2007 Console Price Cuts: How much?

[Shifty Geezer]

Sony is going to keep being arrogant thinking they can sell consoles cause it has the Sony name on it.

There's a big difference between arrogance and stupidity. If Sony believe they can sell PS3's at $600, and no-one buys them, they're not going to be stupid enough to keep the price at $600. They'll have to drop the price to sell any units, or otherwise just give up on consoles because they refuse to sell their console for what people are willing to spend on it.

As has been mentioned elsewhere before, within this year Sony may well have shaved as much as $200 of the cost of PS3, with 65nm and BluRay improvements. If the machine isn't selling, a drop of at least $100 by 31/12/07 is likely IMO.

 

[nelg]

Is there any agreement in place that might prevent Sony from dropping the price to fast? To clarify, seeing that the PS3 also competes in the BR player market, was it necessary to agree to hold the line on price to allow for a more balanced market for the other manufactures of BR players? It is one thing to allow the PS3 to usher in the 'next' generation format, but to compete with it until it reaches true mass market price points, where cheap players commoditized, makes support for it far less lucrative. This is why I thought that the other CE manufactures might have insisted on some sort of pricing floor for a period of time.

 

[infinity4]

i don't think sony cares much about 20GB. i rememeber an article saying 20GB version making more loss than 60GB

but anything can happen, i would say price of 20GB PS3 all depends on market shares of competitors

 

[wco81]

It'll be interesting to see as the price delta between the Wii and the X360/PS3 closes.

That won't necessarily happen this year but you figure the latter have more room for price cuts over the life of the console, compared to the Wii.

Will the Wii remain hot or will a lot of those who bit at $250 look for better graphics? Every year, every Xmas, every Superbowl, millions more HDTV sets are sold. At some point, people may see the Wii as being limited, especially if the novelty of the wand-waving wears offs.

There was a local news story about some guy losing 9 pounds playing Wii Sports. More power to him but he really doesn't have to wave the arms that much. You can execute all the actions by flicking your wrist, really cutting down on the motion (and the calories you burn ).

 

[ERP]

It'll come down to how many sony thinks it can sell at the current price.
But my guess is they intend to follow the PS1/2 model, no price cut in the first year, followed by a significant price cut prior to the following Xmas.

If PS3 sales lag below Sony's expectations then this will change but they have a significant COG to overcome.

 

[Corwin_B]

You can execute all the actions by flicking your wrist, really cutting down on the motion (and the calories you burn ).

But in the immortal words of Penny Arcade, that makes you a f*cking toolbox

Seriously, though, waving around is the best part of the Wii fun in multiplayer sessions. Just like Donka Konga, Mario Party or Mario Kart, I don't think it will get old. For single player, we have to see if Nintendo (and 3rd party) can deliver the content.

 

[wco81]

Well the burden is on the developers to make the game in such a way that the correct motion makes a difference in gameplay.

Ever had rotator-cuff?

Or after a long day or after say an hour of playing, you're just not going to play it as energetically.

 

[22psi]

20GB PS3s are getting 20% off at some stores in Japan:

http://kotaku.com/gaming/top/japanese-stores-slashing-20gb-prices-230297.php

 

[Shifty Geezer]

Aren't those the same sorts of deals that saw budget XB360s too? Store deals can't be taken as any sort of price drop.

 

[Laa-Yosh]

This straight from Sony...
Jack Tretton: PS3 will be difficult to cost reduce

 

[Acert93]

Thanks Laa-Yosh. Too bad I didn't have this quote yesterday!

Hmmm I wonder how much gamesmanship is going on here? There is quite a contrast in what Bill Gates recently said and about the MS's strategy and what Jack Tretton is saying in regards to Sony's strategy.

An interview with Sony Computer Entertainment America chief Jack Tretton in the latest issue of Game Informer revealed some troubling news for consumers waiting for a lower-priced PlayStation 3. When asked point blank whether price drops for the PS3 will be "as soon or as drastic as they were for the PlayStation 2," Tretton responded with a curt, "No."

That is very surprising, especially considering Bill Gates' comments. Is it possible that Sony, like Nintendo, is opting "out" of the direct competition model and looking at establishing a different model? (In this case the PS3 as a premium device consumers are willing to pay a premium for). That at least is the general indication, especially when contrasted with the over-1 year timeframe before the PS2 price drop and being told to expect to wait longer with the PS3.

"There's a heck of a lot more under the hood and it costs us more money to make it," Tretton told Game Informer. Despite this, Tretton doesn't seem to think the system's price will hurt its position in the marketplace. "I think the consumers that get their hands on a PlayStation 3 clearly see the value and not only want to buy one for $599, in some instances they're willing to pay ridiculous prices to buy one on eBay," Tretton said.

Also

The reason for the shallower pricing curve? According to Tretton, the increased investment in R & D and hardware makes the system "a lot more difficult to cost reduce" than the PS2.

Maybe xbd can fish out some R&D numbres for us, if that is possible :smile:

Btw, if this is true... color me surprised. I almost didn't even put $499 in the poll and was shocked when people were actually... voting for that. Still, I will be shocked if Sony doesn't have a price cut in 2007...

