| jkimball said: As pointed out your logic on the 50% price cut doesn't work when applied to hardware. And as further pointed out, they sell enough PS3 that HD developers will develop for it or at least port to it - they can't ignore 40% of the HD market.
however, the price cut on the PS2 was really, really stupid. Do the math from a revenue perspective:
if they sell 1million price cut PS2 they have 'lost' 30M in potential revenue. If they had price cut the PS3 by $30, and they sell a million of those they still lost 30M in potential revenue. Sony is willing to give up $30M in revenue per million units sold. Why not give up that 30M in revenue to try and grow your FUTURE user base, instead of the past? IT all goes into the same revenue bucket as Sony in the end anyway...
Dear Sony, we love you , but please start looking AHEAD instead of BEHIND.
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If Sony is making $60 on each PS2, and sell 50000 units, they make $3.0M.
If Sony cuts the PS2 price by $30, and now makes $30 on each PS2, but the number sold rises to 75000: They make $2.25M.
(0.75M loss, but they are clearing inventory as they ramp down production, saving money on the balance sheets for the current quarter, and perhaps hurting the competion some, as well as building marketshare)
If Sony is losing $50 on the PS3, but is selling 80000 units, they lose $4.0M
If they cut the price of the PS3 by $30 (to -$80 per unit old), and sell 120000 units, they lose $9.6M.
(5.6M loss, having to up production, and thus reported losses in the current financial quarter, although they do build marketshare)
I hope that makes it a bit clearer. Cutting the price on merchandise that is popular, but already losing money is a really really bad idea. Cutting the price on a device which is losing popularity, but making money, isn't necessarily a bad idea at all.
