A quick note on business economics (yes, they intrude even here) about Sony's decision to de-Emotify the PS3. Why would they do it? Some suggestions are that it means that Sony can cut prices more quickly in the future. One commenter at It's the Emotion that's gone suggested:
It doesn't have to make a large difference to the overall cost of producing the PS3 to make a significant difference to Sony's profit/loss on each console.
As a hypothetical example, say you're in a small profit margin market and sell for $40 a device that costs $35 to make - reducing production costs by only $1 increases your profits by 20% ($5 to $6).
This is true as far as it goes, but falls into the classic "I've never worked in a small business" error. In business, as they say, "turnover is vanity, profit is sanity, but cash is king."
If your change in production means that instead of selling 10 you only sell 9 (because people say "It doesn't have feature X"), then your *actual* profit moves from $5 x 10 before, to $6 x 9: $50 before, $
54 afterwards. Your cash flow has *fallen* from $400 to $360. That's a
8% rise in profit and 10% *fall* in available cash. But, you say, our margins are up! [Thanks AlexGB for pointing out the error. Sigh. Is this why I've never run a business? As he points out, you'd need to lose two customers to make profits drop.]
In any business a fall in profit *and* in cash is a Bad Thing, and is the reason why companies like to sell you things that cost a lot and have lots of things inside on which they can squeeze margins later: because the one thing that matters most to a business is capturing the cash from buyers - lots of them. A fall in available cash is a bad thing - and offsets a rise in profit significantly, especially if you're trying to push lots of new product out of the door (and have just had an expensive battery recall) and need lots of cash to pay suppliers.
And it's why you like to appeal to lots of potential buyers with that single thing. It explains Microsoft Office having a million twiddly capabilities that only a few people use (but use all the time), the PS3 having - until recently - PS2 compatibility as well as a Blu-ray drive, and so on. (It's also why Apple didn't, until recently, offer low-end machines; it couldn't generate sufficient cash and profit from them.)
But this has to be balanced with marketing savvy: you have to get people buying it. On the logic above, if you filled the box with air and sold it for $40 - production cost $0 - you'd make infinite profit. Bring it on!
This, by the way, is the flaw in Datamonitor's argument (site link only; look at its press releases for the right one) that removing the Emotion engine will boost (Sony) console sales - not now, but eventually. Datamonitor argues that not having the Emotion engine chip will make PS3 manufacture cheaper. It might, but price is not the only determinant of whether people - especially Sony gamers - buy a console. Backwards compatibility and not having to fuggle around with swapping cables behind the TV matters too. That's what that chip offers. And it's what Sony seems to have left out.
Though if someone from Sony wants to comment below on how it's actually a brilliant profit-making idea...