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Would a PS3 price cut do it?

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Stromprophet said: Quartz said: Microsoft at that point probalby could at the afford the losses on the xbox at that time. But the significant drop in shares for Sony in the past, and it's drop in company value it is probably a wise choice to hold out on the price for the PS3 until parts are cheaper. At this point I don't think Sony wants to keep bleeding money for every PS3 they are making at this time. The reason they price cut was because PS2 price dropped and they knew they would not be able to keep their system alive at 300 dollars and compete against the PS2, and also the gamecube which was also cheaper. WAS I THE ONLY ONE GAMING BACK THEN? I don't see how none of you remember this. Xbox was easily losing more than 200+ dollars a console when they dropped the price from 300 to 200. http://moneycentral.msn.com/investor/charts/charting.asp?iax=1&Symbol=SNE Huh, that's interesting. I wish I had bought Sony stock back in November, I would have made over a 20% gain in 3 months. You know Sony is profitable as a company, Sony Pictures, Sony Financing, Sony Electronics, and Sony Gaming. Just like Microsoft they can afford to take massive losses cause they are a massive company. Microsoft lost 4 Billion dollars after all software sales and hardware sales on the original Xbox, that certainly didn't disaude them. And as I already pointed out, they've taken steps to lower the part costs this year, in the range of 100+ dollars. 65nm technology saves them 40-50 bucks, the EE chip saaves them 27 dollars, and reduced price of blu-ray laser diodes should be at least 25 bucks. Yes Microsoft can afford to do a lot of things, like lose money on Zune, lose money on their search program (competing with google), lose money on Xbox. But so can a company like Sony. And the only thing they are losing any money on right now is the PS3, Financing is profitable, electronics are easily profitable, the picture company has been one of the most dominant at the box office the last several years.
Point taken. But like anything else, a business likes to make money. Dropping the price of the PS3 while it's selling 'reasonably' in Sony eyes is not really needed. Unless of course for some reason the System takes a major dive in sales - then a price drop would be a last resort.



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HappySqurriel said: A system at (approximately) $200 is inexpensive enough that it can be bought by most families, as a gift for a single person in wealthier families, and by gamers for one game. A system at (approximately) $400 is too expensive for most families outside of the holiday season, is (probably) not going to be purchased as a gift for an individual person, and requires more than one game to interest most gamers. A system at (approximately) $600 becomes (essentially) a toy for the wealthy ... most families will think twice about buying it, and gamers will wait for enough high-quality content to come out to justify the price. It isn't that complicated and you see the pattern everywhere ... How many cars on the road cost $20,000 new as compared to the number of cars that cost $40,000 or $60,000? How many people buy the $2 name brand potato chips compared to the $6 bag of organic potatochips? Certainly there are millions of people who buy the priemium items, but most people just want something that gets the job done. Edit: In North America a price drop to $400 would do wonders to selling more PS3 units but it won't cross into the mainstream until the price approaches $200 ... A risk Sony faces by dropping the price is that they could cause a price war they're unable to win.
300 bucks had pretty much been the standard for the launch cost of a brand new system. As far as the economics go, a lot of families are making a lot more money today than they were in the 90s. How many families do you know that just get a 0% 60 month loan on a 30,000 or 40,000 dollar car? I see a lot of middle class families do that. I also see right now a lot of middle class families buying 500-1500 dollar HDTV sets without blinking an eye. We're at a point in our society where a lot more people are willing to stretch to get something more expensive. I agree with you, but I think there are a lot more people (even lower income) who are spending more than they should on non-essential things. It's America for you. A prime example of this. I was playing Texas Hold em last night in a cash game I freqeunt. I literally saw one guy blow around 400-500 dollars easily, and I see him there every week. I don't think half the people in that room can afford to be gambling, but they do. I make pretty decent money today and I know you do squirel. I told some of the guys I was playing with that I couldn't have done that. I play small and lose small. But most of the guys in there weren't even batting an eyelash about losing that kind of cash. Just sayin, I think more than ever in our society people will stretch beyond what they can really afford. Even for a toy.



Stromprophet said: You know Sony is profitable as a company, Sony Pictures, Sony Financing, Sony Electronics, and Sony Gaming. Just like Microsoft they can afford to take massive losses cause they are a massive company. Microsoft lost 4 Billion dollars after all software sales and hardware sales on the original Xbox, that certainly didn't disaude them.
Sony is a profitable company but look at their financial statment as of March 31st 2006: http://www.sony.net/SonyInfo/IR/financial/ar/2006/qfhh7c00000aksvu-att/qfhh7c00000aksx9.pdf The problem is that Sony isn't all that profitable and the Gaming Division (Sony's Golden-Egg laying goose) is going to start to bleed money because of poor sales of the PS3 and PSP. Sony is not in a good position this year because it is likely that Electronics (from the exploding batteries) will likely lose money, gaming (from the start up costs of the PS3) will likely lose money and these losses may not be offset by the profits in all other divisions combined. March 31st will be interesting because Sony will either announce they're losing money or just barely making a profit.



Quartz said: Point taken. But like anything else, a business likes to make money. Dropping the price of the PS3 while it's selling 'reasonably' in Sony eyes is not really needed. Unless of course for some reason the System takes a major dive in sales - then a price drop would be a last resort.
The way the market is lolly gagging right now I'm surprised the price is still up. I looked at my 401k and IRA and shook my head the last few weeks here. My whole thing is I recognize IMO the number was bad. 127k is not good. I suppose if they only look at competing against Microsoft as winning they could reason that the numbers aren't so bad. After all worldwide they will likely start outselling Microsoft after the European launch on a monthly basis. If they slip below 100k a month I don't see any other way. For example Dreamcast was the last system to fail, or stop being made. From February 2000 - September 200 they averaged around 50k-60k sales a month in a non competitive environment. Regardless, those sales weren't good enough to keep them in the game.



