Ars Technica rumor claims 399 40GB PS3 this year

[Tap In]

I would also say that Sony is pretty much RIGHT WHERE THEY EXPECTED TO BE in terms of sales at their current price point, with a slight hesitation towards the fact that the 360 seems to be gaining ground that they didn't expect.

some good points in there but the one faactor that I believe you underestimated is Sony's expectation in Japan.

Sure, I agree in NA and Europe they are not too surprised. I think they are floored by their near shut out by Nintendo in Japan.

That is leaving a mark IMO. Although with an already lower price there I think it does not even factor into this discussion which is mostly leaning toward NA and the rest of the world with regard to price drop. I think they expected Japan to keep them in it longer WW.

 

[avaya]

Who does?

Ms and Sony? Are they retarded?

And if they do, they need to fire their finance divisions, they are obviously not qualified for the job. Going by payback only when deciding on projects is.... well.... dumb.

Most companies do. It's easier to explain to all executives. It's changing but they prefer the simplest method first. A lot of the time payback is more useful because they have commitments they have to meet within the projects time period which will need a certain sum of real world cash flows ready on time.

These days the trend is to use NPV, Payback and Real Options if possible.

 

[Joe DeFuria]

People keep bashing MS for not lowering the price more than they did for this holiday season and people keep basihng Sony for not doing essentially the same thing.

I think you're confused...it seems to be the same party bashing both MS and Sony for not lowering the price more. Personally, I don't have an issue with either Sony or MS price strategy.

Basically, they're both doing pretty much the best they can given their respective hardware and decisions that have been made long ago, and how events have unfolded the past couple years. That's been pretty much my point this whole time.

 

[woundingchaney]

I would also say that Sony is pretty much RIGHT WHERE THEY EXPECTED TO BE in terms of sales at their current price point, with a slight hesitation towards the fact that the 360 seems to be gaining ground that they didn't expect.

I personally find this hard to believe. I doubt Sony expected such low momentum sales at their price point throughout their sales so far this gen. While I dont doubt that Sony did expect to push less hardware due to their high price points I cant see them expecting such consumer purchasing reluctance (in any of the 3 territories).

 

[one]

360 got a jolt from two directions this summer: "small" price cut, plus "pretty big" value prop increased (new software) combined to drive up sales.

Add the HDMI model update to that.

 

[quest55720]

Oh, come on people.

The only REAL question that exists at this point is HOW FAR BEHIND Sony expected their sales to be in relation to the 360.

Despite all the fanfare, everybody has already discounted the Wii as insignificant, regardless of their sales.

Their software adoption ratio has only further cemented the fact that whatever hardware sales the Wii gets are irrelevant in the larger "Console Wars" picture.

I think it's OBVIOUS that Sony expected their sales to fall behind the 360's for the first two years, and possibly through the third year as well.

No chance in hell sony expected such poor sales from the PS3. Do we need to go back the famous quotes of being able to sell 5 million units with out any games. Or that people will get a second job to buy a PS3. I am sure that sony higher ups are pretty in total shock over the monthly sales figures. They are not just in 3rd place but they are getting it handed to them on pretty much every front. They are not only losing money on the hardware but bleeding money by having to invest into home, PSN and dedicated servers. They are getting 0 money back on those since they are free. It is basically desperation tactics trying to do anything to stimulate sales.

If 2008 is not the banner year were the PS3 makes a comeback I am sure a lot of heads will roll in the gaming division.

 

[one]

Do we need to go back the famous quotes of being able to sell 5 million units with out any games.

They didn't say "5 million units".

 

[Shifty Geezer]

It is basically desperation tactics trying to do anything to stimulate sales.

Desperation tactics would be dropping $200 minimum off the pricetag. Everything is cautious, careful tactics, trying to make a comeback without losing more money.

 

[Acert93]

They didn't say "5 million units".

That is exactly what SCEE CEO David Reeves communicated to CVG in May 2006.

Anyway. Despite Sony's pledge to reach a broad audience with PS3 during its launch window, Reeves admitted that appealing direct to the hardcore games playing fraternity will quickly become vital for the company in the next-gen console war.

