Sony: PlayStation 3 price drop

[Titanio]

On 60GB vs 80GB supply going forward, N'Gai Croal asked Jack Tretton about this. In short, he says they're not making any precalculation as they did with 20GB vs 60GB, they'll push both equally, and that consumer feedback will ultimately decide how they tweak supply and production going forward.

What is the split going to be between the 60 gigabyte and the 80 gigabyte models--

In terms of sales or supply?

Supply.

In terms of supply, I think we'll have aggressive supplies of both. We made a much more calculated bet as to what consumer demand would be when we initially came out with the Playstation 3, between the 20 gig and the 60 gig, because we had gotten a lot of retailer feedback. In this instance, we're going to kind of going to go in with a pretty robust supply of both and let the consumer decide, and then we'll adapt supplies accordingly. So I would say it's probably from a supply standpoint equal, initially, and then we'll adjust based on consumer demand, and we'll adjust production beyond that.

http://blog.newsweek.com/blogs/leve...ea-ceo-jack-tretton-on-the-ps3-price-cut.aspx

As much as he says that, though, I think HDD cost economics will see the 80GB replace the 60GB eventually - but I don't think it'll be 599, and probably not with Motorstorm.

 

[Carl B]

Psssh! Man, but do I roll my eyes when Tretton talks. Anyway, yeah for real - they're going to make whatever decisions they make based on whatever actual criteria they're taking into account, and go from there. Whetever they do, they're obviously going to say consumers and/or retailers wanted it.

 

[patsu]

Yes, that's what I thought in my post above. They will let the market decide the split between 80Gb and 60Gb. Even then I think that's only half the story.

Scooby, consumer behaviour changes over time. So we shouldn't need to compare PS3 with PS2 + memory card. With built-in WiFi, assorted media readers and a larger drive, plus 5 free Blu-ray, the 60Gb represents much better value than the old 20Gb drive at the same price. This would be the same answer to expletive's question about HDD size. The total package will speak for itself (rather than looking at just 1 line of specs). Naturally, there is also the software and online aspects to take care of.

Both Blu-ray and HDTV have gained some more traction over the past few months. Perception will shift some more over the next few months (taking into consideration MS's counter-moves).

There are other possible (and compelling) strategies for a 599 unit but these moves are generally more convoluted to execute (At least one strategy was hinted by Mr. Kutaragi last year). We should just bring our pop-corn and watch them play their cards.

 

[crazygambit]

He wasn't serious. A new controller would be launched completely separately from any specific model and probably bundled with a game / games that supports it specifically.

Wait what? I think he was definetely serious. It's pretty much a given they'll announce a controller with rumble (though I'm hoping it has that touchsense tech) at E3. See a Haze interview with the devs with blurred out vibrating controllers.

The 80GB PS3 right now it's terrible value, I'm sure there's more to it. A new controller will make it more appealing to a lor of people. Plus I saw a picture of the 80GB box with a controller with a red PS button. Not confirmation per se, but at least enough to speculate and not simply dismiss it as a joke.

Edit: Ok I seemed to have just owned myself

Patrick Seybold | July 9th, 2007 at 9:26 am

Just want to clarify for those wondering why the PS Button on the controller is red. That is what happens when you charge the controller. It is not a sign or indication of a new/different controller with the 80GB model

Well maybe the light is not an indication, something else is, therefore it's still coming. You gotta love PR talk though.

 

[scooby_dooby]

Scooby, consumer behaviour changes over time. So we shouldn't need to compare PS3 with PS2 + memory card. With built-in WiFi, assorted media readers and a larger drive, plus 5 free Blu-ray, the 60Gb represents much better value than the old 20Gb drive at the same price. This would be the same answer to expletive's question about HDD size. The total package will speak for itself (rather than looking at just 1 line of specs). Naturally, there is also the software and online aspects to take care of.

They change overtime, but they don't change completely overnight. There's absolutely no way that the overwhelming majority of the market coming from last generation looks at 20gb HDD and says "Nah, I really need 60."

