ps3

Have Sony learnt from the mistakes they made with the PS3?

When Sony decided to invest heavily in its R&D department, it was a bold gamble; a gamble that has paid off time and time again for tech companies but has also virtually bankrupted them. Nokia for a long time insisted on us using their proprietary charging systems, and their Symbian OS (does Symbian still exist?). This stubbornness put them on their knees as better, more popular OS’s and hardware became available. They were more compatible too with systems like Android; even Windows phones were just about holding their own with their offering. There are also times when going proprietary has worked out, take Apple, one of their philosophies is to make as much of its own hardware as possible. Its software was proprietary too. Apple very nearly disappeared into obscurity but now it is one of the most cash rich and valuable companies in existence, and possibly in history.

ps3But the gamble didn’t pay off. iSupply discovered that it cost Sony around $840 to build a PS3 and yet it was sold at $599, which still appeared to make it an expensive choice of console.  What’s worse is that the cheaper of the PS3 consoles made an even larger loss as the difference in tech cost was around $11 in the form of extra storage. There were three ways in creating all this additional cost and they were:

‘Reality Synthesizer’ to handle the PS3 graphics at $129 per chip.
Blu-Ray when Blu-Ray still cost fortune at $125 per unit.
Their custom CPU at $89 per unit.

This culminated in the grand total loss of $3.5bn (apparently) but I wonder if that was a cost they could afford. Sony is known for offsetting losses with gains made in other sectors; in fact they all probably do it. Getting people hooked onto a console is a great way of gaining a new loyalty and then cross-selling accessories, and games and other add-ons.

playstation 4This time is different, I don’t think Sony has the stomach to go down that route again, it just cost too much but it could also have been a gamble with a delayed pay-off. If PS3 gained an additional following, or cemented their existing following then it could explain why PS4 has such a large volume of pre-orders. In fact it’ll be likely that we’ll once again see the ‘can’t make them fast enough’ issue that we saw with iPads/iPhones. It could also be down to the fact it’s cheaper, which is of course a benefit of using other people’s components. My concern about backwards compatibility has been addressed in some sense due to the fact that Sony state that previous titles will be available to play on the PS4 via download. I hope that’s enough to keep hard core title fans interested in upgrading.

I just hope that cheapening (literally) the console will have been the master stroke they’ve been looking for to retain their following and actually make a profit this time.

About the author: 

Nick Hughes is a keen technology enthusiast from Leeds that specialises in computer assisted design. Nick often writes blog posts and regularly comments on the industry. This article was produced on behalf of Device Hospital.

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