Can Xbox One come Close to PS4 this Holiday??

[binary solo]

deskpro2k3 said:

Alby_da_Wolf said:

roborad said:

deskpro2k3 said:
I think Sony can afford to drop the price at anytime without losing profits to keep the lead.

Sony can afford to do that and microsoft can't? 

If I'm not mistaken, sony is the one who's heavily depending on the ps4 profits to boost the company.  Microsoft, on the other hand, does not depend on the xbox brand at all for their profits, so Microsoft is the one that's more likely to do a heavy price cut to move the consoles they need to.  

MS situation is good and linear about this, Sony's one is more complicated: as you correctly wrote, their company's heavily depending on its few profiting divisions, so Sony could decide a cut, not to react to MS, but if their predicted increase in HW sales, and so in SW ones, would be large enough to at least make up for and possibly exceed decreased profits on HW only.

Dude you've got it, but I was hoping robo would get it on his own...

Yeah, volume vs profit margin is a tricky beast. But if you have postive consumer perception and you are profiting off every unit sold cutting the price by a modest amount should always end up improving net profit. But only if the price cut isn't wiping out to much of your margin. If Sony is clearing $20 per PS4 sold then a measly $10 price cut requires them to sell double the number of consoles to make the same profits, but a $10 cut won't achieve that level of increase in hardware and and any increase they do get won't also compensate with a substantial increase in software. If they clear $50 per console then a $25 cut demands the same increase, but won't have that effect, though it would significantly improves software sales, albeit probably still not enough to maintaqin current profits. To actually be able to have a meaningful effect on sales but no loss in profits pretty much requires Sony to be profiting $100 per console so that they can afford to drop the price by about $25 and get a 20% or so lift in hardware sales and enough of a lift in software sales to hold profits. But I seriously doubt Sony is profiting $100 per PS4 this soon after launch.

Therefore, I think if Sony cuts the price by any amount that is meaningful to the consumer they will be sacrificing short term profits. Which may still be a justifiable move, but I think with Sony's already projected huge loss for the FY (albeit not an actual cashflow loss) selling a drop in PS4 profits to the board and major shareholders would be difficult.

Sony could be legitimately accused of being stupid if they make pricing decisions based on how they are competing with Xb one in the USA and UK. The USA in particular is a low margin market already (being the cheapest place in the world, I believe, to buy a PS4 or a Xb one) and it really doesn't matter if PS4 only beats Xb one by a little bit there or even if Xb one wins by a little bit, especially if it's only holiday 2014 and not LTD. Similarly with the UK, PS4 is doing plenty good in that market. And as for the rest of the world Xb one is as much of a threat to PS4 as Wii U. PS4 is in a position where Sony can make pricing decisions according to its own timetable and they can ignore all rational pricing moves by MS qnd Nintendo. If MS gets irrational and drops to $299 this year, Sony might need to think about a response. But I don't see MS doing that. Black friday Xb one $349 with $50 gift card I can see happening. But I can see PS4 $399 with $50 gift card happening on BF too, meaning the $50 gap is maintained.