And whether the 60gb is a better value than the 20gb one is, is a no brainer, of course it is at the same price, that wasn't the point of the discussion.

 

[Shifty Geezer]

A consumers is gonna realize the $599 package is not a great deal, but they will still look at $499 and say "Holy smokes, that's a lot of green for a console", it's not suddenly gonna make it seem like a better deal, or convince them that $500 is in their price range.

I agree, and wasn't suggesting a comparable lower price would sway people to think it's cheap. I just think there'll be a little extra positive comparison seeing a cheaper but barely different machine, and make $500 not seem so much as an isolated pricepoint. Before, they'd walk into a store and see $600 PS3 and a $500 PS3 missing lots of stuff. "I want a PS3" says JP. "I want all the stuff, even if I don't know what it does." The 20GB SKU isn't the full monty. 6 months later, JP walks into same store and sees PS3 is still $600. But wait! What's this? The full monty experience is now only $500. If course if PS3 launched at $500, single SKU, JP wouldn't be interested. But the contrast of a higher priced model adds perceived value to the still-pricey cheaper version. Just like putting a dark grey next a white makes it look less bright than a dark grey next to a lighter grey, putting a high price next to a higher price makes it look lower than a high price on its own.

I dunno how true or to what extent that'd happen, but it must be something the Three Marketeers would be thinking about. Like daft $nnn.99 prices, where psychologically it's believed people perceive it as markedly cheaper than the round hundred. Does that really matter? To educated folks, they just round it up. But I guess they did enough research before deciding knocking off a few cents would have a notable improvement on sales. If not, everything would be rounded up to the nearest buck and companies would earn a few extra cents per sale.

 

[patsu]

They change overtime, but they don't change completely overnight. There's absolutely no way that the overwhelming majority of the market coming from last generation looks at 20gb HDD and says "Nah, I really need 60."

And whether the 60gb is a better value than the 20gb one is, is a no brainer, of course it is at the same price, that wasn't the point of the discussion.

I re-read the correct post and see what you meant. I agree with your assessment but I think there are more to it. The 60Gb model will allow them to have a more unified downloadable content market in the long run (20Gb is too small and has no WiFi for easy living room connectivity).

 

[betan]

On 60GB vs 80GB supply going forward, N'Gai Croal asked Jack Tretton about this. In short, he says they're not making any precalculation as they did with 20GB vs 60GB, they'll push both equally, and that consumer feedback will ultimately decide how they tweak supply and production going forward.

Just PR. (I personally think he is the worst of big three)

Anyway, they really didn't keep enough 20 GB to be able to decide anything. As far as I know it was sold out just after launch and never supplied again (mostly). I know because I was looking for the damn SKU at the time. (Actually I never even saw any 20 GB online, other than ebgames units which were backorder only, and rarely available).

And for Sony to let customer decide on 60 GB vs 80 GB would be really stupid because 80 GB is cheaper than current 60 GB. They have to replace 60 GB sooner than later.

ps: I ge a lot of Deja Vu in this thread, I guess it's advancing way faster than most of us can keep up with.

 

[patsu]

Heh heh... in that sense 20Gb may be an anomaly during the jumpstart phase (They have to catch the HDD cycles).

But I think it is possible that Tretton is telling the truth. i.e., 80Gb to have the same treatment as the 60Gb. By the time 60Gb is depleted, they would have enough 80Gb to push (together with 100Gb/120Gb PS3, so on and so forth). They all have short lives and yes purchased based on market demand.

 

[Carl B]

What is the truth he is telling though? That they will receive equal attention? Or that the attention given will be determined by retailers? The former yes, I believe so long as there are stocks of 60GB units both will be readily attainable. The latter is just the usual line of "everything we do, we do because you asked us to."

 

[patsu]

Well... it's always a case of consumer vs retailer vs manufacturer. I am wary of Jack Tretton too -- He has this thousand-year salesman look . People should focus on the real meat of his talk (if any).

