Sony 2003 Annual Report Download - page 99

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Consolidated Financial Information 2003
13
currency basis, sales for the fiscal year ended March 31, 2003 decreased approximately 7 percent and operating
income increased 12 percent compared with the previous fiscal year.
Regarding sales by geographic area, sales decreased in Japan and the U.S. but increased in Europe. In Japan,
hardware sales declined due to lower unit sales of PlayStation 2 hardware, brought on by a stagnation of the game
industry, and a price reduction of PlayStation 2 hardware. Software sales decreased slightly due to lower unit sales of
software published by SCE. As a result overall sales in Japan decreased. In the U.S., unit sales of PlayStation 2
hardware increased mainly due to strategic price reductions. Despite an increase in unit sales, hardware sales
decreased due to the negative impact of the price reductions exceeding the positive impact of the increase in unit
sales. Software sales increased due to an increase in unit sales brought on by an expansion of the software market
as a result of the increase in hardware unit sales. As the decrease in hardware sales exceeded the increase in
software sales, overall sales in the U.S. decreased. In Europe the market penetration of PlayStation 2 hardware
continued to expand as hardware unit sales increased mainly in Western Europe, primarily due to a strategic price
reduction of PlayStation 2 hardware. As a result, software sales increased and overall sales in Europe increased.
The depreciation of the yen against the euro also had a positive impact on sales in Europe.
Total worldwide production shipments of hardware and software were as follows:
(Million units)
Year ended March 31
2002 2003
Cumulative as
of March 31,
2003
Total Production Shipments of Hardware
PlayStation + PS one . . . . . . . . . . . . . . . . . . 7.40 6.78 96.41
PlayStation 2 . . . . . . . . . . . . . . . . . . . . . . . . 18.07 22.52 51.20
Total Production Shipments of Software*
PlayStation . . . . . . . . . . . . . . . . . . . . . . . . . 91.00 61.00 917.00
PlayStation 2 . . . . . . . . . . . . . . . . . . . . . . . . 121.80 189.90 350.00
* Including those both from Sony and third parties under Sony licenses.
In terms of total software unit sales, PlayStation 2 titles represented 76 percent of the software unit sales for the
fiscal year ended March 31, 2003, an increase from 57 percent of software unit sales recorded in the previous fiscal
year.
In terms of profitability, operating income increased as compared with the previous fiscal year. This increase
was due to an improvement in profitability of the hardware business as a result of a reduction in the cost of producing
PlayStation 2 hardware and the positive impact of the yen’s depreciation against the euro. The increase in operating
income was also due to an increase in profitability of the software business brought on by an increase in unit sales
mainly in the U.S. and Europe. Cost of sales in the Game segment decreased due to a decrease in
manufacturing-related expenses of PlayStation 2 hardware, resulting in a decrease in the ratio of cost of sales to
sales compared to the previous fiscal year. Although selling, general and administrative expenses increased