The article really seems to state the obvious. I've read some articles from the author and for once, the article was on track.

Also people should keep in mind, that Kazuo Hirai was hoping that PS3 could be making profit in FY 2009.

@Happy Squrriel: True. The main reason for people seeing the product as "most expensive", instead of "best value", is because of them wanting it only for one functionality.

@Jo21: Ehh... OK... Wii and 360 use DVD for the games and 360 even for the same games. What's your point?

It is hard to tell exactly what Sony can and can't do in the future. All we can truly do right now is through out theories on what the next year will bring. Was the price stiffnees for the holiday a move to show share holders that the division is profitable, and therefore allow for a price cut come mid Febuary? Will Sony hold strong on price tell late next year? Will Sony mirror Microsofts 50/50 stratagy dropping in both the spring and fall? Right now the door is really wide open, and Sony is in a position to do whatever they want next year.

Personally, I think Sony's best bet next year is to back the system strongly with software, services, and marketing. Keep working away on Home, and make it an even more fun place to visit. Fix the DRM in the video store, and add a music video/music store. Market the hell out of the Games, Home, and the Store, and Sony would spark a lot of more interest in the system, and still be able to compete at $399.

You know, I agree with a lot of what you said.  But, to be honest, HD-DVD would be doing about as well as Blu-Ray is now had it won.  These disc formats were destined to be laserdisc-esque.  Just as audio before it, convenience is going to be the the future.  Even for gaming ...

Their statement does make sense and is just a pure insult to Sony. First of all, consumers don't only want an affordable console. If that was the case, PS3 sales would be worse. Those people don't know a damn thing about gaming. Second, there's a difference between a affordable console and a console with value. The PS3 is valuable console. Third, its about the type of quality on a console. Today, consumers don't just buy consoles to play games, they do more than that. And about Sony's software, most of their software is profitable.

Lastly, the price of the ps3. There is a difference between Sony make as much good profit they can with the ps3 than dropping the price and going bankrupt. Price drop is not the only solution. I rather have the ps3 have low sales for the moment than drop the price and lose more money and file for bankruptcy.

@Snake612: Really? Wii and its game sales may disagree about what gamers want to do with their hardware.

You are using the term "gamers" kind of loosly there aren't you?

completely kidding. The broadening of the gamer audience has always been the plan to sell the wii. But those who play the wii alot, probably end up wanting another system as well.

The rest of the wii's demographic will buy it because its trendy, play it once or twice a week, and not think about it any more than that.   And that is fine there is nothing wrong with that.

that was all sort of disjointed.

@OP, You have to appreciate the variety of hardware the current generation offers to its consumers. I hope the success of the wii does not dilute that variation in the next cycle of consoles.

Just imagine

all $250 machines, nothing to desire at a higher production value or price... that would not be so great. So for now.. Sony can keep its price high to ensure that there might just be a "better" oprion next generation as well.

After reading this over it comes across a little bit sharp... sorry about that. No offense was intended

For sony to have sold almost 19m units at it's supposedly unaffordable price tag compared to the 26m units of the 360, which is much cheaper and an extra year of sales to account for, is the PS3 really the hated system the media promote it as being?

If it is hated as much as they say, surely a more prudent question would be why the 360 isnt up around the 35m mark vs say 10m for the PS3?

I appreciate that sony took a gamble with the amount of losses they were going to be stacking up but from those charts ive seen for 06', 07', 08', the trend seems to be going in the right direction, due to larger install base and lower build costs etc, i would be the first to agree that sony are in trouble if the charts were going in the opposite direction but thats just not the case so i think most of this is just smoke and mirrors borne of bitter minds.

Well ,this everybody knows .

PS3 hardware is very good .
PS3 offers a lot of value .
PS3 game library is very very good rivaling the 360 already .

But PS3 price is too high ,specially after the competition price drops and in the economic crisis we are getting through .

If Sony drops the price they will sell a lot more .

I thought they were dropping the price this christmas to keep the gains they had made this year .

If they havent been able is because

1)They cant .

2)They could but with terrible loses and feel confident in their sales and dont mind losing another 1.5-2 million to the competition (360) if that means posting a profit and not a 600 million loss in their annual meeting .Getting close to 20 million in their second year they have the future of their plattform assured and although the gap gets bigger they are happy with the current sales until they can effectively drop the price .

But we do know what Sony can and cannot do to some extent. For example, it would be illegal for Sony not to do its best to maximize return for investors. If Sony dropped the price of the PS3 to $199, sold a ton of PS3s and lots enough money to sink their share price down, their investors could literally sue them for it.

We know what Sony's balance sheet looks like. We have a good idea of whether they're profiting on the PS3 and by how much.

Sony is losing a certain amount of money on the PS3 strategically to keep sales to a certain level and in an effort to compete with the 360. Had Sony not dropped the price, especially in Japan where the PS3 launched around $400, they would have lost more exclusives and more developers.

Saying that Sony needs to back the system up with great software and services is awfully easy, but it's also very time and resource intensive.

You can compress time with money. However, you can only do so to an extent. Sony cannot simply make games come out in 2009 that wouldn't normally be ready in 2009 any more than Nintendo can. If they want the quality to come out and if they want a shot at profitability, it means the system won't be getting pushed as aggressively on price, and Sony won't be pushing as fast on software (since faster development either costs more money or quality).

Keep in mind the following:

(1) The "value" offered decreases as the price of BD players decreases.  The "value" added to the PS3 over the 360 is entirely the BD player, as the 360 can do anything the PS3 can do otherwise (and many things better -- see Netflix).  Right now, the 360 offers better value than the PS3 as evidenced by that article: 360 + BD Player = cheaper than PS3.

(2) The 360's library is generally considered better than the PS3's library and will be for the forseeable future.  No one cares that the 360 has had an extra year on the market.  That's irrelevant.  Who has the best games? 

Certainly tastes differ and one person may say, "I like MGS better than anything else, so I'll get a PS3."  In their case, the PS3 has the best games.  But for the majority of gamers it seems the 360 does.

As TheBigFatJ says, there's lots of information out there on Sony's situation. From Sony's financial statements to their Q&A sessions at the financial conferences. That's the thing with being a publically traded company, you have to share a lot of information with the public.

That's why it's easy to tell that Sony as a whole is in trouble during this quarter, and will very likely post a loss. Sony's debt and money collection is also public (if you haven't seen those threads, they had to pay more than $2 billion in debt recently, and raised $400 million from investors).

For next year, there's all the information available about falling electronics demand for starters, and loads of analysis about the recession and financial crisis which will certainly continue throughout the whole year.

There are some things we don't know, and some things aren't certain, but there's a lot we know too. To cut prices in the near term is asking for trouble.