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Forums - Sony - Tretton: "We’ll do everything we can do to make our pricing relevant"

S.T.A.G.E. on 17 June 2009
KBG29 said:
I have been saying Sony needs to focus on just what he said since the PS3 launched. Put somuch software and services on PS3 that consumers can not ignore the value. Then push marketing to show people that the PS3 is everything you will ever need. Apple has done this with iPod, and iPhone, and Sony is in the best position to do it with a console.


In a world where everyone has money your logic would work, but it isn't that way.



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Aprisaiden on 17 June 2009

Well we know a price cut is coming this year, but we don't know when or how much of a cut it'll be.

With the PSP Go likely making SONY approx. ~+$50 per unit sold to retailers and assuming that SONY launches a redesigned PS3 (internally or eternally, it could just be a smaller motherboard/ 45nm CELL) i think its safe to assume PS3's manufacturing costs will fall between ~$20 and ~$70 by the time SONY announces a price cut.

ill assuming SONY makes its target for 13 million shipped PS3's and 8 million shipped post-price cut:

At a $50 price cut SONY will lose $400 million in revenue
At a $100 price cut SONY will lose $800 million in revenue

The losses from this should be offset by increased profit/revenue from PSP Go and decreased manufacturing costs for PS3. Assuming PSP Go ships 3 million to retail this fiscal year.

PSP Go profit increase will be $150 million+ (3mill x ~+$50)
At $20 decrease in manufacturing costs PS3 will save $160 million ($310 million with PSP Go)
At $45 decrease in manufacturing costs PS3 will save $360 million ($510 million with PSP Go)
At $70 decrease in manufacturing costs PS3 will save $560 million ($710 million with PSP Go)

As such i think its clear that unless SONY is able to save ~+$70 per PS3 or that PSP Go makes more money than expected SONY will go with a $50 price cut, while if PS3 costs are able to be cut by ~$70 SONY will opt for a $100 price cut. Overall of course these numbers are simply estimates which ignore software sales, accessory sales and expected losses for this fiscal year meaning that they shouldn't be taken too seriously.



Showertea on 17 June 2009
Aprisaiden said:
Well we know a price cut is coming this year, but we don't know when or how much of a cut it'll be.

With the PSP Go likely making SONY approx. ~+$50 per unit sold to retailers and assuming that SONY launches a redesigned PS3 (internally or eternally, it could just be a smaller motherboard/ 45nm CELL) i think its safe to assume PS3's manufacturing costs will fall between ~$20 and ~$70 by the time SONY announces a price cut.

ill assuming SONY makes its target for 13 million shipped PS3's and 8 million shipped post-price cut:

At a $50 price cut SONY will lose $400 million in revenue
At a $100 price cut SONY will lose $800 million in revenue

The losses from this should be offset by increased profit/revenue from PSP Go and decreased manufacturing costs for PS3. Assuming PSP Go ships 3 million to retail this fiscal year.

PSP Go profit increase will be $150 million+ (3mill x ~+$50)
At $20 decrease in manufacturing costs PS3 will save $160 million ($310 million with PSP Go)
At $45 decrease in manufacturing costs PS3 will save $360 million ($510 million with PSP Go)
At $70 decrease in manufacturing costs PS3 will save $560 million ($710 million with PSP Go)

As such i think its clear that unless SONY is able to save ~+$70 per PS3 or that PSP Go makes more money than expected SONY will go with a $50 price cut, while if PS3 costs are able to be cut by ~$70 SONY will opt for a $100 price cut. Overall of course these numbers are simply estimates which ignore software sales, accessory sales and expected losses for this fiscal year meaning that they shouldn't be taken too seriously.

Nice analysis. I think you're overestimating the amount of PSPGo!s shipped this fiscal year. I mean, the Go isn't launching until halfway through the year. I don't feel like looking up the exact dates of the sony fiscal year, so let's assume exactly half. That would mean that in the course of six months, you're expecting Sony to ship 3,000,000 Go!s, or 115K a week. The PSP has been on the shelves in the US for 212 weeks, and has sold roughly 50 million systems, or 235K a week, on average. Assuming that trends sticks, you're expecting roughly half of all PSPs sold to be Go!s, a system that's 70$ more expensive than the normal PSP. Furthermore, I don't think digital distribution appeals to anyone but the techiest of people, at least at the moment.

The Go! might end up selling half of that this fiscal year.



Wii has more 20 million sellers than PS3 has 5 million sellers.

Acolyte of Disruption

S.T.A.G.E. on 18 June 2009
KBG29 said:
I have been saying Sony needs to focus on just what he said since the PS3 launched. Put somuch software and services on PS3 that consumers can not ignore the value. Then push marketing to show people that the PS3 is everything you will ever need. Apple has done this with iPod, and iPhone, and Sony is in the best position to do it with a console.


How illogical is this? People don't want Sony creating entertainment system. They want a videogame system. Sony gave them Blu Ray and forced them to choose between them and the competition. Sony's next system better be affordable to the people or else.



steven787 on 18 June 2009
S.T.A.G.E. said:
steven787 said:
Sony needs to stop hemorrhaging money.

A price cut would not solve this problem. Why sell more consoles at a loss when the people can't buy enough games to make up that loss?

They need to keep doing what they're doing, to make a profit.

Selling a quality product, with quality software at a reasonable price... $400-500 for a game system w/ WiFi, a free gaming network, online media, universal music and video, a blu-ray player, an HDD, and a rechargable wireless controller is the price they want to charge. It's the best hardware deal around. 360 just seems to have the more attractive core library - going by sales not my opinion of the games.


Yes...amidst a worldwide recession. Yes...keep the sales up. The third parties obviously want to make games for the PS3, but Sony seeing that as a threat. Putting Blu Ray in the PS3 was a threat to their system. The quality is not the in the video game system in an objective manner, but only in the subjective. The objective is for the system to gather quality games. Forget the specs.

No the objective is to make a profit.  If you're #1 and are already selling at a profit, then you may want to do a price-cut to expand market share.  If you're not #1 and you are not making a profit, then a price cut would make you LESS profitable no matter the games, the console, or the brand name.

For Sony a price cut looks like this: More loss per console * more consoles sold = more losses.

It would be different if they were turning a profit on individual consoles, then you'd have a simple supply curve and demand curve to look at.



I would cite regulation, but I know you will simply ignore it.