If Sony doesnt cut the cost of the PS3 before Christmas

[Nidan]

Kyros said:

owever I still don't see you giving any arguments as to why they will cut the price and therefore lose even more then they already do.

They will not fall behind the 360 in sales again. Being the junior partner in the big PS360 multiplatform game market was bad. They got crappy ports if they got them at all. So if the 360 sells more Sony will react. I am pretty sure about that.

Besides I think the effect of 100$ price cut on their profit is overrated. 10 million consoles ~ 1 billion dollar. That's less than MS lost on their quality problems. On the other hand with every console they sell more they will make money for games, downloads, peripherals, BluRay discs etc.

Much of their loss is fixed anyway: Development costs, advertisement campaign, game development costs etc.

So the question is when will the price-cut cost bring a return on investment to them. And somehow I am sure that Sony won't sit by while discounted 360s sell like hotcakes in the hugely important christmas season. They didn't do this last christmas and they won't do it this christmas either.

And finally the Ps3 will be 2 year old technology by then. If you look at PC prices you can be sure that it will once again have a substantial production cost drop till christmas.

But again this is like predicting the weather. We simply will not know till it happened.

That $1 Billion dollars a year! As they would then be in a cycle of reducing their price to follow MS.

So here’s what could happen.

 1. Sony makes more profit in the last few years of the generation, but in the next gen, Sony will launch at the same time as MS, Effectively shortening the life span of the PS3. (huge loss here for the PS3. All Sony is doing is delaying the inevitable)

2. When the Ps4 launches, the price of the PS3 will still be quite high (higher than that of the PS2 at the same time in the life cycle) so the switch to the next console will be at a lower price differential and we will see a higher number of people jump to the next gen sooner.

3. They continue to lose $100 per console until the focus is on PS4 (estimated 2012 i.e 4 years of $1Billion + losses)

These 3 scenarios would see Sony losing every dollar the Play station business has ever made, the only saving grace the PS3 has is blu-ray.

 

Most of their loss is in the cost of goods. The other costs are small in contrast to this.