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Would a PS3 price cut do it?

Forums - Sales Discussion - Would a PS3 price cut do it?

Well I think we can all agree that when Sony eventually does cut the price for the PS3, the effects will be immediate, in that the 360 and Wii will match or exceed any cut Sony can offer.



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Stromprophet said: 1) 360 hasn't price dropped yet and hasn't even announced an intention beyond doing it sometime in 2007. They haven't even said they will drop the price when their new SKU comes out.
It does not matter, since the biggest german electronic retail chains lowered the price, as I said. At the moment you would be stupid to buy the Xbox for a higher price.
2) Sony as a company is profitable, has a low debt to equity ratio (long term loans as compared to the value of the company), so I really don't think that would be an issue.
Well they have lost most of their critical production capabilities. That is their problem, where they once produced their own TVs they now have to buy their Displays from Samsung. They are now totally dependendend from their suppliers, which generate most of their internal prices. And their game sector would look pretty bad without the PS-2, Another problem: they sell some PS-3 but few games. Even their own software production studios would be hard pressed if they should really produce the games exclussively for the PS-3 or if it would be more feasible to go the multi plattform way. The big proplem every of their studios has its own financial structure. If their PS-3 department wants exclussive titles they have to pay for it, otherwise their software producer would have to argue with the company management, why their internal revenues are so bad. Especially Sony has many problems of this kind. HD DVD would never have been an option if the first BluRay titles (produced by Sony) would noit have been inferior to HD DVDs.



It`s ok for you to buy new cell for 300-1000$
No, it's not ok. I bought a new cell phone 5 years ago for 25 bucks. I bought a new cell phone this year for 60 bucks. I would've kept the old phone if it was still working, but it finally just died. $1000 on a new cell phone, you've got to be effing kidding me. Even the "iPhone" isn't that expensive. It's OK for SOME PEOPLE to spend $300 or more on a cell phone and get the "PDA" use out of it. It's OK for SOME PEOPLE to spend $1000 or more on a TV and then $600 on a PS3 so they can play their games and watch their Blu-ray movies. It's OK for way more people to spend less on a Wii or Xbox 360. Price absolutely matters. I guarantee if Sony dropped the PS3 to $400 tomorrow, what's his name could re-issue his "I'll give you $1200 if you can find a PS3 on a shelf" proclamation, only this time, he'd be safe, because the shelves would be empty.



kars said: Well they have lost most of their critical production capabilities. That is their problem, where they once produced their own TVs they now have to buy their Displays from Samsung. They are now totally dependendend from their suppliers, which generate most of their internal prices.
They lost most of their critical production capabilities - are you for real? There is nothing wrong with the fact they buy displays from Samsung. Everyone buys from Samsung or LG-Philips. No need to provide own technology. It's cheaper. Do you think Eizo is going to fall because they are using Samsung panels?



kber81 said: They lost most of their critical production capabilities - are you for real? There is nothing wrong with the fact they buy displays from Samsung. Everyone buys from Samsung or LG-Philips. No need to provide own technology. It's cheaper. Do you think Eizo is going to fall because they are using Samsung panels?
I could be wrong, but I think his point was that "Back in the day" Sony physically manufactured every component in their electronics whereas today they buy a large portion of their components from other companies. Now, in general, this should reduce the price of electronics but in the case of the PS3 it may mean that Sony does not have enough control over the price of their components ... I personally don't know if this is true or false with the PS3, but one of the reasons that Microsoft couldn't reduce the manufacturing costs of the XBox on the scale that Nintendo could with the Gamecube (or Sony with the PS2) was that they agreed to long term contracts with component manufacturers in order to reduce the initial cost of production.



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CrazzyMan said: to buy a console there must be atlest 5-10 AAA exclusive titles for many people.
That's true, especially for a $600 console. Too bad that the PS3 won't have 5 AAA exclusives until the end of 2007 plus you have to consider that not every player likes the same genres, so some may be pleased by some racing and fps, others will still wait for rpg and action-adventures.



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Price cutting is critical to any race. The Xbox dropped its price $100 in May 2002, and tripled its monthly sales, and reached a point that it sold very well in the US the rest of it's career - price drops help get a good system to a willing (and paying) marketplace. However, I don't really see Sony cutting the PS3 $100 really helping it out alot. It'll help, but not the boost it needs. However, I don't think Sony wants to, or will, cut the price for awhile. The PS3 needs a $150-$200 pricecut across the board - which won't happen for atleast another 2 years. Once it's at the current 360 price level(s), we should see the system do near-360 numbers in the US. As for Japan, I question if the price drop would REALLY help alot. What matters to Sony is 2-3 years from now getting it to a mass market price, and getting all of those late-adopters to purchase a PS3 rather than a 360, or an aging Wii system. Having 5-10AAA titles don't matter. It didn't really help the N64 - it had TONS of AAA titles. However, it lacked the cheap(er) near-shovelware titles that the PS1 had. A library of 100+ decent games is better than 20 good games in the eyes of consumers. Im not saying its right, but no system has survived without a strong base of developer support, either from 1st or 3rd parties.



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kber81 said: They lost most of their critical production capabilities - are you for real? There is nothing wrong with the fact they buy displays from Samsung. Everyone buys from Samsung or LG-Philips. No need to provide own technology. It's cheaper. Do you think Eizo is going to fall because they are using Samsung panels?
Yes, it's cheaper but on the one hand, but suddenly only a fraction of the price stays in your company. Your earnings might look better, but in fact you lost internal knowledge. Other companies can buy the same displays and it is much easier for them to compete with you. Their tube TVs were a name of their own, but now their biggest contributions is the elctronics part and its brand name. In the stores everything looks fine, but in fact only a fraction of the price stays in Sonys pockets. And this increases the relative size of their games business. They can no longer compensate losses of the games business as easily. And in fact a very important factor nowadays bad news in the game market have a much bigger effect on your share price and puts more pressure on your management.



zukaus said: For all those expecting a PS3 price drop next year here are the words straight from Sony's mouth. It appears price cuts will be unlikely for the next couple of years. I suppose things could always change, but this seems to be Sony's stance for now. "Although analysts say price reductions would benefit PS3 sales, Sony isn't likely to make any price cuts for at least another two years, said Kimberly Otzman, a spokeswoman for Sony Computer Entertainment America. She noted a similar time frame for lowered prices for the PS2. "We probably expect the same for PS3," Otzman said, adding that while the console's price is higher than competitors', it comes completely packaged so consumers don't have to buy extra equipment or attachments." http://kotaku.com/gaming/ps3/sony-ps3-price-cut-not-likely-for-two-years-239816.php[/quote] As I've said before 2 things to consider. 1) The price cut was 1 1/2 years after US launch. They had the option of price cutting at their liesure as they had been on the market longer. 2) Microsoft price cut a mere 6 months after launch when PS2 price cut. Sony can say whatever they want. The fact is, WHEN 360 price cuts they are not really gonna have a choice. They compete for a lot of the same market that 360 does. 360 IS price cutting this year, that's a fact.



HappySqurriel said: Now, in general, this should reduce the price of electronics but in the case of the PS3 it may mean that Sony does not have enough control over the price of their components ...
That's another problem. In fact Microsoft saw this problem (after their Xbox experiences) as so big, that they took specail care, to own the IP of their key components. So they can use any company they like to build their components and on as many chips, as they like.