If Microsoft insists on having the cheapest Console it will always be closer to mainstream in any case
Ars Technica rumor claims 399 40GB PS3 this year
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If Microsoft insists on having the cheapest Console it will always be closer to mainstream in any case
If Microsoft insists on having the cheapest Console it will always be closer to mainstream in any case
I wonder how the mainstream would respond to paying $50 a year for online gaming.
Surely at some point this is going to count for something when comparing prices? If not, Sony better make sure the buying audience is aware of this kind of thing.
But it is of course entirely possible that they just assume that's how it is supposed to be and you have to do that on all consoles ... ?
I really don't know in this case.
Unless they strip the PS3 down to get @ $399 i think it will be very good value for money with the added extras. The other post about the controller chips doesn´t indicate it
I think that a huge part of the mainstream gamers don't care that much for online gaming, silver live subscription could be enough to satisfy theirs needs (big If i know but I don't care that much of online playing I'm somewhat casual gamer myself) and they would be happy with free patches and demos.
Wii aims at even more casual players (or casual use no matter who play) but lake of online doesn't seem to hurt.
If I'm right a arcade at 229$ could really attract casual/mainstream gamers, and I guess it's MS bet with the arcade pack==> most people don't care that much about online.
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IMO at this point, they do.
"Playstation" is still a much stronger and broader brand. The race is still up for grabs and at this early juncture, MS still needs to better establish "XBOX" as not only a viable 2nd alternate to "Playstation", but as a viable first option.
They are doing a great job of filling out their library with great software, but there are still diehards out there who will need more convincing to flee from the Sony flock. A low price that they can afford will do the trick for some. Continuing to add to their game selection, quality and diversity would do it for others.
By chosing not to react to such an aggressive move by Sony could prove disasterous for MS. The only market MS even has a lead in (disregard Wii for a moment), is the US. They are not doing as well as they hoped and have already missed two sales targets (adjusted once and even missed that one).
Now isn't the time for MS to be complacent.
I'm no financial wizard and I don't know how they would measure their raising funds to support a price cut, but I'm pretty sure that such an action can be viewed as not "taking a loss" but merely transfering assets. Thus, they still make a profit while still allowing ~$3 billion for pricedrops.
I could be wrong but from what I've seen and heard, Sony will be able to drop the price of ps3 fairly rapidly based on how aggressive their BOM reductions are coming along. Only question is "when".
Consider the fact that December is essentially the cutoff for significant sales, and that places a deadline on "when".
I look at it as Sony needs to "borrow" a bit in the short term to capitalize on immediate Christmas sales by dropping the price of ps3 to ~$400 which will eventually be made up for by BOM reductions in the not too distant future.
I completely disagree with the assertion that Sony will not drop the price again this year and the recent news of them raising significant funds by selling off a portion of their company supports that theory. This combined with lackluster sales, even after a pricedrop/value-add, raises the probability.
But not the UK, who are so multinational in mindset that everything bought here is made elsewhere, and every home-grown product or company ends up being sold to foreign nationals anyway
I think MS have to keep a lower price than PS3 because they launched lower, which set them up as an 'inferior' product. If you assume PS3 costs more because it's better, which is how the general populace tends to react to prices, then to be able to get a PS3 for a lower price than XB360 makes it that much more of a bargain. For gamers who follow the scene, it'll come down to choice of software, but then it always would for them anyhow. For the masses, I think they'll see a price competitive PlayStation as the better, uneducated choice.
Except America I guess, who buys the world's products without qualms..
Toyota is taking over a lot of the American car market for example, where GM probably sells nothing in Japan.
Interestingly though, China is a big revenue growth for GM, because the Chinese shun Japanese products but not American ones...but now I've gone really OT.
Edit: Haha, shifty kinda beat me to it..
I think we can agree protectionist attitudes are less common in the west, though perhaps still present.
I somewhat agree..somewhat disagree...for example, if you want to play Halo, you have to buy an Xbox..and many would make that choice even if it as the same price as PS3.
The big thing PS3 has I think, is a Blu ray player which is very expensive as a stand alone..I think that makes it less of a straight up comparison with 360.
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Sorry I checked again their FY2006 earnings conference in May and actually the CFO said the game business would be profitable in FY2008 while cost reduction of PS3 would occur throughout FY2007. In January he said they'd make a profit in FY2007, so the prospect is changing.
DuckThor Evil
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I don't think the biggest deciding factor in either of those two countries is the origin of the product. The manufacturer has however easier time to build their product to answer the needs and desires of a market that is better known to them. Xbox is doing bad in Japan, because of multiple reasons, for starters it has a bad sounding name, it's game library is not best suited for Japanese tastes and so forth.
The game library of Xbox is however very well suited for the NA market, the Live marketplace and other services also offer much more interesting content in that region, in essence the product is better there than in other regions. I think it has very little to do with any sort of patriotism, for example The Wii and the DS are doing superb in NA, and also you used the car analogy, check out how Toyota and Honda are doing in United States... Car purchasing is the place where people are most conservative, if Americans buy lots of Japanese cars they'll sure as hell buy their game consoles, if the product is good.
