to offset some of that decline by moving the PS2 into the value market, reducing its price and turning up the promotional volume through mass retailers. But the PS2 campaign apparently fizzled; meanwhile, demand for the PSP appears to be collapsing, at a time when demand for the competing Nintendo DS portable appears strong and steady.
Booming consumer electronics sales in nearly all other categories indicates that the economy isn't the reason. One very real possibility is that the value proposition for PSP as an all-around consumer hi-tech gadget, rather than just a wireless joystick with a screen on it, may be deteriorating at the onset of prospects for newer and more enticing devices, such as the Apple iPhone.
A few weeks ago, Info-Tech Research senior analyst Carmi Levy told us the Apple iPhone and the PSP could be going head-to-head in the battle for consumers' mindshare, and that the Apple device may already have won.
"Feature-for-feature, clearly you can see that the iPhone is a very strong match-up to the PSP," Levy told BetaNews, "and certainly competes very well against the PSP, but I think the truth of the matter is that the PSP is already yesterday's news and is fading from the scene, whereas the iPhone is clearly tomorrow's news, and is very much a growth opportunity for the market going forward."
While it might not make sense that a communications device could be considered competitive against a gaming device, consider the fact that CE suppliers in all market categories are going after the same consumer, who has just one budget and one disposable income. Although the Apple iPhone isn't even available anywhere, its $500 price tag gives consumers something to want to save for.
"Considering how badly the PSP has stumbled in the market over the last 12 months, I would say the war is already won," Levy continued. "Unless Sony completely reinvents the platform and re-engages developers to once again support the platform -- because they have, for all intents and purposes, abandoned it -- Apple's going to steamroll them quite effectively."
As a Web surfing device, for example, the Apple iPhone provides what Levy calls a "less compromising experience" than the PSP.
"It's a full Web experience; the pages are not dumbed down, the iPhone does not force the end user to go through a convoluted browsing process. It's browsing the way we have all come to know browsing. So you can easily call up a Web site and interact with it; whereas the PSP is not quite as fully featured; a lot more advanced Web functions will not run on a PSP. You can't stream stuff onto a PSP as you can onto an iPhone. But the PSP is clearly an earlier generation device that defined the market then failed to exploit it; the iPhone is likely going to have a better time of it."
While revenue in Sony's games division actually rose 5.6% over the prior quarter, to USD$3.7 billion, the high cost of PS3 drove resulted in a net loss of USD$455 million for that quarter. That put a drag on Sony's overall numbers: With total corporate revenue up nearly 10% to $21.9 billion on the quarter, income decreased by an annual rate of nearly 15% to $1.5 billion. This while the Electronics division -- responsible for the Bravia upper-end brand -- reaped $1.5 billion, an increase of 102.8% over the prior year.
if sony cuts the price of umd then psp will be once again at the top
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|Thanks, but I am really happy with my PSP. I can watch movies, play music from my central media server, on my PSP, I can play games, the games I want to buy, and the free ones to download from PSP Store. I can also take it on flights, and play movies on music from the Memory Stick.
It's got a fantastic screen, and fits nicely in my pocket.
Thank you Sony, FU Microsoft haters (they only Hate is because MS havn't got a similar offering out yet)...
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|One word: Duh!
I have a PSP. I don't use it anymore. Even with the latest update, it cannot play inline MPG, AVI, MOV or any other online media formats. The built-in memory is embarrassing, and the expansion is too expensive. I set my home network up to wireless synch with my MP3 library, but pulling songs is painful and requires renaming each one with that FRIGGIN HORRIBLE keypad entry interface (GOD - I HATE THAT PC OF CRAP!) Sony doesn't care about long-range vision, only short-range profit. Their announced switch from UMD to SD cards hasn't gone anywhere. Niether has the PSP. The abysmal numbers speak for themselves. If the PSP had any chance of success, this article wouldn't even exist.
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|Good.
F U Sony....for making everyone pay $179 for your proprietary 2GB MemoryStick ProDuo when you can get a common format 2GB SD card for $29.95.
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|Where do you get $179.00 Best Buy has 2 GB Sony memory sticks for $79 bucks today! Don't get me wrong Sony sucks and should be boycotted.
Now how these guys can compare a game system to an iphone is the just plain laughable.
Hmmmm who should I call on my PSP.
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|I have a PSP and to be honest, I love it. It's issue is there really are not allot of good games for it. I have had it for about 18 months (Year and a Half to those who can't count) and only have 6 or so games.
What Sony should have done was use the PSP to reopen their MiniDisc Market. What I mean by that is I at one time owned a MD Recorder / Player as well. It was well before IPODs and such, but it was nice and compact. The PSP uses a MD style disc, but its plastic enclosure is different. If Sony had made it a Standard MD or Vice-Versa, both markets would have a better outlook.
Homepage: http://mysite.verizon.net/slinkys_delsol/
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|Yes, use an antiquated propriety format instead of their latest propriety format...
Because MD did so well, you know?
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|Did you even read my post? Did anything in it say the MD did great? I think it was a great idea for the time it came out, but again EXACTLY where did I say it did great?
Since the PSP uses MD Discs, it was an opportunity to open that market back up. If the PSP could take the Standard MD's and just be able to use them for the Music aspect, it would have.
