You do know that statement was made in the beginning of January or maybe late December (as that article is from 1/2/07) before the true global demand of the PS3 could even be somewhat measured?
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Ars Technica rumor claims 399 40GB PS3 this year
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You do know that statement was made in the beginning of January or maybe late December (as that article is from 1/2/07) before the true global demand of the PS3 could even be somewhat measured?
I think both sides have merit.
I can understand their actions if they decided to go either way.
The selfish side of me says "be aggressive on the price so I can pick one up next year for $300", but like you said, I think they may just pack it in for this battle and save it for the next.
IMO, this would probably be the smarter move. They will have the advantage with ps4 arch and cutting their ties financially will enable them to better capitalize on their situation and advantage.
Going gung-ho at this point would probably be a bad move as they don't have the software to support such an aggressive move now anyway. Essentially, they'de be losing money for a lost cause and may provoke MS into aggressive price cuts themselves. Doing so would push xb360 into the mainstream price braket, and with a solid software lineup to boot, may hurt a lot worse.
It sounds odd, but by being conservative and ceding this years sales, they give themselves a chance to better compete later.
Either way I'd understand, but I think I agree with xbd here.
If the only way market leadership can be obtained is through huge unrecoverable losses then its likely that Sony will try to find other profit and cost models to either find a profitable place in the market or a place in the market place that minimize the losses due to its investment in BluRay and other costly technology.
Look at the Xbox. Due to the decisions made early in its life, it was doomed to be unprofitable. Additional price cuts would have done nothing but exacerbated the losses incurred.
Now look at the GC, totally opposite result with almost the same market share. Decisions were made to keep the hardware cheap and it allow them to be competitive with the xbox with cheaper price points. Cheap hardware and software sales dominated by first and second party titles allowed Nintendo to be nowhere near a 4 billion dollar loss.
If the initial strategy for the PS3 is failing do you expect them to not change it.
Or like, they are taking that one last step that would make profitability impossible.
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scooby_dooby
Legend
How is another $300-400 million going to make profitability 'impossible' when they've already invested billions?
No. Not a mere 10 months into it, before they've even reached a mainstream pricepoint.
How is another $300-400 million going to make profitability 'impossible' when they've already invested billions?
No. Not a mere 10 months into it, before they've even reached a mainstream pricepoint.
I think more information would have to be known about their current BOM and predicted timeline for reductions.
If what we heard a while ago was true and Sony is looking to shave $200 off the BOM this Winter, then I think they can afford to jump the gun a bit and either drop price or do a mail in rebate in Dec.
It would minimize the losses to a million units (roughly) and help them build momentum for spring and their eventual BOM reductions.
Not to mention that it does not mean breaking even on the hardware, but on hardware and software sales and microtransaction revenues altogether...
How is another $300-400 million going to make profitability 'impossible' when they've already invested billions?
How did MS's forced price cut to $199.00 six months into its life harm the revenue generated by the Xbox.
Price cutting pressure is going to exist going forward. Just because you price cut now does not mean you have the luxury of foregoing a price cutting round 4-6 months down the line.
If the Xbox could have sold at the pace that it did in the US while holding off price cutting to $199.00 till the following spring and following the same price cutting strategy thereafter an extra 600 million would have been generated from hardware sales in the US. Thats from just sales of 14-15 million units.
So if you had a product that was producing results way below what you forecasted you would continue to follow the strategy thats based off that failed forecast model?
scooby_dooby
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Doesn't answer my question at all. But I know you were exagerating, so we can just leave it at that.
Except that would've been impossible. Sales were anemic before the pricedrop, a mere 78k the previous month IIRC. Postponing the pricedrop for en entire year would've done nothing but relegate the 360 to an even smaller niche player than it ended up being, and probably cause it to be a total failure in both marketshare AND profitability.
It probably would've also severely impacted the success of their Halo franchise, negatively impacting sales for Halo 2, and the tremendous brand value they posess today with Halo 3.