"Without being too arrogant about it, I don't think we worry too much about building up the hype in the first six months, but where the rubber hits the road is going to be when all those hardcore gamers have bought PS3", said Reeves. "They have also bought Xbox 360 and they have probably bought Nintendo Wii as well."

However, Reeves maintained that shifting PS3s in the early days won't be a problem, such is the strength of the PlayStation brand: "We have built up a certain brand equity over time since the launch of PlayStation in 1995 and PS2 in 2000 that the first five million are going to buy it, whatever it is, even it didn't have games."

"[T]the first five million are going to buy it [PS3], whatever it is, even it didn't have games."

Ok, ok, Reeves didn't use the word "units" but neither was quest quoting him verbatim. Yet they clearly state they expected to sell the first 5M quickly and that the essential challenge would come after launch. So what is your issue again?

Nearly a year later and they still are struggling in the 5M range. So much for the 5M theory (a tbh, I along with many others thought Sony would sell their first 6M units that were to ship by March 2007 without issue based on the Sony brand--exactly what Sony themselves are saying in that quote. Looking at the 360 demand out of the gates at $400 and how it only tapered off after April when supplies came in, it was absolutely logical that the MUCH more popular PlayStation brand, strong in all 3 territories and the last 2 gens champ, could charge a 25-50% premium and best that demand easily.)

 

[Joe DeFuria]

Add the HDMI model update to that.

Yes, when I mentioned increased value prop, the HDMI is a part of that. Some other things in addition to software, lower price, and more features that IMO impacted the value prop:

1) The Elite SKU iteself is seen as increased value to many. (Whether it's the color, larger hard drive, or both.) The same may happen with the "Arcade" SKU.

2) Live: The increase in functionality of the Live service since launch has increasingly raised the vlaue of the 360 since launch.

3) Warranty: even though this is a reaction to something that has decreased value (real or perceived return rate), this moved bumped up the value this summer.

 

[one]

That is exactly what SCEE CEO David Reeves communicated to CVG in May 2006.

"[T]the first five million are going to buy it [PS3], whatever it is, even it didn't have games."

Ok, ok, Reeves didn't use the word "units" but neither was quest quoting him verbatim. Yet they clearly state they expected to sell the first 5M quickly and that the essential challenge would come after launch. So what is your issue again?

Nearly a year later and they still are struggling in the 5M range.

I stand corrected about the 5M in Reeves's comment, but that comment was before the launch delay in Europe was announced. Right now PS3 is slightly under 5M, this is 9 months after the US/JP launch, and 6 months after the EU launch. It is not quite "5M in the first 6 months without games" but not very far either.

 

[Shifty Geezer]

But there are games. The original statement was that the console would sell 5 million without anything to play on the damned thing, just because it was a PlayStation.

We have built up a certain brand equity over time since the launch of PlayStation in 1995 and PS2 in 2000 that the first five million are going to buy it, whatever it is, even it didn't have games.

I'm one for looking at statements from different POVs to try and see what the spokesperson may have been trying to say, but there' no two ways about it : this was just a crazy, arrogant assumption that the PS brand was strong enough to sell millions of units at an unprecedented price without Sony even trying. Thankfully reality has shown Sony that that sort of thinking is suicidal, and they need to pull their finger out and win custom, rather than expect consumers to plead with Sony to "please, please let us partake of your products we'll do anything he's my bank balance take as much as you want I just gotta have me a box with PlayStation printed on it."

 

[one]

But there are games. The original statement was that the console would sell 5 million without anything to play on the damned thing, just because it was a PlayStation.

I don't take his comment that serious, it's obvious he was hoping it to be a self-fulfilling hype. You have to note the date of the comment again, it's a comment at E3 2006 where the unexpectedly high price of PS3 stunned fans and media, they had to be extra aggressive in front of media. If they had been pessimistic about the prospect of their own new platform third parties would have been in a major panic.

As for games, I think it's a metaphor - they don't have sequels of popular franchises in the first 6 months, or 1 year for that matter, due to the small install base.

 

[Shifty Geezer]

I don't take his comment that serious, it's obvious he was hoping it to be a self-fulfilling hype. You have to note the date of the comment again, it's a comment at E3 2006 where the unexpectedly high price of PS3 stunned fans and media, they had to be extra aggressive in front of media.

