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Would a PS3 price cut do it?

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

HappySqurriel said: 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.
In any case Sony has still more control over the manufacturing process than MS or Nintendo .As you can see MS wants the 65nm Xenon to be produced but it hasnt been capable of forcing the manufacturer to start doing the process and it is delayed (well not exactly but you get the idea ) .Sony can reduce costs faster than the other two . I think a price drop would help it enourmously .It doesnt matter if the others reduce the price at the same time .There is one price at wich the consumers will perceive the PS3 as good value/price due to the free online and BR player even if the rivals are cheaper .At that point the PS3 will sell in the big numbers .Here in Europe Xbox had a horrible start with that big price ,then it dropped two times and then the console sold quite well .Game Cube was also helped with a price cut .Still ,most of their lifes the PS2 was more expensive and still sold ten times more .IF the consumer perceives value the machine will sell indepedent of what the rivals do .



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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] Don't beleive it. Why would Sony announce a price cut until it was ready to make a decision to cut the prices? They won't b/c the people that would have bought a more expensive PS3, sooner would instead choose to wait. So no, they will keep saying this, until we read in kotaku that Sony has announced a price cut.



stof said: 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.
There's no evidence for that. Again, where were you guys all these years ago? May 2002. PS2 Price cuts, could have price cut more if they wanted to. Xbox has to price cut and this was 6 months after launch. The Xbox was already selling for a loss at 300 dollars, manufacturing was more expensive, and not coming down yet in the young life cycle. Just cause Xbox price cut 100 bucks Sony didn't respond by going even lower, and Niether did Nintendo, though they both could have. Even the PS2 now still costs around 120 bucks in parts. Just because you've been around a long time doesn't mean the cost of parts goes to 0. Nintendo actually has less room to price cut proportionally to the other 2 systems. How much does a GC cost? 99 bucks? Only half of the original cost. The fact of the matter is the systems usually only cut price about 1/2 to 2/3 of the original cost over the whole life cycle of the product. Think about it. It doesn't make sense as a business to lower your price when you can continue to sell good levels. Which both Nintendo and 360 are right now. In all the console wars there have been price cuts, but they usually respond to timing and not for price wars. The only exceptions are when there is no choice. i.e. May 2002 Xbox price cuts to 200 bucks cause of PS2 price cut. They simply did not have a choice because they were already dominated and at 300 bucks to 200 it would have been even worse. You think Nintendo is going to cut to 1/2 in the first 6 months of life when 360 price drops? 360 will drop by the usual. 100 dollars, that's par for the course. PS3 will drop 100, and I bet Wii probably drops 50. Then the next price cut will occur with normal business cycle.



mrstickball said: 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.
I would argue 64 might be the one system that lost on graphics. I mean comeon, it did have great games, but graphics wise it was horrid compared to a system that came out 2 years later? Who remembers the 64 Blocks that made up James bond in golden eye and the picture plastered on their flat faces? Also Sony moved to CD which was what PC devs were using which helped them on the developer side. Nintendo is always trying crazy formats 64Bit Cartrige? MiniDisc? Actually very few mainline gaming systems have failed. The Saturn, The Dreamcast, and NeoGeo come to mind. The Dreamcast sales were so much worse than even the PS3 sales its no secret to see why it died. How is SCEA not going to do first party support? Of course they are, SCEA is the 3rd biggest developer studio in the world behind Ubisoft and EA. I just don't think a price cut is as far away as you all do because of outside circumstances that are going to force a price cut.