HappySqurriel said: Sony is a profitable company but look at their financial statment as of March 31st 2006: http://www.sony.net/SonyInfo/IR/financial/ar/2006/qfhh7c00000aksvu-att/qfhh7c00000aksx9.pdf The problem is that Sony isn't all that profitable and the Gaming Division (Sony's Golden-Egg laying goose) is going to start to bleed money because of poor sales of the PS3 and PSP. Sony is not in a good position this year because it is likely that Electronics (from the exploding batteries) will likely lose money, gaming (from the start up costs of the PS3) will likely lose money and these losses may not be offset by the profits in all other divisions combined. March 31st will be interesting because Sony will either announce they're losing money or just barely making a profit.
Yeah that may be true. But Microsofts gaming division has been losing money for 20 of the last 21 quarters. It just does not affect these massive companies like you think it would. Last year for the year annually I believe Sony made a profit of 1.2 or 1.3 Billion dollars. Even with losing 450 million on the gaming division last quarter on PS3 costs, and also losing 600 million or so having to replace batteries in laptops. They already payed all the money to replace those batteries and the incurred costs of changing manufacturing methods in China to ensure proper production were applied on last years fiscal statements. As far as future sales, sure it may affect them. But there really aren't that many more manufacturers of the laptop batteries to go to other than Sony. So it's likely Dell and HP probably just keep buying from them. As far as other eletronics, batteries don't have much to do with their DVD players, Blu-ray players, TVs, HDTVs, etc. So I don't think those sales go down that much. "Poor sales of PSP" How are they that poor? They are certainly selling more than say 360 consoles sold worldwide. And software sales from 360 should make them profitable this fall, and PSPs software sales despite not having mega sales are greater for its lifetime than 360. The PSP is a profitable device, costs are down on the parts in the PSP and it's only had a 50 dollar price cut, on software and UMD sales they've turned profitable already. So they are not bleeding any money on that, every single sale is just going against continued operations for manufacturing which would not be that expensive at this point. PS2 sales are entirely profitable and have been for years and are still selling a good amount of Software. In fact, PS2 still sells more software in the US than any other system including the red hot DS. That helps offset PS3 costs. Which is one thing Sony does very well, they continue to support their old system 2 or 3 years after the new one comes out. God of War II is coming out on the PS2 and it looks from reviews that it might just be game of the year. (Unless Halo 3 gets given that title, personally I think Bungie is full of it now and no longer knows how to make the game fun). I bet God of War II is the number one title when it comes out for that month. I just don't think they are taking losses that would cause them to stop making the PS3, or hurt the company as a whole. And looking at it all I still think they could drop the price 100 dollars and be fine financially.



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Yeah, I see what you mean Stromprophet, but HappySqurriel does have a point, where as I didn't show evidence at the time in my last post. Then again I feel like a typing to a load of business men *Edit. Yep that last reply by Stromprophet has just gone over my head! Maybe I'm getting tired here.



Stromprophet said: I would buy the 500 dollar PS3, which is cheaper than the equivalent 400 dollar 360 + 200 dollar HD-DVD add on.
I said at the same price
Stromprophet said: In 2006 more than 50% of all TVs sold in America were HDTVs. So it's already broken that barrier and will probably achieve close to 100% current market sells within then next few years.
The +40m PS2 sold in the US weren't actually all sold in the US. some millions can be found in latin america since there's nearly no official market there. The same things go for the +40m PAL PS2 wiche can be found in north africa and the middle east. Don't except the same number of HDTV there in the near futur ("we" still need some years to see those TVs affordable...). And even Europe and Japan aren't that "HDTV" as the US. (I'm not saying that Latin america, north africa are big/major markets, but the console market is pretty decent. Enough to be taken in concideration IMO)



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I have no doubt that Sony will be able to "hang in there", Stromprophet, it's the 3rd party developers who do not have the same luxury. The question is how long will they have to hold out to make money on their PS3 investments? There will be a line for some developers, and if that line is crossed they may begin to drop PS3 titles, if badly enough they may start to write off the ps3 as a "a title here and there" platform. The question is where that line is for each developer.



Nobody is crazy enough to accuse me of being sane.

Stromprophet said: I saw an article from an analyst reporting on the February sales of PS3. And they said a PS3 price cut was critical. What do you guys think? Would you buy the PS3 at 100 bucks less?
A $100 price drop would not be enough for me. I don't really care about blue-ray or whatever is inside a box, all I really want is to play a good game. And the number of high quality exclusive titles that I am interested in is usually what will decide which console I would buy and when. For now there just aren't enough good games that I want to play that are available now or in the near future for the PS3. Now I know what qualifies as a "good game" is highly subjective but the only things I really want on the PS3 are Heavenly Sword and Final Fantasy XIII. One game this year and one game sometime in 2008 are not enough for me to justify dropping down $600 on, hell it's not enough to drop $300. Fanboys please don't flame me for liking certain games or not wanting your favorite game, it's just my opinion. The upcoming Wii and Xbox 360 lineups are just far more compelling to me. Here's what I am looking forward to on the Wii and 360 that is coming out this year or early next year. Wii: Super Paper Mario Mario Party 8 Smash Bros. Mario Galaxy Metroid 360: Bioshock Blue Dragon Mass Effect Halo 3



One of the problems for Sony lowering the price is that they can't win a price war. The PS3 console is the most expensive to manufacture. This means if all three companies lower the price of their console by $100, Sony's loss will be the deepest since they are already in the hole for each unit sold, whereas the 360 is pretty close to break even and the Wii makes a profit.