WW up

[Alby_da_Wolf]

Immortal said:

Alby_da_Wolf said:

I remember even before (but maybe I mix-up USA, EU or WW), but that was in USA, while in the EU the 299€ PS3 broke even several months before and WW, obviously, somewhere in between, but overall, WW, it broke even around March 2010, so dropping price in Autumn 2011 would be at least 18 months after it broke even WW at $299/299€, dropping to $199 (and 199€ in EU) could make PS3 sell at a slight loss in USA, but break even or make a small profit in EU and profit where it's even more overpriced than in EU, compared to USA. The margin is there, but the decision will be taken considering a lot of other factors, that will be combined and weighted to decide whether the benefit compared to just dropping to $249 could be worth the lower profit margin until in the best case PS3 should have dropped to $199 anyway. Currently Sony looks like it prefers, after the huge initial losses, good profits and more than decent sales to stellar sales and low profit, so, unless their plans are less linear and obvious for the future, this year a drop to $249 looks more likely to me too, but the one to $199 is not to be ruled out, it wouldn't be a bloodbath by any means. BTW, when PS4 launches, PS3 should be dropped to $150 or less, so when PS4 launches plays a role too, price drops too close to each other should be avoided, if possible (this applies to XB360 too depending on XB720 launch date, while Wii is just one drop away from Wii max reasonable price when Wii2 lauches, so it should be fine whatever Ninty chooses, despite having very little room for price drops and strict timing to observe if it wants to launch Wii2 later than Autumn 2012, Ninty has no problems to make Wii reach the right price without hurrying drops up, instead it must be very accurate choosing when to drop if it wants to extend Wii's life as main console as far as possible).

I didn't know that the PS3 was profiting more in Europe early on, but anyway, your main conclusion is more or less the same as mine. They could probably almost break even with it, but it's highly unlikely that they'll try $199 so early.

Other than that, you just did some random analysis, :P, but thanks, I guess. Always nice to be enlightened.

This comes from exchange rate and taxes: 299€ EU price is VAT included, but VAT rarely exceeds 20%, while the €/$ rate has always been greater than 1.2 since PS3 launched, and most often greater than 1.4, so the margin in EU was higher (or the losses lower) than pricing it $299 excluding sales tax in USA. Outside of EU, Japan and USA, price often skyrocketed, giving an even higher profit margin, although on far smaller sales volumes. Anyway, being EU the main market for PS3, strong Euro helped it a lot to reach profitability earlier here and, after a while, but still before than in USA, WW.

About the random analysis, yes, it's mainly "what I find reasonable if a given condition is satisfied and when", except the estimate about being able to do a substantial drop 18 or more months after breaking even, based on Moore's law and the usual components price reduction rate.