Quote:
Originally Posted by Lbooker
It is incredible to witness once more that most people lack basic understanding of finance.
I wrote before that considering how historically high the Japanese Yen is nowadays, it is impossible for Sony to compete on price.
It is a miracle that they manage to sell this new model (which includes 12 dictionaries) at such a price.
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The high yen is a negative only to the extent of japanese-sourced components and value-add.
With the reader, the single biggest cost is still screen, which is Taiwan-sourced, not Japan-made. So a high yen would lower the cost of the screen. Other large costs are the adobe license, payable in dollars, and software development which is done in california.
Sony is not a japanese company any more than Ford is an american company; both are multinationals with facilities spread across the globe, who source components and build products however/wherever is most convenient, regardless of where their corporate HQ might be located. Just because previous reader models were built in Japan is no guarantee the T1 is; it might be coming from the same chinese facilities that build PS3s.
Also of note, well-run multinationals usually spread their cash reserves and play financial games to hedge against currency fluctuations. Losses in one currency are offset by gains in others.
Finally, Sony's reader business is small enough ($250M out of $86B) that any hypothetical losses are rounding errors compared to their recent losses from phones, Playstation hardware, and TVs ($3B in just the last year). Whether they make or lose money on the readers is of limited impact on the bottom line as long as HQ thinks it is an important enough business for the company to stay in it
So it really doesn't matter whether *we* think it is possible for Sony to compete on price, or whether we think they need to do it. The T1 redesign and launch says *they* believe it. And, if the quoted IDC report of 800,000 units sold in 2010 is accurate (and it probably is; their 2009 numbers were 1.1 million) that means Sony reader sales have been stagnant at best, declining at worst, for the last two years.
And those have been years of explosive growth in the business.
With their global market share down to 4% Sony is in danger of falling into nichedom or worse so they "probably" needed to do *something*.
The something is T1.
Now we get to see what the market thinks of it.