The PS3 price-drop dilemma

The PS3 price-drop dilemma

Summary: I keep hearing rumors and reports that suggest that pretty soon Sony will cut the price of the PS3. But cutting the price comes at a risk.

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TOPICS: Hardware
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I keep hearing rumors and reports that suggest that pretty soon Sony will cut the price of the PS3.  But cutting the price comes at a risk.

I have no doubt the PS3 is currently overpriced and I know that Sony is begging everyone to see it as more than a games console. But that doesn't change the fact that in the end it is still a games console – and an expensive games console at that.  Even if we did see it as an all-encompassing home The problem with cutting the price, especially so soon after release, is that Sony risks both devaluing the consoleentertainment system, it would then still be an expensive home entertainment system.  This is exactly the kind of problem that companies run into when trying to tweak a brand.  The PlayStation brand was always seen as a games console, but with the PS3 Sony has attempted to redefine the brand as an entertainment system. Thus far that gamble hasn't paid off.

So, Sony is left with a dilemma.  Stick with the current price and hope they can somehow distort reality and boost sales, or cut the price in an attempt make consumers more enthusiastic.  The problem with cutting the price, especially so soon after release, is that Sony risks both devaluing the console and at the same time angering those early adopters who paid a hefty price for being the first on their block to own one.  Sure, dropping the price of the PS3 by $100-150 would stimulate sales, but then Sony's got to find a way to make that cash back.

An alternative to dropping the price would be for Sony to sweeten the deal for consumers a little by throwing a voucher for a couple of games into the bundle.  This wouldn't be anywhere near as effective as a price drop but it might mean that Sony could hold out until next year without having to cut prices.

Either way, Sony will have to lose a lot more cash on the PS3 to see it gain any traction.

I'm pretty sure that Microsoft's Xbox 360 is also headed for a price cut too now that sales are starting to plateau.  Microsoft could choose to cut the price before Christmas (around Thanksgiving) and be guaranteed of strong sales over the Holidays or take a gamble that new games released this Fall (such as Halo 3) will boost sales enough to carry it into 2008.

[Updated: June 21, 2007 @ 9.50 am]  It seems that Sony's realized that more games are needed for the PS3.

Thoughts?

Topic: Hardware

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37 comments
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  • U know nothing!

    Another american article, another bunch of crap! You look like spoiled little brats, Sony isn't selling that bad, actually it is selling better than PS1 or PS2, and it costs just more $100 then PS2 costed at launch, so price is not the problem. They need nothing to drop the price, because what people are waiting for is games, and those are coming (380 more precisely), PS3 costs to Sony around $850 minimum, so they are losing money with each system they sell and people are in fact making a good business by buying a PS3, and I don't see no one complaining more than American brats (yes, all of you). You have one of the cheapest PS3 SKU's in the worls, but still, you'r not happy, you are NEVER happy. There is no dilemma with price drops, yf they occur now after I'v bought a PS3 I just don't care, I'm happy with my system and I have it NOW, I don't have to be waiting for something no one can guess. PS3 is a lot of money, but it is not expansive given what it will deliver in games and entertaining, a Nokia phone or a Levis pants or a Hugo perfume is expensive given what they are for, not a PS3. Take your head off your butt and open your eyes, Sony has the best and most powerfull and balanced console of the market, it still has the best exclusives and support from the major software houses of the world, it has the hardware quality that no other console in the market has, it is almost future proof, it beated record launches and there are 120.000.000 PS2 owners that will start shifting to PS3 as soon as the games arrive, so honestly...!! Do you really think Sony has a problem with PS3? No, they are just a bit ahead of market, has with all the other Playstation brand consoles. PS3 is not a NOW console, PS3 is for living... this is living! Capiche?
    mk24ever
    • Not anti-america, but yes anti-american sensacionalism!