Regardless, I think comparisons between Xbox1 and PS3 are so fundamentally flawed their not even worth discussing.
I don't know if Sony's original intent was to be at $400 by Holiday 07, so this may not have been their original plan. But I know they need to do it now if they want to remain competetive in NA.
I did not follow the whole thread but I thought Sony didn't announce any price cut in TGS because it is a Japan event. The price there has already been lowered, and they needed to round out the package with more games.
I believe we will hear more from the US team around October. Afterall, the new VP of product marketing is just on-board recently.
I believe we will hear more from the US team around October. Afterall, the new VP of product marketing is just on-board recently.
That 25% higher price of PS3 compared to PS2 launch price is just to relative and not good indication of any kind.
Back in the day of PS2 coming in to EU € was not that strong to $ as it stands today. Yesterday (20.9.2007) € just beat "1,4 mark" against $. Yeah, €1 = $1,4. An to most Europeans € is not compared to $ like most "marketing geniuses thinks" on 1:1 ratio!
Just think how much more we (Europeans) pay for the same entertainment device! And mind you! USA already got a price cut.
For USA = $499
For EU = €599 ~ $838
Sony need to adjust the price in EU not beacuse "to price cut" but because of extremely strong €.
I wasn't making a direct comparsion. Yes maintaining the $299 price point was impossible because in reality the price cut was instituted just to maintain weak sales. I was stating hypothetically and desribing the affect of price cutting can have beyond just a few months.
Furthermore, the PS3 is currently selling at the same rate as the Xbox1 at this current time and sales for this holiday are bound to be greater than it was last year due to the supply issues last year and a $499.00 sku. The PS3 is in much better position than the xbox1, it isn't necessary to try to trim off 1/3 of its price in under a year.
If the PS3 cuts now and come spring MS and Nintendo institute another round of price cuts, there will be pressure for Sony to follow suit or risk sales slightly above the current pace. Furthermore, if it doesn't cut then what does Sony do wait till the holiday season again and get caught in a strategy of cutting at non optimal times or wait till the following spring and hold onto a price point for 17-19 months.
There is no point in being competitive if you forced to maintain price points that software and peripheral sales can't make up.
There comes a time where maintaining market presence, learning from your mistakes and gearing up for the next generation is more pertinent to the health of your company then simply wasting money trying to become market leader under less than ideal circumstances.
Nintendo is an perfect example and with the PSP and the continued sales of the PS2, the gaming division of Sony doesn't have to be market leader to be viable. But they can lose viability and become a long term cost to the company if they choose a path to maximize sales at the expense of huge losses.
MS could have been more aggressive with the price cutting of the xbox1 and been more competitve but they didn't because there were other pressures that forced them not to. Sony has already express a desire to break even at the end of March 2008 and pressure from up top might make it impossible to incur additional losses from a $399.00 price point.
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quest55720
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If I was sony I would hold off on price cuts till next year. With the the rumble axis and home not coming till next march with the big heavy hitter MGS4. I think a lot of people are just going to wait now. Outside blue ray fans or hardcore PS fans why would anyone buy a PS3 now when you can wait till march and get one with a better controller and game line up for most likely less money. If a price cut does not work right now I could see sony losing all the rest of thier non japan exclusives.
A price cut also forces MS into one. Sony would basically push MS close to a mass market price with an incredible fall line up. A price cut in march 08 with its heavy hitters would IMO build some momentum.
Hell I hope sony does lower the price and MS follows suit. The more HD consoles sold the better.
A price cut also forces MS into one. Sony would basically push MS close to a mass market price with an incredible fall line up. A price cut in march 08 with its heavy hitters would IMO build some momentum.
Hell I hope sony does lower the price and MS follows suit. The more HD consoles sold the better.
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6 months later with another exec. constitent with the PS3 goals....
"During a conference call Sony executive VP Nobuyuki Oneda said the firm may be able to break even on PS3 hardware this fiscal year, which ends in March 2008."
