It is no secret that Sony has been losing a lot of money in their gaming department since they decided to enter the market with the PS1. Two class action lawsuits, enourmous production costs, and the failure of the PSP serve to hurt them, not help them.
Today, some new news arises that may mean Sony could file for bankruptcy.
First, let's talk about the raw numbers. If you look at the following picture, you can see a graph of Sony's cumulative losses directly from Sony's investor relations.
http://www.watch.impress.co.jp/av/docs/20061019/sony04.jpg
Basically, this is a work-up of Sony's cumulative losses for the year and into the next year:
PS3 semiconductor production delay loss : $330 million
PS3 Japan price drop loss : $160 million
PS3 HDMI inclusion loss : $140 million
SCEI's present platform loss(namely PSP) : $300 million
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SCEI's total new loss : $930 million
SCEI's already accounted PS3 loss : $1.8 billion
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Total SCEI loss by March 31st 2007 : $2.73 billion
Next, let's talk about a pending lawsuit between Sony and Microsoft. Sony recently announced that the 360 core unit REQUIRED the HD-DVD drive to even work. Microsoft took offense to this and is taking this matter to court. This defamation and misrepresentation suit could cost Sony millions more. FYI, lawsuits of this kind are common, and usually happen between competing products like automobiles, laundry detergents, and food stuffs.
http://www.engadget.com/2006/10/19/sony-claims-xbox-360-requires-hd-dvd-etc-thus-costs-700/
Finally, let's talk about Sony's confidence in their own product. Today, IGN reports that Sony is unsure if they can even meet the already reduced shipment allocations, touting "obvious production issues" as the reasoning.
http://ps3.ign.com/articles/740/740720p1.html
Now rumors hit the net that Sony may even delay the PS3 until next year so they can have a stronger launch, both with better titles and more systems on the shelves. This would also allow the Nintendo hype to die down a bit. This is as of yet unconfirmed, but at this point would be the smartest move Sony could make.
Stay tuned as we cover this story.