 

[betan]

Heh heh... in that sense 20Gb may be an anomaly during the jumpstart phase (They have to catch the HDD cycles).

But I think it is possible that Tretton is telling the truth. i.e., 80Gb to have the same treatment as the 60Gb. By the time 60Gb is depleted, they would have enough 80Gb to push (together with 100Gb/120Gb PS3, so on and so forth). They all have short lives and yes purchased based on market demand.

But he is saying:

In this instance, we're going to kind of going to go in with a pretty robust supply of both and let the consumer decide, and then we'll adapt supplies accordingly.

That means 60 GB shouldn't deplete if customers choose it.
So why do you assume 60 GB will be depleted and Tretton is telling the truth at the same time?

I think 60 GB will be depleted, he is PRing, it just doesn't make any financial sense for Sony to keep producing 60 GB if the customers indeed want it.

 

[patsu]

But he is saying:

That means 60 GB shouldn't deplete if customers choose it.
So why do you assume 60 GB will be depleted and Tretton is telling the truth at the same time?

I think 60 GB will be depleted, he is PRing, it just doesn't make any financial sense for Sony to keep producing 60 GB if the customers indeed want it.

The caveat, for any business, is always "until it does not make sense for us to do so".

This could be due to the rising cost of 60Gb HDD for instance. Sony's reaction may be to replace it with a better option (e.g., 80Gb) at the same price. I don't see that as lying. Alternatively, something may crop up in the middle and force them to change their positions totally. I don't know what to call that yet... it's case by case.

It is not a cakewalk to keep a product properly stocked worldwide. So it is natural for him to say we will do our best to keep both available.

I generally don't want to read too much into these interviews. Many may just be informal comments.

 

[Shifty Geezer]

60 GB will be depleted, at least the real 60GB, 'coz they're no longer making PS3's with EE in 'em. And if 80GB HDDs are as cheap as 60GBs these days, they'll drop 60GB. There's no sense in giving regard to both SKUs - one of them is, basically, ancient history now. It's been superseded by a cheaper mobo and larger HDD.

 

[Archgamer]

The 80 gig model is a rip off. But somehow I think Sony is doing it on purpose. If the 80 gig had more whistle and bells it'll degrade the 60 gig 499 value and people may call that a tard.

 

[bomlat]

amazon.com bestsellers in videogame

The 500$ ps3 jump to the third place on the bestseller list.

 

[avaya]

This multi-SKU pricing model/scheme is down right ridiculous. You can't do this sort of thing unless you have a monopoly.

Sony still wants to have their cake and eat it too. Idiots.

Tretton on CNBC was funny stuff.

 

[Vic]

Agreed. I was simply illustrating the point that the consumer is savvy enough to recognize where the best pricepoint/deal is, and the introduction of an overpriced bundle is not going to fool anyone.

But yes, the $100 pricedrop is a good move, and as I said, even though the $600 sku muddies the waters a little, I doubt the consumer will have any trouble seeing that the $499 sku is the best choice.

Yup, all these SKU's are confusing.

I'm guessing that Sony and MS will introduce 'discounts' by using bundles containing first-party games. Heavenly Sword and Killzone in Sony's case, Halo in MS's.

I still think Sony needs to get to £325 by Christmas in the UK. You're getting close to the £300 price point there, and with the games Sony has coming, it'll sell well in the UK. £375 isnt good enough since many retailers are selling it for £400 now.

 

[Shifty Geezer]

amazon.com bestsellers in videogame
The 500$ ps3 jump to the third place on the bestseller list.

You mean first place! Here we see how many people were waiting for the first price drop. PS3 will quickly sell to them and then settle down.

 

[Skrying]

You mean first place! Here we see how many people were waiting for the first price drop. PS3 will quickly sell to them and then settle down.

Exactly, temporary spike for now though I think we can expect a good increase in sales, nothing massive but a lot better than before. Shall be interesting to see July sales results next month or so.