If SONY don't drop price in EU....its lost for them!

[Dodece]

I think there are a few things I would like to address that I have read in this thread. Perhaps for the millionth time Sony does not have discretion as to when a generation ends. A generation ends when the first of the next generation consoles arrives to market. That has always been the definition. I know the loyalists try to stretch the generation to satisfy their needs, but it is in fact a concession that a particular console cannot win. The ten year plan is irrelevant to generational ownership. So if you are saying the PS3 is going to finally defeat 360 a year after Microsoft has moved into the next generation it is entirely irrelevant. Nature is full of scavengers that linger to pick over a stripped carcass that does not mean they felled the beast.

The call for a price drop owes greatly to loyalist fears of defeat. When someone talks about the fact that Sony needs to drop the price to compete. They really are for Sony in their sentiment. They usually already own the machine so they have no technical need for the price to be reduced further. That said the odds for this happening have diminished below five percent. They would also be entirely reliant on extreme anxiety out of Sony. Once you find that level of anxiety out of Sony you also have a likely outcome of abandonment.

The economic forecast for Sony is very bleak, and the company is projecting break even, but in all likelihood the company is going to show a loss. Their primary goal is to retain profitability for the company. That means that all the belts will tighten, and Sony is well aware that they cannot find substantial backing for new debt, and they still have to address the debt they incurred to bring the PS3 to market.

That is the economic shadow that goes widely unnoticed. Sony beyond losing billions on the hardware already, and diminished returns due to title exclusivity. They have also borrowed hundreds of millions of dollars to bankroll the development and release of the console. With the obvious interest they must also pay off.

Sony has worked itself into a financial dead end with gaming. Right now they may be able to limp along at mild profitability or at a mild loss in their gaming division. However if the heads of the division ask for the keys to the treasury its likely to lead to a door slammed in their face, or worse Sony may decide to cannibalize the division in whole or part to cover losses elsewhere in the company.

Given the current position of Sony I do not think price is a war they can win. I do not think they can even contend in the war of landscape. Both Nintendo and Microsoft have massive war chests, and given the situation I think they are likely to increase the pressure on Sony, and not lessen the pressure one iota. Both are looking at penetration while Sony can only hope for sustainability, and will probably have to look at just surviving this generation.

The only real possibility I see for Sony decreasing the price of their hardware is for Sony to adopt Microsoft's economic strategy. They will need to start charging for their online service. Not only would this remove an incurred loss on the hardware. They could also bank profits towards reducing the price of the hardware. Honestly given the situation unless Sony does something along these radical lines they will not be reducing the price of hardware this year. Nor will they be reducing prices early next year. In fact the best loyalists could hope for is a price reduction next holiday season over a year away.