Well, if sales slide, they are going to have to cut prices arent they

does anyone here play games anymore or are they just bothered about sales? sony will drop the price when they can manufacture a ps3 cheaper thats all there is to it lol...........i know its the most costly console but for me its far better value than the oher 2..........with a great lineup of exclusive games this coming year i thin ps3 will do very well

Another thought ...

Between the poor software sales of the PSP, the declining sales of PS2 software, and the high development costs of PS3 games, Sony is not seeing the same levels of profitability that they once saw from game sales. At the same time, we're at a point in the life of the PSP (and the PS3 in the not too distant future) where the Costs of releasing the next generation platform are near to their highest point, and will remain high until (long) after the platform launches.

What this means is that Sony is (currently) in a position where they can not afford to lose money on the PS3 that will not (almost immediately) be recovered in software sales ... Taking a $25 loss (to pick a number) might be acceptable, but taking a $100 loss would only hurt the long term viability of the division.

Up to is not needed.... we can be pretty sure the PS3 alone has lost more than $5 billion, not "up to $4 billion"

Whether or not they have to and whether or not they can are two entirely different things. They're related, of course; one of the things a console maker simply has to do in this industry is that at each price point, they have to keep the console doing well enough that when the time comes for them to cut the price again, they can afford to do so. As long as this continues, the console can still survive in the marketplace.

What we're seeing now is a case when a console fails to do that. The price of the PS3 must come down in order for the console to stay viable: this point isn't even controversial anymore. But Sony in general isn't doing well, and they're still making no profit from the PS3 at its current price point. A price cut could turn the PS3's fortunes around, but that will take time, and until that happens Sony would be taking even bigger losses than they are now.

In effect, it's a race against time: can Sony survive in the face of those losses for long enough that the PS3 can establish itself? Sony runs this race at the start of every generation, as does Microsoft, and every time they've cut the price on any of their systems, the race starts anew. Most of the time Sony has won that race by establishing profitability by the time of the price cuts, while Microsoft wins it by controlling the price cuts in a way that their infinite stores of money can absorb the loss. But things are different this time. Sony has frankly lost several times, making price cuts they can't afford in a desperate attempt to prop up a console that is failing to thrive.

If Sony were to cut the console's price to a point where people would be willing to pay for it, could they survive the losses for long enough? That's the question. I, and many, don't think they could, and Sony seems to agree; they refuse to cut the price because it would be suicide. Yet at this point, even many of the PS3's staunchest fans agree that the price must come down for the console to thrive, yet this could kill its maker and this would prevent the console from thriving.

That would hurt the Company image, which is very important to SONY.

I am gonna wait until it get's cheaper to get one looks like 2010 will be the right time.

This is the bind Sony is in:

a) Lower price by $100, and add more to their losses, BUT slow or reverse the drop in market share.

b) Keep the price, start turning a profit, but watch your base disappear.


Neither is a good choice. A compromise (like a $50 cut) carries risk in that it could result in the worst of both options - cut into revenue without boosting market share.

I think Sony needs to look to the third parties. If it appears that 3P's are about to jump ship, then they need to offer them some encouragment by cutting price. So long as the 3Ps stay aboard, the console will remain viable for whenever the price cut does come.

With Sony nearing a point at which they break even on hardware they should look to cut the price by $50 with the launch of Killzone 2 and again for Gran Turismo 5 (if it comes out in 2009). In Japan where the strong Yen is a non-issue for them they should have cut the price for the launch of White Knight Chronicles and again for the launch of Final Fantasy XIII. This would really help sales but I just don't see it happening.

To some degree, yes. But companies have proven themselves willing to develop games for lesser hardware, and even for the PS2 in particular. While ending the PS3 would certainly be a blow to their image in the short term, it may be the best overall bet for their long-term survival: retreat to the PS2, regroup on a proven console which already has a huge userbase and well-understood hardware -both of which are very important advantages for third parties- and work on either retooling the PS3 for a relaunch next generation or go with something else entirely.

What I am talking about here is retreat, not surrender. The Wii's rapid conquest of the market, the PS2's continued viability as a platform, and the 360's failure to hold onto its lead despite a year-long head start all prove that the hardware advantage of the HD consoles is unnecessary to compete this gen. Retreating to the PS2 would certainly be a blow to Sony, but it need not be a fatal one. The PS3 has already served its true purpose -namely, locking the HD-zealots into Blu-Ray- so there is honestly no reason but pride for Sony to keep this albatross around its neck.

The PS2 is only in decline because Sony is killing it slowly. As things are the Wii will eventually outsell the PS2, but revive it and bring it back to the market in full force and the Wii would probably never catch up: it beat a one-year head start but it will not beat a six-year one. Given Sony's mastery of the PS2 hardware, it might even be able to do a "PS2 Max" model: start with a Slim, add a modest HDD along the lines of the original PS2's optional upgrade, and move the firmware over to something upgradeable (possibly porting XMB and even Home), and you could do a surprising amount with it for relatively little additional cost: debut it at perhaps as little as $150 and the price advantage becomes too big to ignore.

This is, by the way, coming from a standpoint of ruthless pragmatism. Truth be told, I'm a Wii fan. But I honestly think this would be Sony's best chance at surviving as a viable competitor in the console market: admit the mistakes of the PS3, learn what lessons can be learned, and retreat to what is, for them, a stronger position. They've lost this battle, and the PS3 will not allow them to go down in anything remotely resembling a blaze of glory, so I believe the best route for them now involves living to fight another day.