      You say PS2 owners have no reason to update for PS3? Well, right now that is correct, there is no games or good reasons to do it now, afterall PS2 has now more than ever great games at a fantastic price, why should they move forward? Buy a X360 when they know that it is not a reliablle product, is becoming fastly obsolete, that as not the games they loved to play on PS and PS2, or even offer a new way to play games?? Buy a Wii? Well, yes, I bought a PS2, a PSP and a PS3, why I bought all those consoles? Just because they never disapointed me, but that don't invalidates I'll buy a Wii, it's in my plans, but just not now, even if it is "only" $250 I still think it just don't worth the money, it's a "momentum" console, PS3 also offers the same game experience with motion controllers, not as deep but deep enough, actually, I think it is more rational for games, if I want to act like if I was practicing real sports per example I'll just leave home and make real sport, not pretend it in my living room, but that's not the point, what I mean is that Wii is a toy, actually it is more a toy than a video-console per-se. Peoplle will buy it for fun, then the "novelty" aspect will disapear and the only thing will remain is an obsollete white "CD case", wich was cheap, so yes, claps for Nintendo for their cleaver know-how to make money. PS3 has a Bluray drive not for movies, but also for games! Why to launch a game-console with an obsolete optical drive? Now that would be stupid for Sony don't you agree? Bluray or HD-DVD is not a movie format, is a MEDIA format, it means it allows more data, movie, sound, etc... I have no minimum doubt that games running in 1080p with 7.1 HD sound and other enhancements will in very soon not fit in a single DVD, Bluray will allows game developpers to make better and bigger games, and that's the real point, Bluray is an evolution in media format, bluray is not a disc to put movies on it, just short-eyed people see that way. It's a price we pay now to take advantage in the near future. Someone said I was someone who just wanted the latest, fastest, best gadget available, well, yes, don't you?? Than someone said that a parent will choose a cheaper console fot his son(s) over a expensive one, that is correct, but video-games are no more just for "sones", but for parents too, video-games become a social mechanism, it is no more just for kids, it's for everyone, so "my son" will play what I want to play to. We are in the Playstation generation, the recent fathers from now are the playstation gamers of the past years. Competition is more tough then ever for Sony, and that is good, but Sony knows what they are doing, they launch the best products, some of them fail (BETAMAX/MINIDISC,etc), but for each fail thay make there are many victorys. For some reason Sony is one of the biggest comapanys in the world, and they don't need to use scemes to win. Now your mother company Microsoft is other story, from a boat in france with xbox360 ads in PS3 launch to millions of dollars to buy market exclusives and hardware licenses, they just make whatever it takes to put competition down, but I think they don't realise Sony is not that easy to beat... each move microsoft makes in this business just prooves they are scared as hell, at the begining they "supported" wii60, now wii is becoming their second biggest rival.. LOL, they (microsoft staff) sure are clowns!
      mk24ever
      • Have you ever considered using paragraphs?

        Seriously, your comments are just unreadable.
        odubtaig
        • Lol, yeahh

          You know what, you'r right, I should be more careful.
          ~
          Thank's for the advise, unfortunately we can't edit our posts.
          And I'm not used to write in English so even worse.
          mk24ever
    • Check your figures

      The only thing the PS3 outsold is the 360 (first four months) and the PS1

      PS2, XBox, Game Cube, Wii, N64, Dreamcast all did better.

      EVERYTHING did better in terms of software sales.
      rpmyers1
    • wow...

      there's actually people that read ZDNet that are this passionate about a gaming console? You must feel cheated if you bought in at those inflated prices.

      Hold on to that anger though-- us whiny (patient?) Americans will wait until prices drop to buy into something built for entertainment (not survival!).

      Frankly, its my money and I'll spend it where I please. It's like my neighbor-- 5 years ago he bought a 42" plasma for $7000. Showed off, and then it died after 3 years. I waited 5 years, just bought mine for $898 and got a 5-yr warranty for free with it (Panasonic!!).

      I'll wait on that PS3 to drop, and you can be content knowing that I'll smile at the memory of this rant when I pay $300 for mine.

      Have a nice day. :)
      kckn4fun
      • Good on ya...

        I bet you really wished you had that $7000 plasma in your gaff. Be honest now. But you just couldn't afford it. Obviously your neighbor could, so he has now enjoyed three years of superior TV viewing that you will never gain back from him. To some people out there, the $6000 difference (between his TV and yours) is just the price one pays to enjoy the benefits of better technology as it becomes available.

        ... I'll smile at the memory of this rant when I know you missed out on a few years PS3 enjoyment just so you can save a few skins. In the mean time, I am enjoying mine, and it cost me nothing!
        Big Scoddie
      • PS

        Next time you go to a restaurant, don't sit at the tables and pay full price. You can save LOTS of money by waiting until the restaurant closes and get a meal out of their dumpster for FREE!
        Big Scoddie
        • LOOL

          You'r funny!
          mk24ever
  • love the anti-American sentiments there...

    ...especially how you neglect to take into account cost of living, currency exchange, consumer mentality, etc...

    First off, the PS3 costs more than any other current generation console. Cheaper than other countries? probably. But if you're a parent, and you see a $600 PS3, a $400 Xbox 360, or a $250 Wii, the last of which is widely regarded as a system that the entire family can enjoy, which do you think is the better investment?

    Next, the single biggest reason why the PS3 is so much more expensive is because of the blu-ray drive. That's a double edged sword...if you market it as a cheap blu-ray player, then the consumer is hedging a $600 bet that blu-ray will win the format war, and the 'full entertainment gaming console' argument goes up in smoke. If you market it as a full entertainment game console, then why do we need a blu-ray player in it? Factor in the cost of an HDTV to get the best bang for your buck, and it becomes a whole lot more expensive than either of the other systems, which look just fine on a standard def TV, which still outnumber HDTV's in America right now.

    Finally, you must realize that while there are individuals like yourself who will pay whatever price it takes to get the latest, greatest, fastest, and best, many consumers in America don't share your enthusiasm. Sure some do, but if that were the general consensus, then Wal-Mart wouldn't be the #1 retailer, Apple would dominate the market, and Michael Dell would be flipping burgers. Some people are downright cheap, others simply know their means and live with what income they have. A $250 Wii that everyone can enjoy may be in the budget. a $600 PS3 for just one or two kids might not.

