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Thursday, January 22, 2009

Microsoft and Sony, feeling the burn

It seems both Sony and Microsoft are making cutbacks in the billions, with Microsoft slashing jobs and Sony probably eyeing whole divisions with a bit of stink eye. A gaming perspective would suggest that this is probably because they're both getting spanked by Nintendo, but that doesn't seem to really fit reality.

It seems that both fates are more tied to recession related downturns to other consumer products. Microsoft has had a PR nightmare with Vista and that has been coupled with the recent trend to smaller, cheaper computers (name Netbooks) which run better off XP even when Vista's having a good day. Unlike the previous generation, the 360 is actually something of a bright spot for Microsoft's bottom line.

Sony's big problem is the slow adoption of HDTV's, something I've talked about to length as a factor in demographics for both the 360 and the PS3. So in some ways, the PlayStation 3 is more involved here - but it's a little complicated. One might suggest that a more popular console would result in better upselling of HDTV's. If everyone wanted a PS3, everyone would want an HDTV (if they didn't already have one). But that doesn't mean they want a Sony HDTV. More people want an Olevia, not a Bravia.

And both of these items - Vista and HDTV's - are huge investments for the companies. Sony at least has the diversification to change focus if they want, Microsoft has to deal with Windows 7 no matter what.

For gamers, though, I think the story remains pretty much the same. Sony needs to fix their software, Microsoft needs to fix their hardware and Nintendo needs to stop trying to sell me white plastic things.


Thomas said...

I'm pretty sure XBox still loses money for Microsoft (although its division may have broken even this year). Vista may be a PR nightmare, but it's still been very profitable for them, last time I saw a revenue statement. Especially when you consider that XP sales still count toward the OS division's bottom line.

But as far as gamers are concerned, that last paragraph of yours is dead on. With the addition that Nintendo needs to fix their #@!%#ing online service.

Josh said...

360's are still a loss, but I think the XBox division is a profitable portion of their entertainment dept, but I could be wrong - it might have just been that dept. in general.

Vista would have to cause computers to explode for MS to lose money on it - its more, I think, that its selling substantial below goals. I think Windows 7 will help cement the major computer market, though - and I would not be suprised to see a NetBook edition released next year.

And yeah, Nintendo needs to fix their expletive service.

Sony has more long term concerns than either, though, I think - because so much of their business is based around high end consumer electronics. As you say, if I buy XP for a NetBook, MS still sees dollars. When I bought a Samsung HDTV, Sony wasn't so lucky.