That PCS or XBOX you own, maybe even the PS3, if they told you it "Just played Games" then it's just a console. But the fact that they can play games, DVD's, CD's and many other medias make them VERY Marketable.
Sure the PSP format is proprietary, but you can put a large memory stick in it and sure, load it up with Music and pictures, the MD would have just been one more door to open.
Let’s remember, I am 35 years old. I still have "Records". Do you know what they are? The class of 2008 will NEVER know that there was NOT an internet. They have no clue what a "Cassette Tape / Record or 8-Track" was. I bet you never had to use Dial-Up either. Bottom line, all formats go extinct in one way or another, my point was it you could still utilize one that can be brought back to life with one convergence.
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|Wow, now you're trying to say I'm a kid who doesn't know what vinyl is.
Keep trying. :)
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|Your obviously an idiot, so i'll explain it for you.
Only the PSP can play UMD games, so using the UMD format for PSP games does not matter that it's a propriety format.
I didn't see anyone complaing that the Gamecube or Wii uses a propriety format....
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|"I didn't see anyone complaing that the Gamecube or Wii uses a propriety format...."
Davey,
Fortunately for Nintendo, their systems sell...
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|MDs are still doing so-so in Japan here.
but gradually ipods and such are taking over...
In the first place people used MDs because they were smaller than CDs, but now...
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|If I were them I'd be thinking about how much more money we could have made if not for their sinking game division dragging them into a pit.
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|"may be deteriorating at the onset of prospects for newer and more enticing devices, such as the Apple iPhone."
????? I hope I'm not alone in thinking this is nonsense. PSP sales are down because of the DS plain and simple.
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|And in other news: Sony 3rd-Quarter Profit May Fall 50% on PlayStation 3
http://www.bloomberg.com...01&sid=a4Jrqd8sIuJc
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|"A few weeks ago, Info-Tech Research senior analyst Carmi Levy told us the Apple iPhone and the PSP could be going head-to-head in the battle for consumers' mindshare, and that the Apple device may already have won."
The most stupid statement ever?? What exactly have the PSP and iPhone have in common exactly????
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|Don't know, I think they've started comparing roaches to Lions.
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|Well, I thought the article explained the case, but I'll give it a second shot: Although each is technically in its own market, both products go after the same consumer: the person who wants an attractive gadget. Yes, one's a phone and the other's a game device, but keep in mind that both play media. Sony last year began its campaign to migrate PSP into the portable media realm, partly because it needed revenue from the device to come from other market segments than hardcore gamers. The Apple iPhone, as you know, is already a portable media device, with comparable features in that regard, and advantages in connectivity. If Steve Jobs' hard line on third party advancements could be made softer than it appears to be now, the Apple iPhone could also become a fairly viable casual gaming device.
The feature overlaps, coupled with the fact that gadget consumers tend to lump their desires together into a single mental catalog, help to make the case that these devices compete against each other.
-SF3
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|Not to argue too much, but I see some discrepencies in your statements.
"Apple iPhone could also become a fairly viable casual gaming device."
I have yet to see GTA, or some other main stream game on a phone. I know there are games on phones, but come on. Thats way different from whats available on hand helds.
"both products go after the same consumer:"
I highly disagree. I buy a phone to make phone calls not play games. Hand held to play games.
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|...You just don't like Scott at all, do you plague201?
"Casual (adj.) - ... 2a. lacking a high degree of interest or devotion "
Casual gaming does not mean it has to have GTA on it dude...
""both products go after the same consumer:" I highly disagree. I buy a phone to make phone calls not play games. Hand held to play games."
Actually, the iPhone is designed for entertainment my friend. In a sense, the iPhone is primarily to have entertainment available on a portable phone that's not your average cell phone "centipede" type games. It is for the same consumer--and it has a phone. Plus the bulk of Scott's claims are just his repeating Info-Tech Research senior analyst Carmi Levy's words.
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|So your telling me some 10 year old kid is going to push his parents to buy him an iphone over a PSP?
Please...
"...You just don't like Scott at all, do you plague201?"
Just because I disagree witha few things, doesn't mean I dont like him.
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|plague201, fair observations. Yes, we've yet to see a mainstream game come to a phone in such a way that makes a dent in the market, though already companies have tried. But in order for multi-million dollar games to be profitable in the future, they'll need to be repurposed - just like movies, which then move to premium cable then to DVD (by way of high-def DVD) then to basic cable then to broadcast. Mainstream games will be repurposed for cell phones, even if the phone version isn't really the complete game. If you still don't believe me, allow me to refer you to this article.
The Khronos Group and the Collada project, referred to in that article and championed by Sony, were formed to make it possible for game developers to port their console-based game assets (3D worlds, characters, artwork, portable objects, etc.) to cell phones and small devices.
You say you buy a phone to make calls. Believe me, my friend, so do I! But I'm so far outside anyone's target demographic, it's painful.
Scott "A Market of One" Fulton III
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|I dont disagree that phones will probably be in the end be full blown hand held gaming units. But I'm sticking to my argument that the iphone has nothing to do with what the article is implying... that the iphone is causing the loss in sales for the PSP.
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