Playstation 3: Hardware Info and Price

[cthellis42]

To say that is a viable strategy is to disregard the historical importance of the $199 console price point.

Gone forever. You look at consoles, and other electronic devices, and you'll see them trending upwards. For inflationary purposes, just to start. (The N64 is ~$250 in today's dollars, the SNES more like $270, the NES more like $340...) Feel free to compute other economic factors, but they're harder to measure.

I posted the PS2 numbers in another thread (showing a good 40%+ of their sales in each market before it dropped to the $199-and-equivalent price point in them), and I'm sure if we had hard numbers for ALL the players we'd see similar trending upwards. We live in the age of spending $200-400 for a nice-looking device you stick in your pocket to play music... why do people still harp on that price point as somehow magical for gaming consoles, which have advanced FAR more in scope, scale, and importance over the years than they used to be?

This is not to say that there is no equivalent "hard number" right now that reflects a shift in consumer mindset to give into such spending, but it sure as hell ain't $199 anymore. We could spend some time evaluating all sorts of consumer products to find it, but we usually lack the numbers (and interest) in giving it a good go, and the only people I find still bringing up the "$199" thing are those wanting there still to be a point to prove there.

'tain't none.

 

[pc999]

We live in the age of spending $200-400 for a nice-looking device you stick in your pocket to play music... why do people still harp on that price point as somehow magical for gaming consoles, which have advanced FAR more in scope, scale, and importance over the years than they used to be?

Not the 100M guys that bought a PS2, much less the 1B that Allard wants or the mass market that Nitendo seeks.

Electronic may be bought pricier by some but that does not reflect the mass market (just compare the number of 200-400$ MP3 players to the sub 100-125$ ones on the markets/sold).

And giving that a console business model (specially given the rising costs) can not live with few consoles on the market, I suposse once they got production fast enought the prices will fallen really fast.

 

[Platon]

That highly depends on how much it is costing each to make their console and in how much demand their product is. Sony charging a high price on PS3 may or may not be because of cost, but perhaps is more because they can afford to charge a premium on it (simply because they know they will be supply limited for the first few months). At this point, we don't know who will be able to bring down the price more aggressively: it's all speculation.

Right now I have no doubt that Sony will be loosing on their console at launch and the following months, especially with the losses they are counting to have during this period. As to which one can bring down the costs faster I don't know. Both seem to be on the way to 62nm which should be the biggest factor. Maybe Sony has some small advantage there, but I don't think by much. What they do have though, is the added cost of a HDD, which will most likely not be going much down in price, and the BR which should be going down in price but should still be much more expensive than a DVD reader for quite some time...

 

[RancidLunchmeat]

Not the 100M guys that bought a PS2, much less the 1B that Allard wants or the mass market that Nitendo seeks.

Electronic may be bought pricier by some but that does not reflect the mass market (just compare the number of 200-400$ MP3 players to the sub 100-125$ ones on the markets/sold).

I still don't get the confusion, nor the refusal to admit that pricing is a factor in every purchase, all the moreso in non-essential items.

How many PS2s sold prior to $199 and at what rate, compared to how many have sold since then and at what rate?

It's not just MP3 players, it's every frivolous electronic device. The cheaper they are, they more they sell. Especially when they are of approximate value.

And giving that a console business model (specially given the rising costs) can not live with few consoles on the market, I suposse once they got production fast enought the prices will fallen really fast.

Has the console business model suddenly changed where companies now expect to make enough profit off of hardware sales? Is the model now that cost reductions will occur so rapidly that initial losses will be offset in the first year and also allow a price reduction immediately following? I doubt it.

 

[Carl B]

Without reading through ten pages of repetition, I think one thing that has changed in the last five-ten years is that gamers are older, they're still gaming, and they're not reliant on mommy and daddy to make the purchase.

How many 360's would've sold at $400 if it was launched six years ago? I mean it may have sold out still, but it'd be a different feel in the market. These days I think by and large the majority of 360 owners are individuals that bought the system for themselves. We've been talking about impulse purchases, but there's another level here entirely. Ten years ago it would have been by and large parents and such buying the Sega's, the Nintendo's, and the Playstation's... either that or summer job money, Christmas money, etc... Today you have plenty of well-payed professionals (and this is evidenced even in this forum alone) that are willing to shell out the cost associated with the consoles/franchises they enjoy.

To boot, ten years ago the idea of spending $500 on a console would have proved daunting to me indeed. Now? Whatever...

I feel the 'race to $199' is a very valid point of discussion, because it will be a big source of demand down the line. But in the short-term, I think the larger story is that of the NES/Genesis-era gaming population 'coming of age.'