Why not then answer 'We offer excellent value for money, with the most powerful hardware ever released in a CE product, home to the most well-loved franchises around the world. No other system is as feature rich or offers the diversity of experience as PlayStation 3, as we push out a huge array of diverse triple-A titles" instead of "it doesn't matter that the PS3 is expensive because it's a PlayStation and that makes it worth it" ? If you want to sell a product in the face of a high price, you do it by making a big deal of the merits of the platform. The only reason to focus on the strength of the PlayStation brand instead of the merits of the platform was is they didn't feel they had any merits they could sell. If they felt brand name was the only thing going for them, perhaps then it's a sensible choice. Instead, at the opportunity to diffuse negative reaction to the high price but convincing people PS3 is well worth it, Reeves gave a soundbite saying they've so much faith in the brand they don't feel they need to sell the platform.

As for games, I think it's a metaphor - they don't have sequels of popular franchises in the first 6 months, or 1 year for that matter, due to the small install base.

Perhaps it wasn't literally meant as 'no games' but if not, it was certainly an extremely poor choice of words, especially alongside the choice of marking out the brand as the reason people will buy PS3 instead of its features.

Sales of PS3 aren't great, and given this statement and similar, it looks to me like Sony were caught with their pants down, expecting to do much better than they are. I'm not surprised - I thought they'd sell a load just on the strength of the PS name too (though that was before the price-point was announced and we were talking $400-500). The end result is perhaps they had too much faith in brand power when planning their next-gen strategy, and now we're talking about a huge price drop to a still-expensive price-point!

 

[pipo]

I personally find this hard to believe. I doubt Sony expected such low momentum sales at their price point throughout their sales so far this gen. While I dont doubt that Sony did expect to push less hardware due to their high price points I cant see them expecting such consumer purchasing reluctance (in any of the 3 territories).

You're right of course.

They didn't meet their projections for 2006 either...

 

[one]

Why not then answer 'We offer excellent value for money, with the most powerful hardware ever released in a CE product, home to the most well-loved franchises around the world. No other system is as feature rich or offers the diversity of experience as PlayStation 3, as we push out a huge array of diverse triple-A titles" instead of "it doesn't matter that the PS3 is expensive because it's a PlayStation and that makes it worth it" ? If you want to sell a product in the face of a high price, you do it by making a big deal of the merits of the platform. The only reason to focus on the strength of the PlayStation brand instead of the merits of the platform was is they didn't feel they had any merits they could sell.

He's specifically talking about the first 6 months, your alternative with a big promise reaches a bit too far. But you're right, they didn't feel they would have any immediate merits at the launch! It's interesting to interpret his comment as is - he was candid and indeed PS3 had nothing to sell in its first 6 months. Without optimized PS3 games and major Blu-ray movie releases, it's just a $600 PS2 to a gamer - and it's without rumble. His stealth message was "unless you're a believer of Playstation brand don't buy it around the launch! If you buy it don't blame us on something we didn't promise!" He must have known the state of PS3 games development in early 2006 and how PS3 games at that time were NOT up to the hype more than anybody in the world knew. Even in SCE there must have been many people who didn't expect games like KZ2 could come this far. Sometimes organizations need a soundbite like that to put a huge pressure on themselves.

 

[Acert93]

I don't take his comment that serious

First this quote didn't exist, no we shouldn't take it seriously...

it's obvious he was hoping it to be a self-fulfilling hype. You have to note the date of the comment again, it's a comment at E3 2006 where the unexpectedly high price of PS3 stunned fans and media, they had to be extra aggressive in front of media. If they had been pessimistic about the prospect of their own new platform third parties would have been in a major panic.

Yes, so instead of being pessimistic, Reeves says, "Without being too arrogant..."

The SCEE CEO knew he was being arrogant. He was expecting what many voiced back after the 360 launch demand: the PS3 would sell very well and would have no issue selling their first 6M units. I don't seem to remember hardly any protests from people when it was suggested by most that the first 6M units would be sold immediately, and only thereafter would the price and software selection be an issue of accessibility/value to the non-early adopter market.

You can be optimistic without being arrogant. All of the CEOs carry an air of "confidence" but there is an invisible line you can cross over into the arrogant realm. Reeves knew he was going there, hence he wanted to frame it as not being "too arrogant".

