If anybody is interested, Iwata is more or less paraphrasing one of the key precepts of Blue Ocean Strategy: set the right price from the beginning and stick to it. He's absolutely correct, too, about value assessment in regards to price. While those of us who already have a product look at a price drop as a welcoming invitation to new users, potential new users often see a price drop as an indicator that a product's value has dropped and that the price will continue to drop as a result.
I actually wrote a parable of price once explaining the phenomenon and posted it on this site. Basically, the more the price drops, the more reluctant the already reluctant become to invest in your product. Once the price has hit what you might call their "minimum value price point", then they'll get it regardless of future price drops. But until then, they will hold out as long as a price drop has occurred and is likely to occur again.
The converse effect, where the product does not receive a price drop, results in the opposite reaction by consumers. Instead of waiting for a lower price, their standards go UP and they approach a "maximum value price point" instead, where they decide that the product is sufficiently valuable enough to actually pay its asking price to get it. The Blue Ocean Strategy focuses heavily on getting people to adjust their price expectations in favor of your chosen price point, the key point in that drive being a price that's already "pretty close" to what the vast majority is willing to pay for it anyway.
Sky Render - Sanity is for the weak.