Europe is somewhere in between, closer to US imo, but it's a very unique market and because of many countries it's challenging to operate here, tastes differ between countries, some countries are richer some poorer etc. In my opinion Sony has probably had a little bit more varied library and the brand is better/earlier known in Europe thus giving Sony some edge compared to MS. I also think that MS has done pretty good job in Europe and that they are slowly gaining foothold here. The reliability issue hurt them a lot here though.
Raising additional capital to fund a price drop won't hide the fact that they are taking on additional losses to sell at a lower price point.
One thing I have been pondering on is the profit model for the PS3 and how that is effecting their ability to price reduce the PS3.
People tend to hate MS's model in comparsion to the PS3, but nothing is "free" and cost associated with any "free" service or product shows up somewhere and someone has to eat it. I think that the PS3 profit model is negatively affecting Sony ability to reduce the price of the PS3 especially in comparsion to the PS2.
You basically needed to buy a memory card to really game on the PS2. Cost for a PS2 memory card was and is roughly 15-20 dollars and with 100+ million PS2s and high % of PS2 users buying a memory card, you looking at a revenue of ~1-2 billion with alot of it profit. The PS3 lacks that type of revenue stream and in fact as of now (if the PS3 is still sold at a loss) the HDD, which has replaced the memory as the main storage device represents a loss.
Looking at PSN, its doubtful that the revenue generated from download sales are able to sustain the cost of PSN just yet. The Wifi, multicard reader, BluRay drive and PSN represent a cost to Sony versus with MS those items for the most part represent a profit.
All these costs restrict Sony ability to price reduce which is further degraded by the fact that slower than anticpated sales hampers your ability to minimize BOM costs. Its hard to be aggresive when you go from moving 25 million units in two years and having to deal with limited supply to potentially go to a hopeful 13-15 million in 2 years where the limitation is demand.
Some may hate that MS charges an arm and a leg for some of its peripherals and services that Sony gives you for free. But MS's model gives a lot more flexibility in pricing strategy of its consoles because those services and peripherals aren't tied to manufacturing cost or the retail price of the console. I, like the rest of us, love Sony's intention in regards to their services and features in relation to percieved cost, but it seems like its hampering Sony's ability to provide the console itself at a price that would spur mainstream adoption.
Hmmm Not sure I would call that a price cut. SKU re-organization maybe. Value added SKU, yes. When the lowest price of entry stands firm I don't think it is reasonable to call them price cuts, but that is my opinion.
On the other side of the sword, when the 60GB SKUs disappear the PS3 from a point of entry perspective will be getting a price increase unless Sony introduces a new SKU, shifts value added SKUs around, or has a real price drop of sorts.
If Sony waits until Spring 2008 to drop below the $500 mark in the US they can pretty much kiss their chances of being competitive (for market leadership) in the US market this generation good-bye.
And if they do they 10 year no-PS4 release, they Xbox3/Wii2 will clean up next gen and MS/Nintendo will have Xbox4/Wii3 ready to pounce on the PS4. But hey, crazier things could happen... like possibly sitting at $500 for 18 months.
Gradthrawn
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And if they do they 10 year no-PS4 release, they Xbox3/Wii2 will clean up next gen and MS/Nintendo will have Xbox4/Wii3 ready to pounce on the PS4. But hey, crazier things could happen... like possibly sitting at $500 for 18 months.
I'm pretty sure their reference to a 10 year life-cycle in no way indicates when they plan to release the next Playstation. According to them, the PS1 enjoyed a 10 year life cycle, and technically, it did. Production wasn't stopped until recently, and it had plenty of games even after the PS2s release. I suspect they're aiming for the same thing with the PS2, and PS3. PS2 already being well on its way to a 10 year life cycle.
Exactly.
Not dishonest, but not exactly telling the whole story either.
In 5 years ps3/xb360 will be old news/after-thought just like ps2 is today. proof? Check release dates on ps2 games. Aside from the cash-in titles from EA, it's blank and been blank for most of the year aside from GoW2.
And this from the best selling console in history.
I don't think ps3/xb360 will be sniffing sales anywhere near ps2 levels.
So while they may be manufacturing some form of ps3 9 years from now, it will likely be to a completely different demographic than those who bought the console day one. Some may talk themselves into the concept that ps3 will last them for 10 years "so its a good investment", you're only fooling yourself though - unless you just finished playing Toshinden on your 10 year old ps.
interesting post - thanks!
Oh, I agree!
But, to tie this in with price drops and the PS3's high price, I will quote the man in charge (Kaz Hirai):
I have always agreed that the PS1 and PS2 were 10 year products. According to Sony, they look at all their gaming products that way, and in general that is true. And at E3 2005 many took that the wrong way IMO (10 year lifecycle from KK) as the context was their consoles do have 10 year lifespans--that overlap.
