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Summary:

With the economy deep in the throes of a recession, the only question these days is who — or what — is next? Today it was Sony’s turn, which, citing “the sudden and rapid changes in the global economic environment,” said it’s laying off 8,000 employees […]

playstation-3With the economy deep in the throes of a recession, the only question these days is who — or what — is next? Today it was Sony’s turn, which, citing “the sudden and rapid changes in the global economic environment,” said it’s laying off 8,000 employees in its electronics division and shuttering 10 percent of its manufacturing facilities. In the subsequent corporate restructuring to come, “unprofitable or non-core businesses” are in the firing line, Game Industry Biz reports — most notably, the company’s Playstation division is under review.

What this means is too soon to tell, but if you were to ask me, I’d say it’s time for Sony to walk away from the Playstation 3 as much as possible. Its $400 price point is uniquely ill-suited for these recessionary times, and while the company could lower that MSRP, it already loses $130-$260 on each sale (depending on who you believe.) Meanwhile, the Xbox 360 sold twice as many units as the PS3 in October, the most recent month for which data is available (though both consoles trail far behind the Wii.) With the PS3′s install base so small in comparison, and the appeal of its highly touted Blu-ray drive questionable at best, it’s hard to see Sony benefiting from Playstation 3.

I checked in with Wedbush Morgan game analyst Michael Pachter to get his take; he thinks that with the PS3, Sony has “too much at stake to walk away.” Instead, he continued in his email message, the company needs to “plug away until manufacturing efficiencies allow them to be cost competitive. I don’t see them taking many risks over the next few years, but think that they can get by with a relatively lean operation until they become profitable.”

Maybe so. I think Sony could invest more resources in its Playstation 2 line, which is still selling almost as well as the PS3, and can easily be revamped into an attractive, cheap alternative to the Wii. Even at an $130 MSRP, Sony sells the PS2 at a profit, and the line’s record-breaking install base of 140 million units means a large audience to which Sony can sell peripherals and upgrades.

Whatever they decide, Sony has some tough choices to make. Of course that’s true for most game companies nowadays, but since Sony’s stuck with the white elephant called the Playstation 3, that pain will be all the more keen.

  1. Hahaha. It’s sites like this that lets the public know how much time you have on your hands. Try using your head before you type. Sales are only a fraction of the economic big picture you dumb shit. Or have you forgotten about the billions lost by Microsoft with the RROD? Sony has lost large amounts of money as well but nothing like Microsoft. Pretend you have a brain for a second and realize that Microsoft and Sony haven’t even cracked out of the red since releasing their consoles and XBox has been out longer. Now who’s doing worse?

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  2. I’ll have you know that I own a ps3, and its worth the price. There have been no problems with it, it does exactly what it should do and its got an excellent selection of games. I’ve had it since the UK launch, and i don’t regret it. It’s a brilliant machine, more reliable than the 360, and more “grown up” than the wii. I’ll stick with my ps3 thanks very much!

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  3. I can’t believe this article was published.

    GigaOM needs an editor to weed this kind of crap out.

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  4. Everyone who is buys a PS2 for $130 will be buying a PS3 when it its $130, why would you walk away now. It just takes time for the price to fall a bit, but with Bluray, there is no question it is the right upgrade path

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  5. What an ignorant, ignorant article.

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  6. The Playstation group is not part of the electronics arm of Sony. Sony is composed of many companies: Sony Electronics, Sony Computer Entertainment (makers of Playstation consoles and games for Playstation platforms), Sony Music, Sony Pictures, and the list goes on.

    The press release was from Sony Electronics.

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  7. “The Playstation group is not part of the electronics arm of Sony.”

    True, but as said above, in the layoff’s wake, the Playstation group is now under review.

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  8. wow,, this could be the dumbest article i have ever read.

    Author doesn’t even know what the hell he is talking about.he has just heard some stuff and decided to write this half assed article

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  9. Honestly, you honestly think they’re just going to throw in the towel on their ridiculous investment, because times aren’t so great. Hard to believe this article got published.

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  10. Wow, up until the recent price cuts the PS3 was outselling the 360 world wide. And gaining on it at a ferocious pace. Where were all of the doomsaying 360 articles about a failing console with an atrocious performance record and last gen disc media. As of November Bluray players officially passed DVD player sales in Japan. The PS3 is future proof in that regard.

    No I chalk this up to a fanboy article willing to jump on the first month MS has managed to outsell Sony worldwide SINCE THE PS3 WAS INTRODUCED. How is that for a run? Where was the doomsaying then? No, the purpose of this article was fairly clear even if the infallibility of it’s supposed facts were sophomoric at best

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