This is a response if you like to the other thread on the forums stating how the PSP Go is a huge mistake for Sony, how it will bomb and how high prices have hurt Sony in the past. 

This is a more sensible thread giving reasons as to why the PSP Go is actually very good business:

First off all, Sony have basically killed two birds with one stone. By producing the PSP Go I am almost sure that they have reduced production costs and created an excuse to charge a fairly high price at the same time. This means more and guaranteed profit, something that Sony need more than sales right now.

The PSP Go is smaller, lighter and maybe even has no UMD drive meaning it should be cheaper to produce than current PSP models. However, it is also very different looking, fresh and sleek meaning people will see it as a new product and will expect it's price to be higher, even though it does basically the same things as the other PSP's. The profit could actually be huge on the PSP Go. For example, if they are currently making say £5 profit on each PSP sold, then they should at least be making over £65 profit on each PSP sold (not regarding minor R&D costs). This is over 10 times more profit, due to the higher PSP Go price.

People also say about how the price is too high, but infact the pricing of the system is extremely smart. The PSP Go will launch near Christmas for roughly £230. Christmas is an excuse to spend big on goods, people are more interested in the actual item than the price at this time of year and so the price shouldn't negatively effect sales the way people expect. Also the £230 price point is aimed at the 'early adopters' audience. You know the people who desire the latest gear and are willing to pay launch price.

Once Sony have made alot of money and more importantly profit off the PSP Go through the fall period, then they can do whatever they like with the price because unlike the PS3, they are not forced to charge a high price....they want to. They could cut the price by say £50 without any hassle, and then use this as a promotion tool. People will thing that the PSP Go is good value at this price due to the massive drop, and this could increase sales. Importantly, Sony would still be making profit.

So thats a basic description as to why the PSP Go is fantastic business. If ive made a stupid calculation, missed out something important or made a false claim then please let me know. If not, then discuss...

Ive also left out R&D costs for the Go, because they will already off been soaked up by now...and they would likely of been insignificant

They really should have tried to go with $199...

But I think it's fine since they are keeping the 3000 series models in stock, meaning if you really don't want the high end model you can buy the one that's like half the price.

I think that a $249 PSP Go and a $199 PSP Go would make Sony roughly the same amount of money short term, so its really either or as far as Im concerned.

I've been calling it all week. PSP Go! released Oct with a bundle for 250 dollars. They will ride out christmas with that price getting money from the techies and spoiled brats who want one. Then ride the wave of christmas till it settles down. Stick with the price just a little longer and then drop it. I say April you'll see a PSP Go! price drop. A good 7 months.

I don't really agree with you on one point though, I think it would be pretty bad business if they tried to max out enough money as possible from their diehard fans and early adopters, just to drop the price a few months later.

Yes, and all that time they will be making many times more profit off the Go than on the other models

Price is too much for a handheld costing the similar amount to make as a PSP, alienating PSP owners is too much and to be honest it really doesnt look that great

Aj - That is just technology. I mean HDTV's dropped pretty fast and got even better. Iphone did too. Blu-ray dropped but was still too expensive for people.

What is alienating who? Makes no sense....