Pachter: Sony will cut PS3 price 1st of April

[NJ5]

WiiStation360 said:

NJ5 said:

http://www.thestreet.com/_yahoo/newsanalysis/hardware/10455329.html?cm_ven=YAHOO&cm_cat=FREE&cm_ite=NA

"My guess is that they will cut April 1, which is the day after the end of the fiscal year," Pachter said. "To cut $50 after Christmas doesn't do that much for you. Potentially, Sony could sell 3 million more units at a $50 incremental loss each. That's a $150 million loss, which is hard to reconcile with the job cuts the company has announced."

 

If each new PS3 owner buys an extra controller and 2-3 games, Sony breaks even.  Software sales are where the money is at.  They need to sell more hardware to increase software sales.

 

Actually, Pachter's statement is misleading. He's only talking about people who get a PS3 due of the price cut. What about all the other sales? If the PS3 sells 13 million units in 2009, a $50 price cut means a $650 million loss.

At $10-$20 in royalties per game (depending on if it's 1st party or not), they need to sell 30 - 60 million more games to recoup the loss of the price cut alone.

Conclusion: Cutting the price is good to gain market share and spur sales, but not to make money.