 

[baten]

This straight from Sony...
Jack Tretton: PS3 will be difficult to cost reduce

This would not be the first time somebody from the higher ranks from Sony makes a comment thats ridiculed by their own actions just weeks or months later. Tretton seems to believe that PS3 is still selling like hot cakes, which is not the case anymore.

 

[Corwin_B]

This would not be the first time somebody from the higher ranks from Sony makes a comment thats ridiculed by their own actions just weeks or months later. Tretton seems to believe that PS3 is still selling like hot cakes, which is not the case anymore.

It could also be that Sony feels (IMHO with some reason) that announcing that PS3 would drop price at the same rate as PS2 would make potential buyers wait for the first price cut...

 

[wco81]

Aren't those the same sorts of deals that saw budget XB360s too? Store deals can't be taken as any sort of price drop.

There's so little margin for the stores to reduce prices.

In the US, companies often help stores to pay to advertise their products. It's likely that any major promotion, like the $100 off deals at Microcenter or Amazon for the X360, were financed by the company.

 

[Shifty Geezer]

There's so little margin for the stores to reduce prices.

Stores sometimes run loss-leaders to get interest too. I'm recalling exactly the same comments about XB360, which were going for thruppence shortly after release and that was attributed to such a deal. Though I'm sure Sony don't want parallels being drawn between PS3 and XB360!

As for Tretton's price reduction comments, I think that's bluster. He's not going to say 'yes, we're going to price reduce in 6 months.' Price reducations are always denied right up until minutes before they come into effective, asmpany doesn't want to stiffle sales prior to the reduction. So he spins an excuse exaplining PS3 is so advanced, it can't be cost reduced. We are all better educated enough to know the moment they get 65nm chips, they're saving a fortune. The cost of BluRay we can't be sure of, but two thousand years of industry tells us to expect improvements to be made that drop the price, and normally very quickly on expensive high-tech products intended for the mass market.

I say a price drop will happen when it's needed, and the cost reduction will be substantial at 65nm. Unless they're having trouble hitting that node, there's no reason PS3 should be harder to cost reduce that way than other machines.

 

[Carl B]

This straight from Sony...
Jack Tretton: PS3 will be difficult to cost reduce

But Laa you know better than that; hell, we all should know better. Launching on 90nm was a conscious decision on Sony's part, from a firm that was originally targeting 65nm. Now, they likely wouldn't have made that node anyway, but still the speed with which they'll be able to bring costs down on the silicon front, coupled to the rapid maturation of the blue laser technology which comprises the optival drive, should lead to some failry sharp and substantial manufacturing cost reductions early in the consoles life. Not to mention tossing the EE+GS entirely.

Jack Tretton is doing what any executive in his position should and has to do: defend the present price structure. The $499/$599 pricepoint will always be given as the one both Sony and consumers are comfortable with... right up to the day before they announce a price drop.

 

[scooby_dooby]

He's simply saying what he should, they know that people are wiaitng for a pricedrop so he's trying to discourage people from doing so. June 2008 my ass

 

[Corwin_B]

But Laa you know better than that; hell, we all should know better. Launching on 90nm was a conscious decision on Sony's part, from a firm that was originally targeting 65nm. Now, they likely wouldn't have made that node anyway, but still the speed with which they'll be able to bring costs down on the silicon front, coupled to the rapid maturation of the blue laser technology which comprises the optival drive, should lead to some failry sharp and substantial manufacturing cost reductions early in the consoles life. Not to mention tossing the EE+GS entirely.

May be true (and defending the price structure makes sense), but as I said I've seen countless posts swearing Sony would price the machine at $299 and kill both MS and Nintendo in one nice clean swipe although Sony exec were busy preparing the public for a high price (starting with KK in its inimitable fashion), and even after the initial shock of E3 the Sony forum brigades were all other the place explaining it was a trap to prevent MS from dropping their price, and that the real PS3 price announcement was just around the corner (to their credit, Sony did indeed drop the price a bit for the 20GB SKU in one region).

 

[Carl B]

May be true (and defending the price structure makes sense), but as I said I've seen countless posts swearing Sony would price the machine at $299 and kill both MS and Nintendo in one nice clean swipe although Sony exec were busy preparing the public for a high price (starting with KK in its inimitable fashion), and even after the initial shock of E3 the Sony forum brigades were all other the place explaining it was a trap to prevent MS from dropping their price, and that the real PS3 price announcement was just around the corner (to their credit, Sony did indeed drop the price a bit for the 20GB SKU in one region).

Well, bad logic on one side doesn't cancel out bad logic on the other.

Whoever you heard $299 pricepoints from, I know it wasn't me!

 

[Corwin_B]

Well, bad logic on one side doesn't cancel out bad logic on the other.

Agreed, and as I said your approach of defending the price structure sounds very plausible. I just think that if some company rep announces bad news, it's either a slip of tongue, or those bad news are really likely to happen, or they wouldn't communicate on it.