Sony Open to Considering PS3 Price Cuts

njkid1 writes with word that Sony is considering dropping the PS3's price. The Mercury news reports that Sony Senior Vice President Takao Yuhara has admitted they are investigating whether to drop the PlayStation 3 in price around the world, despite statements previously made that the 'lower' PS3 price in Japan is hurting Sony's bottom line. Profits for the company slipped some five percent in the October-December period, and the shortfall expected through March could be even worse than previously predicted. The article points out the possibly risky nature of a price cut for such an expensive item so early in its lifespan, and notes the stiff competition from the Xbox 360 and the Wii.

Bitterness

[Nerdfest]

I probably sound quite bitter, but I hope they don't do it. I _want_ them to get thoroughly boned for their rampant anti-consumer bahavior. Yes, I'm still pissed about rookits, yes, I'm still pissed about fake advertisements. Peoples memories are too damn short, and companies have been getting exploiting that fact for too long. Nothing beats a good financial thrashing for keeping corporations honest.

Re:Not selling hurts more

[Grave]

To be quite honest, selling the PS3 hurts the bottom line more than not selling right now. The last estimate I heard was that 30 software titles or accessories must be sold per system to break even (on the 60GB). This would require purchasing every single title currently available, three extra controllers, and a dozen Blu-Ray movies.

While the long-term view says that they need to sell as many PS3s as possible before the 360 runs away with the game, there is a need to see production costs come down to prevent very substantial financial loss.

Personally, I think that Sony is in serious trouble this year. There are so many very highly anticipated titles coming for the 360 that will almost certainly be system sellers (Halo 3 being the ultimate), and so few coming this year for the PS3. If it takes another year for a system-selling title to come out on PS3, Sony might not even be able to get close to the market share of the 360.

(I don't consider the Wii to be a direct competitor, as it will almost certainly be the #1 selling system by the end of the year. However, for many people it will be a second system. For blockbuster games, the 360 and PS3 are the competitors.)

Clarification. Wii CAN play movies, not DVDs.

[trdrstv]

actually, no..it can't. this feature was taken out shortly before release

Yes it can play movies. It cannot play DVD's , but it can play motion Jpeg (a Quicktime format) which I have used (My Nikon CoolPix records in that format) in the Photo Channel.

Re:Sony is Going to Lose the Console War

[numbski]

Not neccessarily.

I think it all depends on how deep their pockets are, and how badly they want to win. If they were to do a serious price cut (as in 50%, bring it down to the $300 range), they would be hurting, and hurting BAD, however the units *would* start to sell. Market penetration is nearly as important as profit per unit sold. The main thing killing them right now is that Nintendo actually turns a profit on every Wii sold, Microsoft, I don't recall whether it's a loss-leader or not, but Microsoft's XBox360 simply can't hurt them badly enough for it to matter.

If Sony were to gamble big and drop the price low enough that mere mortals might consider buying, they could at very least make things interesting. Question is, how much of a loss can they afford to take per-unit to get there?

Re:Sony is Going to Lose the Console War

[asc99c]

Sony does have deep pockets. Remember that PS3 is currently hurting their profit margins, but they are still making profits - PS2 is continuing to bring in the money while XBox is now mostly dead for Microsoft. Their TV line is also hugely popular right now. For the first time, they've got a genuinely good range of LCD TVs that may restore some of the dominance they lost in the switch from CRTs.

I'd like to know the sort of royalties they will make on both games and Blu-Ray technology. If it's high enough, maybe they really can afford to drop the price. Microsoft only has one of those revenue streams coming in - AFAIK they are supporting HD-DVD but have no stake in the hardware technology.

Also, Microsoft has the home advantage in the US, so this will skew sales figures somewhat. Europe is a bigger market and a level playing field for the companies. When the console launches over here, I'd expect sales figures to be looking better.

Planned from the start

[roaddemon]

This was probably planned from the start. It would be stupid to start at their target price when the market is willing to pay much more. Start high, wait for manufacturing to pass demand, drop price to initial target.

Re:Bitterness

[oGMo]

A few Microsoft facts:

• Gates, a college dropout, started by stealing code from dumpsters
• Microsoft's big contract with IBM was made by screwing over the superior, existing competitor (CP/M) using family connections, to sell vaporware (DOS was bought later)
• Windows's primary purpose was to have "MacOS on DOS"
• Microsoft continually screwed over competitors over the years (Lotus, Stac, IBM, Netscape, ...) by breaking compatibility, bundling, product dumping, breaking contracts, and FUD, and continues to do so
• Microsoft continually screwed over customers through lock-in and incompatible formats, and continues to do so
• Microsoft was convicted of abusing their monopoly, and has not changed its actions at all
• Microsoft supports SCO in their ongoing lawsuit against Linux
• Microsoft has released product after product that allow easy security compromise

A few Nintendo facts:

• Was heavily monopolistic along with heyday (driving developers to other platforms at first opportunity)
• Routinely censored games (which earned it the "games for kids" reputation)
• Routinely disallowed localization of (now-popular) games
• Entered into contracts with Sony and Philips, later to break the contract (resulting in the Playstation brand)
• Made the decision to stick with cartridges with the N64 (leading to technical limitations on the console and the loss of third-party vendors)
• Made the decision to remain hard-nosed with N64 developers (furthering its "kiddie" image and driving developers to its competitors), though this later changed

Neither of these companies are perfect. Both have made poor decisions, and had bad business practices. Microsoft, obviously, is the worse offender. They haven't changed, they haven't shown signs of changing, and there doesn't seem to be reason they'll change in the immediate future. They're profiting from it everytime you buy an XBOX, XBOX game, or other Microsoft product.

Nintendo isn't great either: they used to be be almost as bad as Microsoft, in their own industry. Of necessity, they've changed to become the "developer-friendly" company they purport to be. They're still trying to shed the "for kids" stigma. They're trying to change; that's good.

But to blame Sony Computer Entertainment---especially unrelated subsidiaries of the parent company, and their contractors---for things they have admitted as a mistake and helped fix, is simply blind fanaticism. Overall, SCE has delivered two solid consoles with huge game libraries, provided developers with exactly what they've asked for, with a minimum of censorship or heavyhandedness. Are they perfect? Is their parent company perfect? Hardly. But compare them to their competitors whom you might idolize, and they hardly stand out as being overtly evil.