SCE / Networked devices are coming into an interesting time over the next 12 months. They have a few interesting challenges which they will face in no particular order:

• Launching the PSP2.
• Continuing to ramp up Move sales and games.
• Increasing the outright profitability of software and total sales of software.
• Continuing to improve SCE profit as the PSP and PS2 wind down.
• Continuing to increase expenditure in R and D and advertising.
• Investing relatively heavily in PSN to improve the network for sales and to expand that network to other devices.

It is no understatement that the next 12 months will be an interesting challenge as they may need to increase profitability whilst increasing expenditure on many different things. They already need hundreds of millions of dollars just to launch the PSP2 with enough advertising exposure to get it on its feet by the next holiday season and that is without considering game and PS3 advertisement and general marketing as well.

What kind of price cut would they give the PS3 under those circumstances? Are they willing to cut the base price to $199 or $249 in order to spur sales if that takes away from the margins they need to successfully launch other products? Are they willing to even take losses in their 5th year on the market? My guess is that they will cut the price to $249 and introduce Move bundles at $299 based off their base SKU and not the lower selling and more expensive SKU with a bundled game and a larger HDD and reorientate their marketing towards PS3 and Move console bundles because an effective $100 price cut is a very marketable Move (pun intended).

So how do you think the next 12 months is going to go? Slow and steady? Ramp towards Christmas? Also do you agree with my assessment that Move and PS3 @ $299 is going to be their focus for the home console space? Are they willing to lose money next year or will they focus on increasing margins to free up cash to do some much needed marketing?

It really depends on what kind of device PSP2 is. If they are going to sell it with good profit margin I don't see reason why they couldn't cut the price of PS3. If they use the same model as in the past though. That's different thing. I still predict that they will introduce so called super slim PS3 with price of $199 and move budle with price of $249. PSP2 will be $249-299 and it will make profit from day one. This with already very good looking game line up for PS3 next year and good ad campaign and we could see some spectacular sales next year.

Even if they have good margin on the PS3 you still have to account for the NRE (non recoverable expenditure) from developing  and releasing the PSP2. At the launch of a new product the NRE makes up a significant proportion of the cost of each unit. Beyond this what do you figure the outright advertising, marking and co marketing expenditure for a new launched handheld is? Microsoft allocated $500M, how much will Sony have to spend between the PS3, Move, games and the PSP2 and it's games?

What about the huge line-up of exclusives?

you are going off topic

It's lucky that Sony Erricson is doing the Playstation Phone cause SCE seems busy enough! :)

It seems each of the big 3 have a big holiday (usualy price cut or something along the lines of Kinect) and then the following holiday they just ride it out, by adding bundles or more value to the system.

PS3 being just under YoY might mean they're not so inclined to price cut next holiday, they'll be down YoY yes, but as much as they should have been this holiday.

They don't need a $100 cut, $50 would spur enough sales on.

But yeah, I wonder if the PS division or w/e it's called, is actually going to slip into the red since the PS1 released, it's dangerously close no?

I'd predict price drop to 250$ in Septemeber two years after slim release.

As for PSP2 i don't belive in 2011 release - more likely Q1 2012.

That's why Sony Marketing is so bad actually, they don't have the funds to properly advertise each of there products individually, so they will do what they always do. Which is throw in ads and tv commercials of collages with everything bundled into one, showing pics of a PS3 with a PSP(2) resting on it with the move controller laying at it's foot.

Then we'll get a 30 second commercial with 1 second glimpses of every game/genre and platform they have with a fast paced song playing, and probably a smile from KB at the end.   There's your Sony marketing year all done and ready again for 2012 after that. Now that's cost cutting at it's finest...

I dont think PS3 will see a price drop until 2012 (maybe holiday season 2011 if sales slump)

PSP2 announced and displayed at E3 2011, launches between Fall 2011 and Summer 2012. Hopefully it's profitable from day 1 and cost less than 300USD.