Could a price cut actually hurt the PS3?

[FishyJoe]

Poseidon said:

rocketpig said:

My point is that it would be a monumental mistake for a company that is losing money on a product (Sony) to attempt to get into a price war with two companies who not only offer a cheaper product, but also make money at their current price points (MS and Nintendo).

If MS and Nintendo want to play hardball in a price war, they have a lot more leeway to do so than does Sony.

But this isn't a company that has to rely solely on their gaming division, which is also true for Microsoft but the same really can't be said about Nintendo. Like I said, Microsoft continuously lost money on the Xbox, and even now, though they are getting a profit for each console sold, it isn't even remotely close to wipe their slate clean.

So Sony will lose more money if they lower the price for the PS3, boo-hoo. If it will work, it will work, and if not, who cares, that's a multi-billion dollar company, I think they will manage.

Sony may be a big company, but it only has a $5-6 billion cash reserve. Nintendo, a much smaller company has a cash reserve around $7 billion. Microsoft has a $38 billion cash reserve. 

Just because a company is big and has a lot of divisions does not necessarily mean it's in a better position to take losses. If a company runs out of cash, it goes downhill fast.