Stromprophet said: I would argue 64 might be the one system that lost on graphics. I mean comeon, it did have great games, but graphics wise it was horrid compared to a system that came out 2 years later? Who remembers the 64 Blocks that made up James bond in golden eye and the picture plastered on their flat faces? Also Sony moved to CD which was what PC devs were using which helped them on the developer side. Nintendo is always trying crazy formats 64Bit Cartrige? MiniDisc? Actually very few mainline gaming systems have failed. The Saturn, The Dreamcast, and NeoGeo come to mind. The Dreamcast sales were so much worse than even the PS3 sales its no secret to see why it died. How is SCEA not going to do first party support? Of course they are, SCEA is the 3rd biggest developer studio in the world behind Ubisoft and EA. I just don't think a price cut is as far away as you all do because of outside circumstances that are going to force a price cut.
In raw processing power (and in supported features) the N64 was dramatically more powerful than the Playstation or Saturn; the unfortunate thing is that certain limitations (cartridge size, maximum texture size ammount of available ram, etc.) caused a lot of trouble for most developers. The best looking games on the N64 looked far better than anything that was available for the playstation, but the majority of games were never able to come close to the potential of the system. The Gamecube on the other hand was designed less for maximum theoritical performance and Nintendo focused on maximum real-world performance and produced a system that had the best performance/cost ratio in the generation. Edit: A way to think about it would be, imagine that Sony cut all memory (including on-chip cache) by 75% and used UMD as their game format ... Their best games would look amazing but most developers would have trouble producing games that looked better than Wii games ...



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Diomedes1976 said: Well they wont be announcing or even hinting for a price drop until days before that price drop .They arent so stupid you know ?If they announce they will cut the price in three months nobody buys the console until then .We wont be hearing anything about a price drop until the effectively drop the price .
dallas said: Don't beleive it. Why would Sony announce a price cut until it was ready to make a decision to cut the prices? They won't b/c the people that would have bought a more expensive PS3, sooner would instead choose to wait. So no, they will keep saying this, until we read in kotaku that Sony has announced a price cut.
Nobody said you had to believe Sony, I wouldn't. And yes it's obvious that pre-announcing a price cut would be suicide, I don't think Sony is that stupid. I'm just pointing to Sony's official stance instead of speculating.
Stromprophet said: 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.
I agree if the 360 drops, it will force Sony's hand and they will probably have to drop their price as well. But it is not a fact that MS will drop their price, did I miss some press release? Is MS that stupid to pre-announce a price cut. I think it is likely there will be a 360 price cut sometime this year, it would make sense to try and undercut your competitors if you can. But I don't think it's a fact. Stromprophet, as someone who seems to be clamoring for evidence this entire thread where is yours to back up your fact.
Stromprophet said: I just don't think a price cut is as far away as you all do because of outside circumstances that are going to force a price cut.
I think you are in the majority of people, both Sony lovers and Sony haters are expecting a price cut from Sony soon within the next year and a half. They may be forced to by a 360 cut, or they may have to do it to try and stimulate sales.



Stromprophet said:The Dreamcast sales were so much worse than even the PS3 sales
ORLY? PS3 is a bit ahead of DC in Japan at this point, but add that to the US sales and they're neck and neck BTW, the Neo Geo was never a "mainline gaming system". The Saturn was #2 in Japan and Sega's most successful console in that region - hardly an outright failure. That distinction belongs to the Jaguar or anything Atari after the 2600, save home computers. Oh, and the PCFX.



Leo-j said: If a dvd for a pc game holds what? Crysis at 3000p or something, why in the world cant a blu-ray disc do the same?

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Stromprophet said: stof said: 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. There's no evidence for that. Again, where were you guys all these years ago? May 2002. PS2 Price cuts, could have price cut more if they wanted to. Xbox has to price cut and this was 6 months after launch. The Xbox was already selling for a loss at 300 dollars, manufacturing was more expensive, and not coming down yet in the young life cycle. Just cause Xbox price cut 100 bucks Sony didn't respond by going even lower, and Niether did Nintendo, though they both could have. Even the PS2 now still costs around 120 bucks in parts. Just because you've been around a long time doesn't mean the cost of parts goes to 0. Nintendo actually has less room to price cut proportionally to the other 2 systems. How much does a GC cost? 99 bucks? Only half of the original cost. The fact of the matter is the systems usually only cut price about 1/2 to 2/3 of the original cost over the whole life cycle of the product. Think about it. It doesn't make sense as a business to lower your price when you can continue to sell good levels. Which both Nintendo and 360 are right now. In all the console wars there have been price cuts, but they usually respond to timing and not for price wars. The only exceptions are when there is no choice. i.e. May 2002 Xbox price cuts to 200 bucks cause of PS2 price cut. They simply did not have a choice because they were already dominated and at 300 bucks to 200 it would have been even worse. You think Nintendo is going to cut to 1/2 in the first 6 months of life when 360 price drops? 360 will drop by the usual. 100 dollars, that's par for the course. PS3 will drop 100, and I bet Wii probably drops 50. Then the next price cut will occur with normal business cycle.
I agree with you. My main point was that it'll be quite some time before the PS3 sees a price cut, and with the way the other two systems are doing, they can comfortably hold on to a price cut until it's needed to counter Sony's.