And that was Quest's point: Comments like this and the "people need to save" for a PS3 absolutely come across as arrogant. And more importantly, Sony didn't expect to be in the hole they are now.

Even most market researches were still predicting substantial PS3 sales for its lifetime at that point.

As for games, I think it's a metaphor - they don't have sequels of popular franchises in the first 6 months, or 1 year for that matter, due to the small install base.

And this should have been a huge warning signal. Sony seems to have taken a "year later" approach to not only when the PS3 was released, but also to when PS3 software began development.

It would be a substantially different story if Sony, while delaying until 2006, had essentially began development of titles about the time 360 titles did, thus hitting the ground running. So instead of a weak 360-like 2nd holiday, they could have countered MS's big 2007 holiday software with their own.

The price dug them into a small hole, the lack of value in terms of software & hardware price drops is quickly making that hole deeper.

Sometimes organizations need a soundbite like that to put a huge pressure on themselves.

Or you can go with the primary surface reading: He was being arrogant.

Come on, they just sold 220M consoles in 10 years, setting all sorts of records. The PlayStation was a cash cow. Just go back and look at polls here about how people expected the PS3 to do: Most expected great sales. Even now you expect over 100M.

I have read many times how the PS2 lineup at launch wasn't great, but it was in 2001 that the PS2 began getting its killer apps. Yet the PS2, in 2000, sold very well. In that context, even conceeding a "no software = no sequals" analogy (not buying that at all), there was a previous history that would indicate the PS3 would sell amazingly well.

- It was a PlayStation; the PS2 outsold the Xbox 5:1 and the GCN 6:1, the PS2 won every territory. People don't play video games, they play PlayStation.
- It had the next generation of HD optical media (Blu-ray) with substantial exclusive support.
- It was 2x as powerful as the competition with the amazing Cell processor; it has media slots, KB/MS support, HDMI, WiFi, and even has motion sensing. The PS3 is a media center that plays amazing PlayStation games.
- It had the big guns in the wings that sold tens of millions to the PlayStation consumer" Gran Turismo, Metal Gear Solid, Final Fantasy, God of War, and so forth--all exclusive to the PS3. And until then you get amazing titles like Resistance, Motorstorm, Warhawk, and Heavenly Sword plus all the 3rd party support you expect.

Some of us were bullish on the price as a long term issue, but the reality is people (even executives at big 3rd party pubs) expected the PS3 to sell well because it was a PlayStation. All PlayStations sell well, and this was by far the best. Out of their 120M PS2 customers, finding 5% of those to throw down $500/$600 for a PS3 with next-gen HD media ($500+ alone!) was not out of question.

But Sony, like many of us, didn't expect their "instant buy" demand to fizzle at about 1M-1.5M. There was a demand there for an expensive PlayStation--it just wasn't 5M units.

Gamers are fickle and most overestimated the value of the PlayStation brand. The clear reading of Reeves is Sony did as well.

 

[one]

First this quote didn't exist, no we shouldn't take it seriously...

I didn't write it didn't exist, I was just not sure about the exact number.

You can be optimistic without being arrogant. All of the CEOs carry an air of "confidence" but there is an invisible line you can cross over into the arrogant realm. Reeves knew he was going there, hence he wanted to frame it as not being "too arrogant".

And that was Quest's point: Comments like this and the "people need to save" for a PS3 absolutely come across as arrogant. And more importantly, Sony didn't expect to be in the hole they are now.

If you think they could sell more PS3 if they hadn't made "arrogant" comments, I'm sorry that's really funny.

 

[Joe DeFuria]

If you think they could sell more PS3 if they hadn't made "arrogant" comments, I'm sorry that's really funny.

I'm not sure where you get that impression.

It's clear to me that he's saying that Sony was simply over-estimating the value of its brand.

 

[one]

I'm not sure where you get that impression.

It's clear to me that he's saying that Sony was simply over-estimating the value of its brand.

Did you read my response to Shifty's comment above? When executives start to reiterate their brand value explicitly, they are trying to make stronger impression on people's mind about the brand. This is the most primitive PR. I have no idea why you think it exactly matches their own internal estimate. If they had been really really confident in the brand, there would have been no need to make "arrogant" comments in front of media at all.