Not until 2010... I just don't think they can afford it with their current financial troubles.

It will increase sales, but it won't help them catch Wii or 360.  MS made a statement a month or two ago saying that they are prepaired to drop the price of 360 if Sony makes a pricecut.

I agree with you. Not until 2010 since they have the goal to break even and profit.

If Sony's financial situation continues as it is, my bet would be a $150 for the 2010 hollidays. I'm not sure if a 100 price cut, to 299, could boost the sales that much. The sweet spot is 200-250. I think that th boost in sales and install base that would be gaqined from that would compensate the loss of such price cut.

When the value of the Yen improves.

Japanese exporters who depend on US sales are getting hit hard by the weak dollar. The dollar is down 15% against the yen from where it was last year.

Since production costs remain level, this effectively means that Sony is taking a $60 hit on their profit margin. I doubt that they can afford to cut the price in the face of that.

Nintendo's hurting from this too. They're taking a hit of $40 which probably nullifies their profit margin. Given their conservatism I doubt they'll cut any prices any time soon either.

The Yen is an issue when it comes to financial reporting because Sony needs to report financials in its "home currency", but it doesn't necessarily mean they are actually exchanging dollars/euros for yen and realizing a material loss.

I think it will be a $100 drop because the PS3 has a history of outselling the 360 when there is only $100 price difference, see 11/07 - 9/08 sales data. A $50 drop will improve sales, but the 360 will still outsell it.

I think we'll see a new 45nm SKU with 120GB or maybe even 160GB HDD (they're now the cheapest sized HDDs) in Q3 '08 but without a price drop then (as they've said previously, they don't drop home console prices during the summer, but they may give "Added value", which doesn't necessarily mean game bundles). There's a possibility of a small price reduction on any remaining 80GB SKUs, but if they plan it like they did with the 40GB - 80GB changover then probably not.

I think they'll then drop the new main SKU price in Japan to ¥29,980 in Q4. In other countries it will depend on the exchange rate. For example, I wouldn't expect much of a price drop in UK if current exchange rates remain the same, but the Euro price could drop by a bigger margin. SCEE seem to be in a better financial position than SCEA too, so this could also influence how much the price gets dropped in each country.

They're paying their manufacturers in either Yen or Taiwan dollars and getting revenue in dollars. The difference on the reporting basis represents a very real disparity. It's unlikely that they will be able to just sit on the dollars and not convert them to yen.

For this year, they probably have most of the loss on exchange rates covered by currency options or other currency derivatives. For example they could buy a yen denominated put on dollars that would give them the option to exchange $x dollars for y yen when the option expires and that would allow them to effectively lock in a certain exchange rate for the year.

However, the price of an option is dependent on the current market exchange rate and the market's perception of the volatility of the exchange rate. Given current market conditions, if they bought options to guarantee them the old exchange rate, they would have to pay almost all of the difference between the current market rate and the old exchange rate.

50$ around november 2009, then another 50$ around april 2010.

It will probably coincide with the launch of a PS3 Slim, late 2009. That's my prediction at least.

Yes, but I believe the two of you would say such things in order to convince the masses to buy the PS3 now, instead of waiting for the price cut.

If the probable price cut became common belief, it would kill momentum of the console moving into Killzone 2. You guys are not the only Sony fans pushing this "don't wait for a price cut, it's not coming" fiasco across the Internet.

My prediction?

50 bucks mid year, 50 more xmas.