I agree with Starless. Sony will need to drop the price of the PS3 in time for GTA IV. It was the main system mover for the PS2 and if they don't drop the cost they will see most of their sales go to the 360.

Look who's talking...

Sony can't wait till 2008. That's after GTA IV and the Christmas period. Too many people would have already decided to go for a 360, and with console prices as high as they are now, the number of people willing to own both a PS3 and a 360 will be small. Also, waiting that long to lower the price means Final Fantasy XIII and MGS 4 will be selling to a much smaller group of PS3 owners. Square Enix and Konami definitely won't be happy with this and they would most probably port their games over to the 360. Lowering the price before GTA IV will secure at least some of the GTA market who are just deciding to switch to next-gen, and the PS3's other 2007 titles (Uncharted, Lair, Ratchet, Hevenly Sword) will keep PS3 sales strong. This should build a big enough PS3 userbase to convince Square Enix and Konami to keep their games PS3 exclusive.

Hey, I've not resorted to name calling once in this thread so I don't think its fair to hold me to an act I have perpitrated here yet.

Back on Topic though.

Look at it this way. Sony is in the hole deep. Now tell me, are you going to lower the sales cost and lose even more money on each PS3 sold further compounding your losses over the holiday season or are you going to keep it 600 and gradually lower production costs allowing for a better return and let the Holiday season sell a boat load of the more expensive units before considering a price cut? Besides I don't think a Single Sony fan should want a PS3 price cut, if they have so much faith in the games, they should relish the fact that Sony will be making their money back sooner by keeping the price where it is.

Also, think of the psychological fallout, a price cut sounds good to you who already owns a Ps3 and wants more people to own one, but at this point it wouldn't sound too good to a perspective buyer. Crazy you say? Hear me out. Imagine a console dropping in price, $100 or $200 dollars in its first year, not even the Dreamcast went down the shitter that fast. You drop the price on the PS3 now and yeah, you'll have a considerable sales spike, but no where near what it could have been because you've just scared off the majority of potential buyers by taking the action of a company trying to liquidate stock before abandoning a product. Who wants to buy a console that's about to die? And even though the PS3 isn't dying, try telling that to the casual consumers whom don't keep up on Sony news and whom you've just made shit themselves.

Gballzack is right the sooner and bigger the drop the worse things look for you, news will report that Sony is in trouble. They'll talk about how much they are losing on the console and it will look bad.

Secondly Sony cannot afford a $200 drop. For crying out loud they are losing money on the system already. You know how many games they'd have to sell to those people just to make their money back? Their attach rate in japan already sucks. Sony is losing more money then it's making and a price drop will only speed that up. stock holders will be really pissed if they drop the price.

Sony reported a 68% profit reduction for the 2006 fiscal year.

 "Sony announced operating profit of 71.75 billion yen ($596.8 million) for the year ended March 31, down from 226.42 billion yen ($1.88 billion) a year earlier."

 Now that reduction was also due to developing and launching the console, so without those, selling at a larger loss would be unlikely to reduce profits further. So Sony would not be at a loss, for the whole company, to reduce the price. Sony would still make money, just about $500 million instead of about $2 billion.

 In other words, they can afford it; it just wouldn't be a good idea.

 So their best bet is to get the manufacturing costs down ASAP. Yet that would have to be a redesign of the parts (which is done on consoles all the time, even if it looks the same externally), since it isn't selling fast enough for volume to reduce the price.

Ummm... Your Mother?

sorry, couldn't resist.    

Sony's got a gigantic head this generation, and it's going to take quite some time to actually get them thinking. Yes, they're working on releasing better PS3's, but the "better" system they release is more expensive.

Okay...

Actually, we won't see a significant price cut anytime soon. I'll expect there to be one by the holiday season, but only about $50 at most.

Gballzack, I think you greatly overestimate how "legally binding" a statement like that is from a corporate executive. A company doesn't have to make one profit forecast at the beginning of the year and blindly stick to it against all odds; they revise it as many times as necessary over the course of the year to meet with changes in the market. Example: http://www.theregister.co.uk/2005/01/20/sony_fy2005_warning/

I also have no idea why you would think the one statement that supports your opinion is the only legally binding one, while all the contradictory ones are empty chatter. As someone else mentioned, of course they'll deny a planned price drop - it would be suicide to say "Yeah, we'll probably drop it around July 21. You probably shouldn't buy till then!" Now there's a statement they'll be answering to shareholders over.

Sony has already committed to taking a loss in the short-term by choosing to lose money on the console from launch. Lowering the price would only mean a deeper commitment to that goal for the sake of long-term success - and while there is no doubt a limit to how much they're willing to lose, it's absurd to suppose that you or I somehow know what that limit is. Keep in mind that costs on the PS3 have already been significantly reduced since launch - lowering the price this year would likely bring them back to around the level of per-unit loss they were at earlier. They won't be happy to do it, but they'll swallow it if they think it means long-term profitability.

To compare the PS3's situation to the PS2's is ridiculous for what I think should be obvious reasons. The PS2 held out on a price drop for a year and a half because it was wildly successful - because it had the luxury to do so. PS3, on the other hand, is likely facing its demise (or at least a lifetime of Gamecube-esque success) if it can't turn itself around this year. If Sony's decision-makers see it the same way, then the decision they're faced with isn't "lower input costs or cut retail price," it's "lower retail price or cut our losses and run." Scrapping the PS3 altogether would mean abandoning the massive costs they've already put in with no hope of recovery. Sony is not Sega. Can you honestly see them doing this?

As for the PS3 having already lost its momentum, it's my opinion that Sony can easily recover that momentum. A well-timed price drop before the holidays coinciding with the release of some of their major titles wouldn't look desperate at all, and might well generate enough positive buzz to completely turn the PS3's fortunes around.

Finally, if you're looking for a precedent, here's another interesting point about the last generation: part of the reason the PS2 cut its price when it did was because the Xbox was fresh out of the gate. When Sony dropped its price it forced Microsoft, who was in a much worse position, to follow suit within a few days. Today, the situations of Sony and Microsoft are almost exactly reversed. Microsoft is in an excellent position to cut its price this fall, and while Sony is not, they'll have little choice but to follow. They can ride this bomb down to the ground like a cowboy, or they can stand up and do something, and perhaps reverse the fate of what still has the potential to be a phenomenal console.

Think what you like on that matter, there's no sense in furthering a matter of speculation.

Look at it this way. Sony is in the hole deep. Now tell me, are you going to lower the sales cost and lose even more money on each PS3 sold further compounding your losses over the holiday season or are you going to keep it 600 and gradually lower production costs allowing for a better return and let the Holiday season sell a boat load of the more expensive units before considering a price cut? Besides I don't think a Single Sony fan should want a PS3 price cut, if they have so much faith in the games, they should relish the fact that Sony will be making their money back sooner by keeping the price where it is.

Also, think of the psychological fallout, a price cut sounds good to you who already owns a Ps3 and wants more people to own one, but at this point it wouldn't sound too good to a perspective buyer. Crazy you say? Hear me out. Imagine a console dropping in price, $100 or $200 dollars in its first year, not even the Dreamcast went down the shitter that fast. You drop the price on the PS3 now and yeah, you'll have a considerable sales spike, but no where near what it could have been because you've just scared off the majority of potential buyers by taking the action of a company trying to liquidate stock before abandoning a product. Who wants to buy a console that's about to die? And even though the PS3 isn't dying, try telling that to the casual consumers whom don't keep up on Sony news and whom you've just made shit themselves.