Sony must drop PS3 pricing for Christmas

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czecherychestnut said:
Personally, I really don't think Sony sees being number 1 on the market right now as their priority. Would they like to be? Of course they would, but one thing Howard Stringer has done for the company is given them the right priorities, having the highest market share is great and can give the highest profit and market influence, but there is no point sacrificing profitability to get the highest marketshare. A company with shareholders *has* to have profit as a priority. Do fanboys like ourselves like it? Of course not, most of us see the console 'war' like a footy match, we want our 'side' to win, and in return our 'side' gets the most games.

Howard Stringer said last year that the losses incurred last year from the PS3 were necessary because to have a viable platform you need a customer base of at least 10 milllion. Don't know why 10 million, but I'm sure lots of Sony accountants had a big meeting with lots of biscuits and cake slice and worked out 10 million was the minimum required, probably for sony's 1st party developers to have a large enough base to be profitable with. Now Sony has that, its trying to get a decent return off a poorly planned investment many years ago (talking PS3 only here, PS1 and 2 were very good investments). Do Sony realise they might end up third this generation as a result? Probably, but as Nintendo has shown with Gamecube, being third is no insurmountable obstacle to being profitable, and Stringer has said in the past that Nintendo's business model has turned out better than Sony's previous ones.

And remember that you only have a finite number of price cuts, the cost time/cost sales curve gets very flat at the end, so provided Sony can sell enough games and consoles to keep seller shelf space, and keep 1st, 2nd and 3rd party developers profitable, then there is no rush for them to ride down that cost curve. Yes, having the most console sales usually means the most software sales and hence the most profit, but they are in the situation that they can very easily negate software profitability due to losses earned from console sales. I think Sony has realised that they just need to stay close enough to Xbox 360 sales to ensure third party HD developers keep producing games for PS3, regardless of which is the lead platform (potential customer backlash will ensure any ports are sufficiently similar in quality and experience, even with a 2:1 sales difference, that 33% is a lot of potential sales to negate by producing a piss poor quality port).

I think in the long run, I think Sony's current strategy (the one they have hinted at since the PS3's release) will give them the most return. Most likely not the highest sales, or the most profit of all the console manufacturers, but the most return. When you have rotten apples you change your plan and make cider, you don't just try and sell them at a discount. Wait until your next crop with fresh apples before you have another crack at the fruit market.

 

 Nice read Bro.