PS3 party pooper Merrill Lynch says Sony will lose

Posted Nov 13, 2006 at 3:55PM by QJ Staff Listed in: PS3 Tags: Merrill Lynch, Sony

Merrill Lynch remains unmoved by the global clamor bordering on adoration for the PS3. The investment firm remained, well, firm on its dire forecast about Sony's upcoming financial disaster from its PS3. Merrill Lynch estimated that Sony's next-gen console debacle will result in a 5-year total operating loss amounting to US$6.3 billion.

The good news is the prediction came out before the sparkling debut sales performance of the PS3 in Japan.

More good news: previously, ML predicted that it would cost Sony US$900 to create a PS3 which would result to an unaffordable price tag. Eventually, ML mused, the PS3 price will go down to a more sane level on its third year. Something to the tune of US$320. ML analysts got that wrong.

Today, we know the price in Japan is around US$507 for the 60GB version. And even then it generated 62% of the PS3 sales. In other parts of the world, the PS3 pre-orders have all been snapped up. GameStop sold-out on pre-orders on its first day. Although we know nothing about how the financial world of the big guys operates. But from our point-of-view, it doesn't look all gloom-and-doom for Sony. So let Sony pop the champagne for now. We think they've earned it.

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Comments

# No they didn't Alaric S. :| — Guest 2006-11-13 11:06

>"ML predicted Sony's PS3 will initially sell for US$900 for the first two years."

ML said it will cost Sony $900 to MAKE each PS3, they did not say the PS3 would sell for $900 (since it would be sold at a lost, just like previous consoles).

http://www.engadget.com/2006/02/18/playstation-3-costs-900-sez-merrill-lynch-mob/

BTW, their own figures at the time added up to $800, but many assumed that if you include the HDD, then it would probably be $900 assuming the rest is correct.

# PS3 will win, thats the end of it — Vietone 2006-11-13 11:12

They can say all they want about how the PS3 will fail, fact is the PS3 will outsell the Xbox360 and the Wii as soon as they have enough units.

In every single gamestop/ebgames store who took preorders, there were more then a couple dozen at each store, the store i tried to get mine from had people lined across an entire block for pre-orders alone.

this means that the demand for the PS3 will be very high even in the coming year.

The PS3 is geared towards the hardcore gamer more then the Xbox360. You can even call the PS3 a desktop replacement with the inclusion of being able to run linux for day to day tasks and the ability to play games. It also acts as a full function media player, and thats something the Xbox360 cant say out of the box.

They can predict all they want.

Blu-ray and Linux will make the PS3 future proof for years.

# Couldn't resist — Guest 2006-11-13 11:17

Kane and Lynch should go take down Merrill Lynch

# what global clamour — CSFFlame 2006-11-13 11:19

no seriously, what?

# IF SONY HAS MORE PS3 TO SELL! — Guest 2006-11-13 11:57

If SONY could have manufactured more PS3 on launch day, then they can over take or be even on XBOX 360 total sold within a few months. But reality sinks in that any company always have a shipment problem on launch day.

They could have sold 2 million PS3 in Japan easily in the 1st week. Japanese consumers are falling in line from 500 - 1000 even if they don't have any preorders. That's 3 times to 4 times larger than the XBOX 360 launch. Thats how you will know that the product is in high demand.

I'm pretty sure SONY can sell 2 million PS3 in the U.S. too in its 1st week of release.

# hey — Guest 2006-11-13 13:47

someone tell sony to show my psp some love,being an afterthought stinks...

i feel like a biazaro-gamecube owner

# Thing is... — Shatterdome 2006-11-13 14:10

More PS3's sold = more losses for Sony.....

They have to hope their machine isn't as easy to crack as the PSP and that they can actually sell some games....

Also, all 360 pre-orders were eaten up on the first day, and we all knew how long it took to find them without looking too hard....so ya, that is a moot point....

They are looking at this from an investment standpoint, not a fanboy, who has the most consoles sold standpoint....if I was an investor I would not go near sony right now....

# Tired of people dissing sony — Guest 2006-11-13 14:45

This is tiring after awhile cause sony has worked so hard at this and all people want is for them to fail. They've done so good now everyone wants them to fail. They odviously are doing well seeing as 88,000+ PS3s are sold at the high price of $507 in japan and seeing the lines for just pre-orders shows how much people want PS3s. Sony has done the best job they could and they are still trying to make more so all you *****s who don't like sony's success can just get over themselves cause sony's here to stay always.