    Joey
    voyager529
    • Australians are subsidising your so called "over priced" PS3

      Seems a little unfair that $US600 seems too expensive for you guys. We, in Australia, are paying the equivalent of $US840 for a PS3. So, if Sony is selling at a loss (as is implied above) to gain market share, I am sure that Australian buyers are subsidising (or over-compensating for) the difference. So, I agree; USA must be full of cheapskates!

      I think that you do get what you pay for. The quality and abilities are commensurate with the asking prices for the Wii, Xpox and PS3. Nevertheless, I am still a bit annoyed at having to pay $US240 more for the PS3, especially since we get the cheaper software emulator (for PS and PS2 compatibility) in our Australian model!!

      SO, STOP YOUR WHINGING ABOUT PRICE!
      Big Scoddie
  • U know everything!

    You are right and a price cut is certainly in the works. The prior poster is more than a little off by implying that the prior user base of PS2 owners is going to reflexivly purchase PS3s. Why would they do that? For backward support, they still have their PS2 to play PS2 games. For forward support, as a user you go with the best new product. If this was not the case, American car owners would never have switched to Japanese cars. Local store shoppers would have never switched to Wal-Mart and Target. But they did. Sony must be worried about PS2 owners buying 360s. I know they are worried because they are good businessmen and good businessmen would be worried.

    Additionally, Sony is certainly not paying $800+ per unit at this point. They have more room to discount than they did previously and they are going to start before Christmas this year.

    By way of disclosure, I own a PS3 and not an XBOX 360 (yet). I own a PS2 and an XBOX from the prior generation. I think that BluRay support compensates for the higher price of the PS3. Apparently, I am in the minority and that is what Sony needs to worry about. I am looking forward to Microsoft dropping their price to get an XBOX 360 on the cheap.
    goingbust
    • Or maybe they're planning on Home being a winner...

      ...but I wouldn't bank on it. It's Second Life, only prettier. Woohoo. Seriously.

      It probably doesn't help that a lot of devs don't own one either, least they don't around here, but they do have XBox360s and Wiis.
      odubtaig
  • Sony *must* cut the price

    They lost the VCR war when VHS overwhelmed Betamax in the market. They can't afford that same mistake, not with the future of High-definition DVDs at stake.

    They should cut the cost as far as they have to in order to win the BluRay vs. HD-DVD battle. I don't own any of their stock, but if I did, I would gladly take the short-term loss for the long-term mega-win.
    bidemytime
    • Yeah...

      The only reason the future of the next gen discs is at stake is because people are ignorant of the facts that the PS3 is already compatable with the HDDVD format discs, and that to watch HDDVDs on your XBOX 360, you have to pay an extra $200 for it. With the Wii, it's not possible.
      Catman929
  • XBOX 360 has already won...

    Everywhere I go I see rows and rows of XBOX 360s. Yet I cannot seem to find a Nintendo Wii anywhere! LOL! I guess retailers realize the Wii is not a seller and decided not to stock it. The PS3 is now "just another victim" to the ubiquity of sheer dominance of the XBOX 360. Sony's best bet is to stop making consoles altogether and give up this market to Microsoft. Microsoft is a thought leader in everything nowadays: mobile phones, portable music players, game consoles and of course, the WOW of Vista!
    Mike Cox
    • I almost Responded to you . . .

      before I read who wrote this . . .WOW, even I can get taken in sometimes (Luckily, I managed to catch myself this time :) )

      Definite 10 on this one!!!
      JLHenry
    • Love your work, Mikie... n/t

      n/t
      Big Scoddie
    • Different explanation?

      Maybe there are lots of XBOX 360's on the shelves because the retailers [u]thought[/u] they would be popular. Instead, the Wii's they had sold out of stock and can't be reordered and received fast enough to keep them on the shelves.

      I don't know which is the case, but it's a thought...


      (Too bad ZD doesn't allow preview of a post before submitting...)
      MWPollard
  • PS3 price is OK for what you get...

    My daughter won a PS3. Now, after messing about with it for a while and integrating into the home theatre, I would be happy to pay the $AU1000 asking price for one. That's $US840, which is a bit more than the $US600 or $AU710 you guys seem to find ?too expensive?!

    Anyway, my wife got a PS2 with a mobile phone deal a few years back and I told her it wasn't allowed to be plugged in to the home entertainment system. I am not a games enthusiast and it offered no apparent benefit in our home theatre set-up.

    On the other hand, the PS3 had a few compelling features that persuaded me to allow it in the main entertainment room. The Blue-ray drive; optical audio; full 1080p resolution through HDMI; standard DVD up-scaling; SACD compatibility; 60Gb storage for digital video, image and audio content; memory card readers; WiFi; etc. were all modern and desirable features for me. None of those reasons have anything to do with gaming. Then, I loaded a couple of the (very few games available for it) and was hooked. I quite enjoy sitting down to fire it up for some ?entertainment? from time to time.

    My biggest beef is not the price; it?s the distinct lack of games. Even though I don?t particularly care about the games, I can see why the gamers out there can?t justify the so-called high price. The promised 380 new games had better hurry up or the PS3 will most certainly suffer continuing poor sales.
    Big Scoddie