Posted by Mr. X on 04/06/06 17:06

"asj" <kalim1998@yahoo.com> wrote in message
news:1144299327.365036.293750@j33g2000cwa.googlegroups.com...
> A lot of money has already been spent on this by the blu-ray group, and
> they know this is a long-running war. They will be prepared (Just like
> the HDVDV group) to sustain losses for some time because they know the
> profits in the end far outnumber the relatively small losses at the
> beginning.

Sure, Sony try to do this. It's a the classic Japanese approach to the
problem. Buy marketshare. But it won't really help them as a company any
more than the orginal XBox helped MicroSoft. In net terms the XBox lost
money over it's entire development and lifecycle and was subsidized by other
products, mostly bundled XP installs. MS planned that falling production
costs would eventually give them a healthy profit margin, but there was
competition from other formats that prevented that kept forceing them to
lowwer prices just to maintain marketshare so they could keep their licence
fees per disk up. The same thing is happening to Japanese electronics
companies in general right now. While they've managed to kill off most US
electronics manufacturers, now that they're trying to raise profit margins
the Koreans and now China is stepping in undercutting them and after China
it will be India, etc. There's always somebody who can make things cheaper.
And with the accelerated pace of formats, the lifespan of this generation of
physical disks will be dramatically shorter as storage tech and codecs leap
ahead on PCs and super broadband becomes more available. The real winners
are the content providers because content is the non-commodity part of the
business.


> How do i know this? because the cellphone industry went through the
> same timeline. At the beginning the cellphone was used mainly for voice
> calls. When the cellphone manufacturers started adding Java games, and
> ringtones, and other Java apps to their cellphones, they had to invest
> much more money on the product and service infrastructure. They also
> had to contend with a public that AT FIRST was very resistant to using
> phones for anything but voice calls.
>
> But the cellphone companies and carriers knew that small losses and
> investments at the beginning were acceptable because the possibilities
> at the end were so promising. Data services were the way to go. AND
> THEY WERE RIGHT.
>
> After 5 years, almost all cellphones today come with Java capabilties,
> and data usage and revenues from data use has soared. Average Revenue
> Per Unit (ARPU), which measures the average monthly revenue generated
> for each customer has SOARED.

Check your math, the cellphone manufactures have terrible margins. It's the
network owners who make all the money. What Sony needs is more stuff like
EQ which is their biggest profit maker. To bad they ruined Star Wars
Galaxies, that could have been another huge cash cow.


> I believe in the long run, home entertainment systems will go through
> the same cycle.

While I do agree that in the near future more and more content will be
delivered online, this will do more to erode the profits of the electronics
retailers than to increase the profits of Sony, MS or Nintendo because of
pricing pressures. Right now, Sony and MS can push Nintendo (and any other
hypothetical consoles) off the game shelf space. When most sales happen
online, both Sony and MS will lose that retail leverage. Just look what's
happened to both DVD and CD sales distrabution. Now that people are not
restricted to buying what's on the shelf at Walmart, there are less megahits
and sales of classics has climbed. This is the sort of effect Nintendo is
banking on. Now some of us already play MAME but the Nintendo solution will
be mainstream.


X

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