They make a profit per unit on software, through the licensing issues. And yet, neither are making a profit over all in releasing those products: it's financially unviable in the long run.
Yes, the entire console business platform is that the console itself is a loss leader (well, Nintendo makes a profit per unit on the Wii), but they're meant to make up those losses though software sales. Which they aren't.
Just checking that you are aware that Sony makes TVs, Stereos, MP3 Players, Phones blah blah blah
And that Microsoft are bitchin' rich, right?
The money that they lose can be made up from their other products, liscences all that jazz.
If you earnt £30, 000 a year, would you be cool with throwing away £10,000 on something you get no benefit from? Thought not.
But Sony is three generations in, Microsoft is two, and neither of them have turned a profit the whole time, while, to use the cliché, the DS has been printing money for Nintendo. They don't look likely to burn Nintendo out of the market soon, it'd be better if they either gave up or changed their strategy. :/
Releasing 5 different versions of the PS3, announcing more PSN features, and more games isn't "changing strategy"?
Not really. It's the same old deal that Sony's been doing for years. How many PS1 and PS2 models were there, huh?
Nintendo's stuck to a single model at a time - sure, the GBA got replaced by the SP, the DS by the Lite, but they never tried to peddle too much at once. It might work in the TV market to have a thousand ever-so-slightly different products under a single umbrella brand, but in the games market, it just seems to confuse consumers.
Sure, gamers are fine with it, but if you don't know video games, are you gonna spend your time fretting over whether to get the 60 gig or 80 gig PS3, or are you gonna get the far cheaper Wii just because it looks fun? I know what I'd do.
..Really?
Your fanboyism is showing.
!@#$%, did I leave my flies undone again?
* Pyru zips up
All better.
Supporting sony by suggesting the obvious of what was being shown by their business practices? You're !@#$% delusional.
And yes, releasing different versions are a big strategy. If they release a lower priced console, they can increase sales. God damn, get some common sense.
They can increase their loss per unit: until they get their attach rate up to a point where they're actually making a profit per unit sold, what's the point?
I wasn't supporting any company, I was merely pointing out a flaw in Pyru's argument. Sony and MS have changed their strategies, several times in fact.
They've changed, but it's not worked. Therefore, they need to change again, find something that works, or leave. Because until they make Nintendo unprofitable - something that doesn't seem to be happening right now - they're not going to bleed the competition out of the market, only themselves.
They (Microsoft and Sony) make up their money from their other products. Both of them announced before even entering this generations console battles that they are losing money per console sold just so they can make them affordable to the consumers. Sony initially estimated that the PS3 cost them $600 to manufacture, $500 to sell, Microsoft same thing, except they go for the $400 price tag.
This isn't news, and they are prepared for this
actually it was like $850 to make, $600 to sell initially
$600 for the stores to sell; they no doubt bought them from Sony for less than that.
Not only that, but there's other costs involved, like shipping the units that wouldn't be included in the cost of manufacture.
Sony and Microsoft don't market to casual players in the same way. Sony has PSN game downloads, Microsoft has XBLA. Those are for their casual players; the consoles themselves however are meant for more experienced gamers. They don't MIND losing money because they're in it for the gamers along with the profit, instead of just the profit.
But they're not making a profit over all on the product: Xbox and Playstation, have, as projects and product lines, only lost their parent companies money (though companies like EA have made obscene amounts of cash off them). Sure, market share is nice, but there's only so many years that you can talk about operating profits of
minus a thousand million dollars per annum and expect your shareholders to still be pleased with how you're doing business.
The fact that neither Microsoft nor Sony are turning a profit in the market makes me wonder how much longer they can stay in the game. Sure, they're real competitive in the market, but guess what: although Nintendo fans are relatively unhappy, Nintendo actually makes money. And shareholders tend to like that. Hell, the banks that they take loans from tend to like that.
I like what they've done so lately. 
You do not represent all Nintendo gamers. Some of us are disappointed with a lack of really high quality titles on either the DS or the Wii, and Nintendo's frankly stupid attitudes towards third party developers, online play and micro-transactions. :/