BUT Hirai, in defending the PS3's price, specifically invokes, "We're not going to ask the consumers to suddenly buy another PlayStation console in five years time".
Of course there is some nuances there. They are not going to ask consumers to do anything... just make options available
And why would the PS3 go by the wayside in 5 years? Like the PS1/PS2 it has a 10 year lifespan! So $599 is a good value for consumers: $599/10 = $59.90/year.So if Sony is willing to sit at $499 for 18 months in the US, then maybe I have this all wrong and Sony will go the 10 year route the full monte. Let the Xbox 3/Wii 2 get the 4th 3D gen to themselves and take on the Xbox 4/Wii 3 with the PS4. The PS3 will still be around... right?
Facetiousness aside, if Sony sits at $499 through the holiday in the US they, IMO, are sending both consumers and publishers in the US a strong message: We don't plan on competing with MS/Nintendo for US marketshare this generation.
April 2008 is too late tp drop below $499 as market momentums will be irrevocably established.
The current price point is not a damn drop. I mean, it's a drop for the old 60GB SKU, but it's a price point they had at launch out here, and it didn't move those units (don't know why, considering the 20GB was a perfectly fine SKU, but I suppose if half the people out there don't know the PS3 and 360 are high-definition consoles... -_- ), so... it's not like they should be expecting it to move serious volume. We're at least technically ahead of Japan at this point (what with the 20/60 launching at rough equivalents of $440/$530), but still. They have some nice titles landing by the holidays, but the ones that will REALLY push units are basically all 2008 titles. GT5 Prologue will help (if it doesn't slip itself), but FFXIII, MGS4, and--heck--even Little Big Planet...? GTA4 isn't even a timed exclusive, so that's no help. GH3/Rock Band...? Heck, they're even competing with the PS2! (Maybe SOCOM...? I haven't heard much from that in a while, so I'm not sure what to make of it.)
Ergo... what else can they do to get a serious bump in relation to Nintendo and Microsoft? Basically, a real price drop going into the holidays (and as I said, I don't care of they whip up some "super premium SKU" to take advantage of those who'd be willing to pay more and were basically just waiting FOR the holidays...), and some effective marketing to go alongside it. (I still don't know why they haven't worked things out with the big box stores to have some of their HDTV displays showing movies running on a PS3. That would certainly get a lot of "what? It can do that?" questions answered to Joe and Jane Q. Consumer.)
Ergo... what else can they do to get a serious bump in relation to Nintendo and Microsoft? Basically, a real price drop going into the holidays (and as I said, I don't care of they whip up some "super premium SKU" to take advantage of those who'd be willing to pay more and were basically just waiting FOR the holidays...), and some effective marketing to go alongside it. (I still don't know why they haven't worked things out with the big box stores to have some of their HDTV displays showing movies running on a PS3. That would certainly get a lot of "what? It can do that?" questions answered to Joe and Jane Q. Consumer.)
Hard drive cost doesn't scale upward significantly, dropping 40gb off the top and disabling backwards compatibility would be the business equivalent of scratching a dryer just to differentiate it for a Sears Scratch & Dent sale.
Even the wifi antennae can't cost enough to really justify a $200 decrease in price. I've heard this rumor on-and-off over the past few months, and I just don't buy it. It strikes me as the pipe dream of eager gamers, hoping against all odds for an inexpensive PS3.
Even the wifi antennae can't cost enough to really justify a $200 decrease in price. I've heard this rumor on-and-off over the past few months, and I just don't buy it. It strikes me as the pipe dream of eager gamers, hoping against all odds for an inexpensive PS3.
Why do you think that? I don't know anything really about running these large servers, but if you look at something like Guild Wars, they run servers on a single investment and no running fees. I paid £30 or whatever it was 2 years ago and got a couple of hundred hours play. Certainly ArenaNet/NCSoft are finding they can make money out of such a business model, which to me suggests running an online service is cheap.
No, the harddrive indeed doesn't make sense, unless they had a cheap stack lying around or building them themselves or something weird like that. Not impossible, but unexpected to be sure.
By far the biggest savings should be in the BluRay player. I think the build cost of this thing was very high initially and is going down really fast. Same for the Cell processor, RSX, and even the HDMI port was $50 initially. Then there is stuff like the Wifi, memorycard readers, blutooth, and 1Gbit port that even if they weren't expensive to begin with, still have come down in price. Then there are also production costs, with cheaper lines opening in China and such as time progresses, and the lines can usually be optimised further as well at some point. As 65nm gets into the picture, cooling also becomes less expensive, though I don't know if/how they would capitalise on that.
Anyway, I can think of plenty of reasons why the cost of this thing goes down.
And as Shifty said, I don't think it's that hard to make money off the PSN. Certainly, the PSN games aren't selling half bad, and even small things like the mere fact that games can download patches allows you to save in other (testing) areas helps a great deal.
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