Source: http://www.next-gen.biz/index.php?option=com_content&task=view&id=6573&Itemid=2
Sony cannot go into the holiday season with a 600 price tag. It just won't work. And I believe that the 500 model is running out sooner than expected. Drop the price before Christmas. They need a 400 model. So what if MS follows suit. They are always going to have the price advantage anyway. MS gets a holiday boost so Sony should do the same even though we are expecting MS to get more sales out of it.
quest55720
Regular
They have sold around 300k since the price cut I am sure there are is atleast enough for the next few months. Just drop the 599 to 499 when the 60 gig units get low. Hell a little shortage might get demand up some. I don't see no point in sony losing a ton of money when they don't have the line up to back it up. If home, rumble axis and MGS4 were going to hit this christmass then yes a price cut now would help. If the price cut fails now they will most likely need another one in march with its heavy hitters. 3 price cuts in 1 year is just insane and I don't think they could afford it. All they have to do is ride out this christmass and relaunch next year with the rumble axis and home. A new system in march with rumble axis included is going to be much better recieved. MS is going to get the majority of the high end sales this christmass no matter what. There is no point in flushing money down the toilet to lose a battle they can't win right now. A relaunch is there best bet and they can't do that till march 08 with MGS4,home,GTA4, rumble axis and proably GT5 prolog.
Add in another 160,000 in Japan and probably 150,000-200,000 in Europe in those two months.
Throw in some float and three weeks of September as well. And you could see, it might be close to a mil.
I think Sony has to do something in NA just to keep developer faith over the holiday. If they just 'ride it out' they might start losing support from NA developers. What they can afford to do, I'm not sure. It comes down to they need to give up some profit to prevent falling further back; whether they do that through advertising, bundling, and/or price cut.
quest55720
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I agree they need to do something. I like the bundle option I think put motorstorm, HS and Resistance 2 6 axis controllers + spider man 3 blue ray for 499. That way sony could minimize losses and compete with MS holiday bundle. I just think it is foolish to do 2 price cuts to close to each other. It lowers the product in the eyes of the consumer. People are not stupid they see 2 rapid price cuts they know a product is in trouble. That and it can make them wait for yet another price drop since 2 happened so fast already.
They have already done the desperate price cut with no games and it worked ok. I think a price cut in march 08 with all the good stuff coming out that month would be a relaunch and maybe build some momentum towards fall 08. I just don't think sony can afford a price cut in November and march 08. I think the price cut would be much more effective in march 08.
This is the most recent right here:
http://www.beyond3d.com/content/news/375
That's three months ago, and yes - he's targeting hardware profitability. But profitability is the target, and in my mind that means for now $500 is the likely floor. With 65nm components all-around and OPU cost reductions... well, I'm not going to say that $400 might not be profitable at that point either, but just so long as we're all agreed that the profitability itself is the goal.
If they drop the SKU to $400 I won't disparage the move; neither will I if they don't. There's obviously cases to be made for each. But for myself and predictions, I'm just thinking the 80GB SKU with Motorstorm tossed and down to $499 will be the next move we see.
@Alpha: Truth is, I don't see how they could lose any more NA dev support than is already the case. What's not tied up in exclusivity agreements (a la Unreal Tournament) is already relegated to port status more or less. For those reasons, I'm pro 2008 retrenchment mindset.
@Quest: I know it's a minor quibble, but Blu-ray, not blue ray.
If they introduce a new SKU at a lower price, it´s not just a price cut.
And would you really be surprised if the price of the 80 GB SKU is moved to $500 when he 60 GB model run out of stock? Not really, yeah?
Anyway, I am not paying to much attention to this $400 rumor, I think there will be some better offers coming up for christmas, but $400 sounds really cheap to me.
The rumors may just be FUD from one of their competitors.
If you look at the sources there seems to be certain connections.
http://arstechnica.com/journals/thu...-in-our-mole-lets-us-in-on-sonys-future-plans
http://kotaku.com/gaming/addicts/microsoft-bets-ngai-again-ps3-will-be-399-this-year-282303.php
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