 

[mckmas8808]

Okay so what happens when Nintendo launches their console at $199. Does that mean they will automatically crush MS and Sony, due to it being sold at this "Magic Price Point"?

 

[Carl B]

Okay so what happens when Nintendo launches their console at $199. Does that mean they will automatically crush MS and Sony, due to it being sold at this "Magic Price Point"?

Yeah I wanted to bring that up to. Obviously GameCube didn't dominate this gen, despite launching at $199, and consistently being cheaper than the other two. You know what kind of bundles Nintendo offers these days for $99? It's insane. So obviously, there's a lot more that goes into purchasing decisions than just price alone. We could write a hundred-page report around all the little variables and considerations we'd have to account for before reaching trend predictions we felt comfortable with. Price is one of the major vairables in that mix, but just one among many nonetheless.

 

[mckmas8808]

Yeah I wanted to bring that up to. Obviously GameCube didn't dominate this gen, despite launching at $199, and consistently being cheaper than the other two. You know what kind of bundles Nintendo offers these days for $99? It's insane. So obviously, there's a lot more that goes into purchasing decisions than just price alone. We could write a hundred-page report around all the little variables and considerations we'd have to account for before reaching trend predictions we felt comfortable with.

I was just waiting to see how far some people here would go with this "$199 magic point" stuff. Everyone and their momma said the PS2 should have had a price drop a long time ago and it didn't, yet Sony still managed to sell millions more at $149.

 

[rounin]

Does anyone remember what price Dreamcast was at when PS2 launched ?

 

[RancidLunchmeat]

Okay so what happens when Nintendo launches their console at $199. Does that mean they will automatically crush MS and Sony, due to it being sold at this "Magic Price Point"?

Yes.

What is that old saying about asking a silly question?

Actually, I found the monthly sales figures for the PS2 and they trend quite evenly regardless of price point. The implications of that are rather interesting because it means sales didn't spike after a price cut. Either Sony could have kept selling the console at its higher price because demand for the console isn't influenced by price, or it means that Sony has (or had) an amazingly good model of consumer purchasing behavior for them to know exactly when to reduce the price of the console and to what level in order to keep demand at the same level.

 

[scooby_dooby]

Yeah I wanted to bring that up to. Obviously GameCube didn't dominate this gen, despite launching at $199, and consistently being cheaper than the other two. You know what kind of bundles Nintendo offers these days for $99? It's insane. So obviously, there's a lot more that goes into purchasing decisions than just price alone. We could write a hundred-page report around all the little variables and considerations we'd have to account for before reaching trend predictions we felt comfortable with. Price is one of the major vairables in that mix, but just one among many nonetheless.

No there's only 2 main factors.

It's price and games, you need both not just one. GC had the price, but it didn't have the games, therefore GC is not an example of why price doesn't matter, it's an example of why a strong game library is required.

Bottom line is this, PS3 will be facing a competitor with an extremely compelling game library, far and away better than anything on XBOX 1, dreamcast or GC, that's a fact. The other problem facing Sony is that their competitor will be hitting the lower(read: mainstream) pricepoints before they can get there.

We can debate all day about the maturing gamer, and their impact on pricepoints, but I don't think this changes the fact that the majority of gamers are casuals in every sense of the word. They buy the console when it gets cheap enough that's it's not a big expenditure and play maybe a handful of games a year. In most peoples minds, that's a $200-300 pricepoint. If you want to reach that majority of gamers that are not 'hardcore' you have to hit those pricepoints, and if the 360 can get there with a very strong game library it probably enjoy some large gains in marketshare.

 

[Carl B]

Every thread begins to seem the same after awhile these days... maybe we should just merge them all into a single thread entitled: PS3 Pricing - Deathmatch!

Anyway 360 has a superior game library to XBox 1's, for sure, but there are still marked areas of difference between each consoles traditional 'strong points.' For me, the games on 360 that most appeal at the moment are DOA 4 and Oblivion. Now, Oblivion I have on PC, and I'm not getting a console just for DOA 4, y'know? (I have my pride)

I switched to PS in the first place due to the Square exodus from Nintendo, and as long as PS remains JRPG central, I imagine that for myself and many others it will remain the console of choice. I don't disparage 360's strength in FPS games, their gaining of GTA, or anything else. It's just I myself don't play those games, and whether I'm in a minority or not, I'm not necessarily in a small grouping.

To me, strength in the 360 lineup doesn't translate immediately into weakness on the PS3 side. Xbox had a line-up that could traditionally be considered 'pathetic' when compared to PS2's last gen, but yet it managed to make massive inroads in the West due to it's filling gaming niches which PS2 was missing the mark on. Even if the rolls reverse this gen (in the West) in terms of which console offers 'more' value in general to gamers tastes, it would be naive to think that Playstation won't be able to compete competently via their game offerings.

