The elephant in the room: PS3 price cut timing strategy (three scenarios)

[WiiStation360]

"Winning" second place is pointless if they lose money doing it. Sony need to balance increasing sales with making money.

There are two factors that will contribute heavily to Sony sales in 09. Price cuts and exclusive games.

The price cuts will be dictated by the economy (exchange rate), and the ability to reduce PS3 production costs. The days of Sony taking a huge loss per console are officially over.

I do not see a $100 price cut in the spring (option #1) as being possible, unless the economy has a dramatic turn-around, and they can reduce hardware production costs a lot in the next few months.

A smaller price drop (Option #2) is most likely. It also gives them flexibility to work on reducing costs more by the fall and waiting out the economy, without losing too much market share.

Waiting 10 months (Option #3) for any price drop will be hard on Sony. Both the Wii and 360 are hitting their peak sales, and Sony will be left too far behind. Even with great games coming out, $400 is still too much for most people.

The PS3 can sell well at a higher price than the Wii or 360. The first half of 08 proved that. It cannot continue to sell well at $400. Sony know this.

Games are just as important as price cuts. Games like KZ2, GT5, FFXIII (Japan), GoW3 will help move consoles. Sony needs to make sure that these games come out in 09.