I just have an extremely hard time believing Sony is going to cut the price of the PS3 100 USD PER YEAR. If that were to happen, that would mean Sony would be doing an awful job releasing software or adding any sort of value towards the PS3 I surely hope they don't end up cutting prices by 100 dollars a year just to keep up with the market. A system does not have to be 250 dollars or less to be successful.

I think they will stay with $499/$599 at least for 2008. Only increasing HD size and adding bundled games.

2007: 60GB $499 / 80GB $599
2008: 80GB $499 / 120GB $599

I'm pretty sure I read an article stating that $199 was the magic number in console pricing and this is the number that will push people into buying a certain system.

In all lines of technology, prices are now falling by at least $100 per year...it just so happens that the companies generally come out with better specced models for roughly the same price.

$499 is still a high price for a home console (Blu-Ray or not) and I cannot see Sony retaining a $499 price tag for much longer than the start of next year.

Yes, it may seem quite ridiculous, but IMHO Sony need to continually reduce the cost of the PS3 over the next 2-3 years.

Look at the pricing of the PS2 over it's lifetime so far.

October 2000
$299.99

May 2002
$199.99

May 2003
$179.99

May 2004
$149.99

April 2006
$129.99

The PS2 dropped 33% 18 months after release followed by an additional 10% 12 months later then followed by a further 20% drop 12 months later still.

If we applied the same theory to the PS3 it would look like this:

November 2006
$599.99

June 2008
$399.99

June 2009
$359.99

June 2010
$299.99

So comparing the consoles, my predictions weren't that far off.  The thing as well is this.  The PS3 has already seen a pricecut 8 months after release and because the cost retail cost of the PS3 is double that of the PS2, I reckon that hardware production costs could quite easily come down quicker and by more than what happened with the PS2.  Remember, the PS2 eventually only saw smaller reductions, because it was well below the $199 casual barrier.

Eh the PS3 with 65nm chips suppose to release in 2007 according to information on the net. If I'm not mistaken the console will use a lot less energy power then the one with the 90nm chip isn't? How much will that save? Why not the 45nm right away?

Ey?! Did the PS2 with the launch only cost 299USD in the US??!! You gotta be kidding me!! Here it was about 700USD!!! In that case in Europe they're a lot less screwed with the PS3 than back then with the PS2 :=/.

I wouldn't expect price cuts too often (more than $100 in a 12 month period) because it would have the look of desperation and would build the expectation of further price cuts. Basically, if the PS3 gets a second price cut within its first year there will be lots of discussions on how the PS3 has sold poorly and Sony is desperate to move units and at the same time people who are interested in the system will wait with the expectation that it will drop another $100 within 6 months.

Very true. That's the problem with launching such an expensive console, it's hard to do pricing decisions afterwards.

I honestly feel that the Sony is walking on a tight rope with the PS3. The ball is rolling now, the games are coming out and there's not much Sony can do but hope that the next wave of games will save its fate! Why it took so long to launch good games even after the console was delayed, I can't comprehend...

I agree... I reckon they will cut the price down to around $399 anytime from May to August next year.

The thing is as you say, I honestly feel that Sony now has the ball rolling with the PS3.  They won't sell in their droves, but they will sell reasonable numbers through to the end of the year...with IMHO around 7m units sold by the end of 2007.

Then again, they will get a good burst when MGS4 and Killzone 2 amongst others appear in the first half of 2008 quite possibly alongside the extra $100 pricecut (down to $399) for the summer.  I then feel it will stay at this price for easily 12 months and not reduce until the 2nd half of 2009, seeing a further $100 pricecut.

I honestly feel that Sony will be happy with 7m sales WW by the end of this year, although I reckon that they will be looking for closer to 20m by the end of 2008.  They most likely understand that people will only buy the system when there are good games out for the system.  Unfortuantely for them, the majority of the "good" games will not appear until 2008, so therefore I reckon they view 2008 as being a "big" year for them and as long as they don't crumble this year, they'll reckon they can bounce back next year and steal the show. 

I predict Sony will never drop the price in America below $599 next year even and not introduce new SKUs until the price is permanently $499 or less.

I think Sony'll focus on Europe where the average PS3 selling price is:

$825

Yes, that's right. Sony are almost making a profit in Europe, and sales aren't as poor as Japan.

I reckon Europe will see a price cut later this year.  The Starter Pack is the first sweetener that SCEE it trying to get sales (with the 2 free games and extra controller)....and come October or November in time for Xmas, they will reduce the price to maybe £349 or even bite the bullet and push it all the way down to £299 (without games though).

This has been discussed to death. Sony isn't making much more money in units sold in Europe than USA. Take out taxes, higher retailer margins, higher distribution costs and difference is much smaller than it seems.