Sony cant cut the price

[Millennium]

colonelstubbs said:
Well, if sales slide, they are going to have to cut prices arent they

Whether or not they have to and whether or not they can are two entirely different things. They're related, of course; one of the things a console maker simply has to do in this industry is that at each price point, they have to keep the console doing well enough that when the time comes for them to cut the price again, they can afford to do so. As long as this continues, the console can still survive in the marketplace.

What we're seeing now is a case when a console fails to do that. The price of the PS3 must come down in order for the console to stay viable: this point isn't even controversial anymore. But Sony in general isn't doing well, and they're still making no profit from the PS3 at its current price point. A price cut could turn the PS3's fortunes around, but that will take time, and until that happens Sony would be taking even bigger losses than they are now.

In effect, it's a race against time: can Sony survive in the face of those losses for long enough that the PS3 can establish itself? Sony runs this race at the start of every generation, as does Microsoft, and every time they've cut the price on any of their systems, the race starts anew. Most of the time Sony has won that race by establishing profitability by the time of the price cuts, while Microsoft wins it by controlling the price cuts in a way that their infinite stores of money can absorb the loss. But things are different this time. Sony has frankly lost several times, making price cuts they can't afford in a desperate attempt to prop up a console that is failing to thrive.

If Sony were to cut the console's price to a point where people would be willing to pay for it, could they survive the losses for long enough? That's the question. I, and many, don't think they could, and Sony seems to agree; they refuse to cut the price because it would be suicide. Yet at this point, even many of the PS3's staunchest fans agree that the price must come down for the console to thrive, yet this could kill its maker and this would prevent the console from thriving.