# :) — Jasper1605 2006-11-13 14:55

regardless of how Sony does investment wise with their console; it will be a huge hit. It is rather unfortunate though that they themselves are expecting to lose over 1 billion dollars on the console just because it's so expensive from the developmental aspect. However, I became the first person in Bowling Green to hold a Playstation controller since i stood for an hour and a half at wal-mart watching the people set up the demo kiosk, and I must say it is quite a nice fitting controller. They did a superb job on the shoulder button turned trigger, it has a perfect resistance to it. I'm so stoked to say the very least :)

# ...... — Guest 2006-11-13 15:06

There are alot of hardcore xbox fans that are being wowed by the PS3. Yes the 360 has wowed me when it first came out but there is only so much the 360 can do. Plays games in HD and movies in HD. Very nice system that i even own but when the info for PS3 keeps coming in especially the install other OS which is the big news. Talk about homebrew on PS3 . Windows XP??? Linux??? Even Mac??? I can see the apple fan boys jumping at this. (Alot since there is an apple store) I mean what can't you do with a PS3? Make toast? Na that's why i have a toaster.

# yes — mannyman789 2006-11-13 15:22

i agree it will win there was all of this BS talked about with the ps2, but yet it came over the top beating the GAMECUBE and XBOX sales. here is how the sales will go

PS3+most

360+silver

wii+kids toy

# help plz — Guest 2006-11-13 16:35

I don't know much about tech, but PLEASE read this:

http://www.itvidya.com/playstation_3_vs_xbox_360

Tell me how accurate this article is. Please, I need to know.

# Merrill Lynch... Reliable??? — Guest 2006-11-13 17:25

I'm actually a broker and to say the least, Merrill Lynch doesn't have the greatest track record on forecasting the markets. Most of their major recommendations go up because all their herd (investors) follow it, but as soon as the "you know what" hits the fan they keep recommending their clients to buy high and sell low, a big way for them to make money so they artifically push a market then make it come crashing down when earnings start coming out. On top of that they take hugh payoffs from other companies to make competitors look bad... (Greedy greedy company) At any rate their "forecasts" should be taken with a grain of salt.

# Thanks for pointing that out... — Guest 2006-11-13 19:57

Thanks for pointing that out and we did the necessary corrections already. So again, thanks. :)

# doesn't mean anything — Guest 2006-11-14 01:53

All new consoles in short supply have people eagerly waiting for pre-orders. That and the fact they can sell them on ebay for a 200-300 percent profit. It was the same way with the XBOX 360, retard. It was 6 months after launch before they were even regularly stocked on store shelves.

# Dissing for a reason — Guest 2006-11-14 03:03

I was a big Sony fan until Kutaragi came out and said the PS3 was too cheap. That was insulting. I wish Sony the best of luck as they have brought me lots of gaming joy over the years, but I won't be buying a PS3.

# yeah sure — Guest 2006-11-14 03:14

>>We think they've earned it.

Obiously you don't live in Europe, or you would say that the only thing they've earned is a big kick in their asses

# Not true — Guest 2006-11-14 03:33

The PS3 is NOT geared more towards the hardcore gamer at all. Sony is trying to reach the masses by making a multi-purpose machine. The 360 is much more of a "gamers" console.

# but they are — Guest 2006-11-14 03:44

If you buy a PS3 for $1,200-1,900 and update your firmware to 3.0, you can use your PSP as a rearview mirror in some racing game that hasn't come out yet. Or you could just play homebrew emulators. $ony's PSP support sucks, and 95% of the games are ports of better console versions.

# I don't need a Meryl Lynch prediction — Guest 2006-11-14 04:58

The whole story of how the PS3 came about can be told by that picture of Ken Kutargui holding "his baby." That is, PS3 is what he wanted, not what everybody else wants. He's so proud of it, he thinks he's doing a favor by selling it for "only" $499 & $599. Yeah everybody's going to buy it because it's a Playstation. Oh wait, that was last generation. He should have stayed in charge of Sony (the whole company.)

# just read the posts — Guest 2006-11-14 09:10

just read the posts and u will see the answer to your cuestion.

# are you sure MORON? — Guest 2006-11-14 10:25

ML was right after all...

ps3 really cost 900$

think about it

$ony is losing about 500 each time a console is sold.

so dont be so hopeful, because if Ms buys capcom...if their expensive Blu-ray fails before the more versatile HD-DVD. and if MGS4 is heading to 360:

all that we must say is: POOR SONY!!!

# Yeah right — Guest 2006-11-14 10:28

2 million in a week my ass!!!

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