Intrinsic said:
I expect a PS4 price drop within the next 18 months, But spring seems too soon. You're basically saying a price drop will happen by or around E3 this year. If Sony is still outselling the XB1 and still selling around its monthly average of last year, I don't see why they would drop the price so early. Though I can understand that they would if its monthly average falls too far behind what it was averaging last year. |
I can think of one reason: rate of production. It's all matters of economics, it's more profitable for them to let's say sell 25M for $300 than 15M for $400.
For example, let's say everyone who buys a console, buys an extra controller, games and/or or PS+ Subs or anything that gives Sony an extra $100 of revenue per console:
25M * $300 = $7.500M
+ 25M * $100 = $2.500M
- 25M * $100 = $2.500M (The loss agaisnt selling the console at $400)
TOTAL = $7.500M
15M * $400 = $6.000M
+ 15M * $100 = $1.500M
TOTAL = $7.500M
Now Sony probably won't sell 25M, but they also pretty much are guaranteed to make more than $100 (besides the console) per customer on average. In fact they probably get those $100 per console the moment they buy the console or 3 months after tops, and of course selling to more customers faster they'll make much more money long term.
You could ask then why didn't it sooner then (like the past holidays) or why they were particularly unaggressive in the US, well it's very simple, because they just didn't have many more consoles to sell, if they were more aggressive, they would have sold out but not making much of a difference in their total numbers to matter from a financial perspective. Since they couldn't produce the amount of consoles they needed for a price cut to make sense, they focused on milking the most profit they could from every console, hence they didn't care about selling as much in the US, but were more aggressive in the UK and EU because they get more profit per console there.
But there will be a time when a price cut would make sense, it doesn't matter if they keep selling at an amazing rate, after all that pace could always get better and in the end make them more money.
