I know there has already been a thread about this, but I thought this warranted another thread - as it covers another angle...

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I have been a pretty strong opponent to Sony and their strategies, and was pretty much convinced a $399 PS3 was impossible - in '07 at least.

But guess what - I have changed my mind. I'm now almost convinced that is it coming - and it is the October 12th announcement.

Reasons:

1/ Sony have just completed the IPO for the chunk of their company they are selling, and raised a heap of cash ($2bn US+?).

2/ HD-DVD has been making inroads recently (I know some people will debate this), at a time I think Sony was expecting them to already be dead. They *must* compete harder against HD-DVD.

3/ The PS3 has been taking a battering sale-wise in Japan (almost under 10k/week again), and now in the US (under 30k/week --> close to 100k/month). If they follow the current course, they will easily come third this Xmas, will easily miss their hardware fiscal forecasts - and face a serious risk of losing soo much momentum - that it may kill them completely this generation.

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As a result, Sony will do something disruptive - something unexpected, and sort-of illogical (in business terms anyway - "throwing away money"). I actually don't think they have much of a choice anymore. Not doing so risks losing everything.

They will release a $399US PS3 (maybe with a BluRay movie, maybe with game) - the except specs are sort of irrelevant. Hey, if they have *real* balls - they might even be more aggressive - $349?

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Now what is interesting is what the results of this price move will be. Here are some thoughts:

1/ The big loser will be MS. With their best Xmas lined up, and solid 360 sales - Sony in one swoop will take the focus again. MS may decide to stay course (not match/drop prices again) hoping that Halo, superior software lineup will win out. It may just do that. Otherwise, this may give MS reason to drop prices by another $50 (or $100? nah...) a week or two before Thansgiving - electrifying sales.

2/ Ninty is sort of immune - this Xmas anyway. The Wii software lineup, plus strong demand will almost certainly see hardware shortages - worldwide. So this won't really affect them. But it will cut into "market share", as rivals sell more units than expected. You have to worry though, if Ninty *is* worried about a "desperate Sony". Can the Wii really stand up to a price matched PS3?

3/ The biggest loser from this might ironically be... the PS2. Gamers looking a cheap non-Wii console (or Wii if the Wii is sold out) would be looking at a PS2 - but less so after these price cuts. So I wouldn't be surprised to see the $99 PS2 announced as well. This would really boost sales - but would potentially shorten the remaining lifespan of the console. It will also be interesting to see what this "new control peripherial" for the PS2 that Sony is talking about.

4/ This brings the "10-year" proposed lifespan of the PS3 into serious question. A price war between MS & Sony means less profits, means rapid price cuts - and can accelerate any moves towards the next-generation. I still expect you will see *some* form of next console launching in Xmas 2010 - probably from MS, but possibly from Sony. MS have shown that first-mover can have a real benefit.

5/ With this move comes risk. Sony can control the price of the PS3 - they cannot make quality software magically appear. Sony still has the weakest software lineup (by a long way), and run the risk of still being solidly beaten this Xmas. I still predict they will miss their fiscal targets by 1.5-2m - even with this price cut. Announcing some magic title (MGS4?) to be released WW this Xmas (and its possible!) could be just the tonic they need.

6/ I thought the $399 PS3 for 1st qrt '08 would have been awesome - and this takes the potential of that announcement away. So this had better work for Sony - as its their "real" trump card (for now). 

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Anyway - I know I had some more thoughts, but I have to run (to work). So this will do for starters. Please try and keep the thread flame-free everyone - healthy debate is always encouraged :)

My only question is... with that and a weak dollar, how much value has an american PS3 lost in a year as expressed in yens. I mean, is any of that hardware even paid for in dollars?

While I don't agree with all of your post, I am convinced a $400 PS3 is about to be launched as well.

I am almost convinced too. 

Im not entirely convced yet, just speculatin.

I honestly don't think its going to happen. If I'm wrong then I'm wrong but I just don't think they are about to convince their stock holders that this bad proposition they have endured over the last 10 months is a good way to spend a bunch of newly raised capital at least until it shows signs of life on its own.

I can see them going as low $450, but if they go to $400 I have to believe one of two things. Either (A) Sony has a brilliant Plan and this is their first step or (B) They have moved beyond desperate and are making a last grasp for the sales numbers they need to win both the Format War and the Console war, even if it requires the loss of billions of dollars.

Keep in mind that in corporate speak lost revenue is still a loss.

 1 - If they did that they wont post a profit for the first time ever, investors wont look happly at a decade of losses.  Ms  cant spin a decade in the red.

2 - Is week, two great games from Nintendo and the rest is mediocre or unproven ips.

I don't think Sony has any choice if they want a piece of the next-generation pie. They must be aggressive and disruptive. I don't see this as throwing money away. It's a given that console makers always lose money with every console, but if Sony can weasel a Blu-Ray player into the houses of a substantial market, especially in comparison with the HD-DVD market then they have the benefit of royalties to come well over their proposed lofty expectations of the 10 year lifespan for the PS3. Sony's game division holds this card over their parent company and can use it to leverage financial support for their failing console. If, however, they continue to sink into obscurity this next year, they will lose both the console war as well as the next movie format war. Sony has much to gain, but more to lose this generation if they can't move units of the PS3. Expect a rational Sony to drop their price...but is Sony rational anymore?

I want them to drop the ps3 to $399.99 I see the ps3 selling near 100k in north america alone each week with that $399.99 system.

Its smart for them.

1. Christmas is near, and new exclusives coming out that look great are going to help

2. $399.99 ps3= current wii sales.

3. Will steal 360 sales

4. Will increase install base to increase software sales, and 3rd party support.