If the PS3 drops to $300 Microsoft should:

[Squilliam]

Rpruett said:

Squilliam said:

Rpruett said:

 

While I'm not saying the PS3 will defeat the 360 because quite frankly,  I only believe that possibly could happen,  towards the end of the generation and very slowly. (Since the PS3 is selling at a higher clip in relative time frames at a higher price, with a worse library (Atleast initially),etc   pretty basic economics). The question is though, can Sony drop the price quick enough to be able to grab what's left of the marketshare?

 

And saying that $ 100 dollar price drop won't do much this year is absolutely ludicrous.  From the start of this generation, one thing has been pretty proven.  The PS3 as long as it holds that 200$ higher price point over the 360 will be viewed as 'too expensive to warrant a purchase over the 360' to a majority of consumers.  However,  when it dips down into less than 200 dollar territory (Like $150 territory) it sells better than the 360 as a whole.

This all has to do with the mindset that Sony has put on consumers. The PS3's value by the average consumer is assumed to be definitely 'higher' than the 360.  The problem is, this value ends at that 200$ price difference.  People as a whole DON'T see the PS3 as $200 better value than the 360.

The ONE thing Sony has in it's favor is that they have tons of ceiling space and breathing room for their product.  Microsoft can't go much lower than 100$ IMHO and I believe it will be quite sometime until we see them go down that low. 

 

I would wager $100 price deduction would have the PS3 at very WORST selling about on par +/- 1000 per week.   Mind you even a 100$ price deduction on the PS3 would still give Sony room to drop the PS3 to the 'sweet spot' of 200$ .

Microsoft will for the forseeable future retain a much higher revenue stream from the home console space than Sony. Microsoft gets more software revenue and they have a whole other side with regards to Live subscriptions which gives them every incentive to cut the price aggressively to increase the install base substantially.

As time progresses the advantage Sony has maintained over Microsoft erodes. The name "Playstation" becomes less valuable as the install base of consoles not called "Playstation" increases. Its a network effect which is working against Sony's favour as time passes.

 

This has very little to do with anything other than the ability to make price cuts and match price cuts.  Which I agree tilts the scales to some extent into Microsofts favor. 

Still though,  Sony still has a higher perceived value which works in their favor.  I don't really forsee the perceived value changing. (Atleast not until the next generation).   Sony has the upper hand with overall price.  Sony still has the ability to hit the 100$ 200$ 300$ price points.  (Which are all very attractive for sales).  Microsoft has painted themselves to essentially $100/$150.     As long as Sony maintains a higher perceived value and they stay under what appears to be that $200 limit,  I think they will do fine. 

 

Like I said though,  their biggest problem remains how quickly can they get down to a reasonable price ( I would say 300 and below is reasonable) before they lose more of their marketshare than they want to (To the 360). 

 

 

Time certainly will tell.  I don't think a 300$ PS3 is the end all be all for Microsoft or Sony.   I do think it will tremendously lower the sales gap weekly with the possibility of slanting them in the PS3s favor.  Sony has to just keep up their perceived value in the consumers eyes with quality game titles and constant improvements to their network and other things.  If they do this,  their price dis-advantage currently will over time become their price advantage.

 

The percieved value aspect is something which changes with time. It relates to the price of the competition, whether or not your friends have an Xbox/PS/Wii and whether or not people are familiar with a particular brand and what services a particular console offers which is of interest to people. Blu Ray may become more valuable or less valuable with time depending on the adoption rate of players. The people who already have a player now aren't likely to be swayed by this PS3 feature for example and people who are wary of upgrading are also less likely to be swayed by it as well. As an absolute, the cost of the players are coming down so the value it may bring to the PS3 may very well be diminishing.

There is a very real question of whether or not Sony will be cutting the price of the PS3 by a full $100 amount this year. They could easily cut the price by $50 and maintain their present/previous years rate of sales. Furthermore even if they cut the price by $100 per year for the next two years it will be well into 2010 before they can hit that $200 price point. Furthermore the further one looks into the future the less certain any projections become. I doubt anyone can say at this point with certainty the dynamic which will be present in two years time.