Would a PS3 price cut do it?

[johnlucas]

I don't think a price cut helps so much at the height they are now. My take is that the XBox 360 sales are a RESULT of THEIR high price. They could sell MUCH more if they weren't at this USA $400/$300 level. Some people don't even like paying $200 for a game system preferring the price to come down to about $150 or so before buying. That's the whole purpose of a price drop: to get more people willing to buy the product. But that price drop has to be in the range that lowers the barrier to access. FACT: There are MORE poor & working class people in the world than any other. The nature of human greed throughout history designed this social pyramid so since the BASE of the Egyptian triangle thingy is made up of more of the budget-conscious poor & middle economic classes, you had better take heed of their concerns more than you would for any other. Will more people be willing to buy a PS3 for $500 rather than $600? Yes. Is this number of people significant? Probably not. $500 is STILL too high for a toy known as a game console. Just like $400 is too high. $300 should be absolute CAP on what a game console should cost. And personally I don't spend more than $200 for any game console Wii excluded since basic operating costs are included in package unlike the cases of Gamecube & Nintendo 64. I had never bought a console at launch before & usually only got my console after 1st price drop in the $150 range. Wii was so good I actually was ready to buy at launch. All other times it could wait. Microsoft can do whatever they wanna do because they're the Daddy Warbucks company. They got money to burn. That is the only reason they survived the actual failure of the XBox. Yes XBox 1 in reality failed. Only because Microsoft was willing waste money was it able to stay in the market. Which in turn allowed the 3rd parties to invest in supplying the console since they didn't have to worry about XBox falling off the map due to the money cushion. $4 Billion is lot of money. Say it like Chris Rock from his role in "I'm Gonna Git You Sucka": "Good Laaaawwd! That's a lotta money!" If any other company lost $4,000,000,000 playing the vidgame biz game they'd be out of business! So money worries don't easily apply to Microsoft. As long as they feel they can dump money into the project (I call 'em green 'roids with the faces of Presidents) and as long as the shareholders put up with it, Microsoft can spend Macrohard ALL night long. WHOO! (sorry a li'l Ric Flair got in there) Sony on the other hand while being a multi-faceted conglomerational corporation (yes I like to Don King my words) ain't got the bank, ain't got the pockets to be wasting like Billy's company can. Nor the flexibility due to the nature of their corporate setup. The videogame sector is one of their shining lights right now. All other sectors are facing trouble of some sort somewhere somehow. Sony won't go out of business if the PS3 fails but you can bet your bottom dollar that a restructuring will be a-comin' soon, a downsizing that in the worst case scenario will leave Sony jettisoning its videogame, excuse me, computer entertainment division altogether in order to stay solvent. Sony is already selling this thing at a loss from jump. It's bad when it takes say $800 to make a system and you sell it for $600 and sell say 2 million systems: $800 cost X 2,000,000 systems = $1,600,000,000 loss (one billion, six hundred million) $600 sale X 2,000,000 systems = $1,200,000,000 profit (one billion, two hundred million) $1.6 billion - $1.2 billion = $400,000,000 They would OWE Four Hundred Million Dollars! Their success actually HURTS them. That's the problem with a lossleading business strategy. It's supposed to be a temporary strategy to get your foot in the door, not a way of life. Because they don't make money on hardware they are dependent on software royalties to make up the gap. But if they don't move enough units, they have smaller bases to draw software sales FROM. Catch 22 Thousand. Dropping price more creates more loss to make up which creates more impassioned need to move more games. They would be more dependent on many multiple-million sellers to negotiate the differential. It's HAAAAARD to sell games. This is a tough business that is hard to make money from. Why do you think only one old school company exists in hardware now while the other competitors are multi-faceted monolithic megalomaniacal megalomart corporations? (sorry. couldn't find another 'M' word for the alliteration) And why do you think these megalos STILL use lossleading strategies JUST to make a LITTLE profit? Or to seek to make a little profit in the case of one of the mega-companies? There was ALWAYS a problem with the Playstation 2's success. They put so much money in to get so little in return. They profitted, yes, but in comparison to their amazing units sold figure it doesn't match up. Pyrrhic Victory. They won the battle but at what cost? Sony set their Playstation up to have to be dominant JUST to be able to make money. That's the adrenaline principle. I compare it to one of my favorite shows Dragonball Z. It takes a lot of energy to maintain that Super Saiyan level. It taxes the body. You'll give out if you don't come down off of that rush. Sure while in the zone you can do anything but eventually you'll have to come down to the mortal level and what will you be able to do then? Steroids. Green Steroids with the faces of old men on them. Microsoft has a bigger supply of the performance-enhancing substances than Sony and Sony will break their bank trying to follow behind them. Playstation 3 was dependent on continuing the dominance of the Playstation brand but now that's basically lost on both ends. They gotta deal with Wii in homebase Japan (360 is a non-factor there) and they gotta deal with Wii AND 360 everywhere else. 360 had the headstart & Wii's got the buzz. PS3's playing catchup & will be playing catchup all generation long assuming they can survive the generation. Everytime Microsoft drops that price it makes the disparity between the consoles that much greater seeing as they are basically mirror image systems. They both aim for the same audience and have similar approaches to business strategy and outreach. PS3 tries to match them that same old original differential still remains. ~Anything you can do I can do betterrrr. ~I can do anything better than you.~ ~No you can't.~ ~Yes I can.~ ~No you can't.~ ~Yes I can.~ ~No you can't.~ ~Yes I caaaaaan!~ Microsoft will be playing that "cross this line" game with Sony all through the 7th gen until we end up with a Wile E. kind of situation and Merrie Melodies-esque cliffdrop gag. And all the while it won't even matter until the price drop gets closer to the $250/$200/$175/$150 range in the first place. That will be the only thing that allows Sony to get userbase up enough to make up the difference using software sales. You and I BOTH know Sony ain't anywhere NEAR smelling that anytime soon. They don't need a price cut, they need a price butchering! They need to get rid of the apple slicer and get that big cleaver to cut on THAT price. A machete on that son of a gun. Time's a-movin' and the longer Sony delays in this the worse it'll be. But they really can't do that anyway. The more they drop the more that gap between cost to produce & profit from sale widens. Chipping away at production costs can alleviate it but I don't know how effective this can be at this stage in the game. And remember guys, price drop ain't ALWAYS a savior. Do you remember a certain little purple lunchbox not too long ago that was almost flea market price and still didn't give that shot in the arm saleswise? That cube didn't have the proper exponentials to get those sales to the third power (god my puns). History's a wonderful teacher & logic's a beautiful textbook. Gotta put things in context. John Lucas