Sony reports profit, despite decline in PS2 & PSP sales

Sales of VAIO PCs improve

In an earnings call, Sony reported better-than-expected numbers for the third quarter financial period despite losses in Networked Products and Services division which accounts for PlayStation products.

Overall, the division brought in an operating profit of 19.4 billion yen (US$213.5 million), compared to last year's loss of 5.9 billion yen (US$65 million) during the same quarter. This is mostly because Sony VAIO PCs sold really well while PlayStation units sold not-so-well.

In particular, PlayStation 2s and PlayStation Portables sales were down for the quarter. The PSP took the bigger hit, dropping from 5.1 million sales during the same quarter last year to 4.2 million. The PS2 dropped from 2.5 million to 2.1 million unit sales -- Sony attributes this shallower decline to strong demand for PS2s in developing countries.

Meanwhile, the PS3 is doing well. Compared to last year's 4.5 million unit sales in the third quarter, this year they've sold 6.5 million and Sony says it's on-track to meet a sales goal of 13 million PS3 units.

Also, Sony says PlayStation Network registered accounts increased by over 40 million over last year. Sure, it's free, but it means something good for the company's projected earnings on its new download service launching this month.

During the question and answer section of the earnings call, someone asked why software sale earnings for PlayStation were so low (down 40 million yen -- $440 thousand USD) when the projected sales were expected to reach 200 million for the year.

Sony answered that it's a "chicken and egg" problem between hardware and software -- is it the loss in hardware sales that hurts sales more or the decline in software sales? Sony didn't necessarily have an answer, but it did observe that the games Sony sold this year were targeted at a conventional, "old" audience -- meaning hardcore gamers -- while the PS3 is being marketed toward a wider audience as a product that provides multiple services. Also, Sony pointed out that the PS2 naturally will decline as the company shifts its resources to PS3s.