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Serves me right for challenging his sales predictions!

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or if ninty wants t kill off the ps3 quickly drop it within a year out. if ninty does this and bundles a second game the ps3 will die quickly cause of price.



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Stromprophet said: stof said: 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. There's no evidence for that. Again, where were you guys all these years ago? May 2002. PS2 Price cuts, could have price cut more if they wanted to. Xbox has to price cut and this was 6 months after launch.
Let me see if I understand you. Your argument is that a PS3 price cut won't trigger a 360 price cut, and as evidence for this you offer that a PS2 price cut did trigger an Xbox price cut? Um, okay. The simple reality of the thing is that console buyers have proven to be very, very price-sensitive. Sony is obviously seeing this firsthand with the dismal sales of its $499/$599 PS3, but so is Microsoft, with the merely okay sales of the 360 at $299/$399. Microsoft knows, obviously, that if they want to be a big mass-market console like the PS2, they need to be cheaper. And the 360 is in a position now where they can sensibly be cheaper -- around the holidays, estimates were that they were making $75 per unit (looking just at component costs of the box itself and ignoring everything else); the upcoming 65nm die shrink will put them in an even better place, cost-wise. They're going to reduce the price of the box before the holidays, and the only question is when and by how much. (My guesses are May and $100, based on the discounts that were being given out before the holidays, plus a bigger hard drive.) Meanwhile, Sony will not be able to ignore this. The 360 and the PS3 are basically identical consoles in terms of hardware performance, Blu-Ray isn't a feature that sells beyond a small enthusiast market right now (the HD-DVD drive for the 360 sold 100K units, which strikes me as very plausible as a rough sizing of the market that is interested in buying game consoles for HD movie playback at the moment), and the 360's game portfolio is undeniably superior to the PS3's (a situation that's guaranteed to be true at any point in 2007). So Sony has to drop the price... but how can they? According to those same analysts, they were losing $240 per unit (again, just looking at component costs) during the holidays. Now, they're going to shrink those costs over time. Microsoft was able to cut the 360's cost by 38% by a year after launch, so assume Sony can do the same. This puts the PS3's cost in November at around $500 (for the expensive one, but the cheap one is only $30 less right now, and that'll narrow over time). Which means that if they cut the price by $100, they'll be still losing money on the cheap unit and almost breaking even (considering only component cost of the console) on the expensive one. Two things about this: 1. It's bad for Sony. Microsoft lost billions of dollars on the Xbox, which wasn't something that pleased higher management or the stockholders. The Xbox project was approved on much rosier assumptions, and if Gates and Ballmer had realized how it would really go, they probably wouldn't have gone ahead with it. (The 360, coming off the fiscal fiasco of the first Xbox, was designed with costs and profitability much more in mind.) Even so, Microsoft has reliable cash cows in Office and Windows, so can afford to toss around a few billion in losses here and there if it means entry into a strategic market. Sony's not in that position, and they really want to make money off the PS3. They're not going to pull a Microsoft and stay in the red if they can help it at all. 2. It doesn't really help the PS3. If both the 360 and the PS3 drop $100, now you've got two next-gen consoles: The 360 for $199/$299, and the PS3 for $399/$499. The cost of entry for Sony's console is twice as high as for Microsoft's, and the price difference between similar tiers has gone up as a percentage of the price. (That is, $599 is 50% more than $399, but $499 is 66% more than $299.) People who are price-conscious are even more likely to buy the 360 over the PS3 after they each have $100 drops. If the PS3 really wants to be competitive with the 360, it needs to cost the same. (Even then, I think the 360 is the better buy, but "the PlayStation brand," as Sony likes to remind us, still has some cachet, and I suspect it'd be a real fight.) But there's no way Sony can afford to drop its price by $300, which means that it can't compete with the 360 on an even price footing, which means Sony desperately needs to convince everyone that the PS3 is not only as good as the 360, but that it's hundreds of dollars better, price drop or no price drop.