 

[expletive]

Every thread begins to seem the same after awhile these days... maybe we should just merge them all into a single thread entitled: PS3 Pricing - Deathmatch!

Dont you mean "PS3 Pricing- Team Deathmatch" ?

 

[Carl B]

Dont you mean "PS3 Pricing- Team Deathmatch" ?

There ya go.

 

[Shifty Geezer]

No there's only 2 main factors.

There's a third factor, marketting and mindshare, that is at least as important. A popular thing will sell itself on account of being popular, regardless of whether it's any good or not - just look at the Da Vinci Code book None of these trumps the other. You could probably try to derive a mathematical relationship of equivalencies, how one factor can be considered as worth to the other factors. eg. Given a low software base, what price would be worth the lack of software? Or how much more can a product cost for a given minshare? It still seems to me most people overlook this point, that PlayStation really is damned popular, the market leader, and it's not easy to get the public to change from market leader to a rival product. Just underpricing the market leader doesn't work, otherwise iPod would have been usurped yonks back.

 

[scooby_dooby]

There's a third factor, marketting and mindshare, that is at least as important.

Oh really? 'at least' as important?

Take a look at Nintendo vs Sony ~1995, and show me how mindshare is more important than price and game library. It's not.

Mindshare and marketting are important, but are not even close to being as important as price, and game library.

XBD - I wasn't saying that a strong 360 lineup equates to a weak PS3 lineup, simply that when you combine a strong lineup with low price, you WILL get good mainstream sales. GC notwithstanding.

 

[Arwin]

The race to $200 is meaningless. By fiscal year 2005, Xbox sold 13,5 million of its total of 21 million Xbox'es in the U.S. That left about 7,5 million for Europe, and 450,000 in Japan. $200 had nothing to do with that - look at this for instance:

http://www.gamesindustry.biz/content_page.php?aid=995

"13 million units by the end of 2002 would give the PS2 an entirely unassailable lead in Europe, with more than three times the installed base of GameCube and Xbox combined. Current projections are that GameCube will have sold 2.5 million units by the end of the year in Europe, with Xbox lagging behind - despite strong uptake in the UK - on 1.5 million units."

Sure, the 199$ limit was reached in March 2002 in the U.S., but not in the other regions, where it nevertheless did even better than in the U.S.

But the thing is, exchange rates are tricky. Look now at how the pound, euro, dollar and Yen relate:

Current JPY exchange rates

On last update (12 May, 2006), the rate was
1 USD = ¥110.47
1 euro = ¥142.09
1 CNY = ¥14.5447
1 Pound sterling = ¥208.68

In terms of the $599 PS3 (we only have the UK estimate for this version) that means the US version costs 65.800 Yen, the UK version costs 88.000 Yen, and the EU version costs 85.000 Yen.

But in late 2001, the dollar stood at 131.47 Yen, and the Euro at about 115 Yen. So compared to the Yen, the Dollar vs Euro shift has been from +16, to -32, a difference of 48 Yen per dollar. That is over 40% of the current dollar value.

Besides that, regular inflation makes 299 about 350 today.

I leave it to you to decide how expensive or cheap that makes the playstation 3 in the U.S. when it launches. I estimate that against the Yen and with inflation taken into account, the entry level PS3 would have cost about $399 in the U.S. in 2001, which makes it about 100$ up against the PS2 at that time.

But really all I'm saying is ... forget about that $200 price point, it is meaningless.

 

[Carl B]

Oh really? 'at least' as important?

Take a look at Nintendo vs Sony ~1995, and show me how mindshare is more important than price and game library. It's not even close.

Mindshare and marketting are important, but are not even close to being as important as price, and game library.

Well, I think that marketing and mindshare are more important than that... I mean the iPod example Shifty brought up is a great one. iPod has competitors that offer better sound quality, lower pricing, everything... yet they are the 'only' choice because they are the only cool choice. Sony has a shot at that, at least. MS got some of that last Christmas too, of course.

I'm not saying I disagree with you, I'm just saying I do agree with Shifty as well. I think for every one of these scenarios, we can find a good exemplar or two on each side of the equation in terms of supports for arguments.

XBD - I wasn't saying that a strong 360 lineup equates to a weak PS3 lineup, simply that when you combine a strong lineup with low price, you WILL get good mainstream sales. GC notwithstanding.

Ok well I definitely agree with you there. 360 may be a sort of 'modern Genesis' in terms of it's appeal and penetration in the West. I certainly predict a strong future for it myself.

 

[scooby_dooby]

The race to $200 is meaningless. By fiscal year 2005, Xbox sold 13,5 million of its total of 21 million Xbox'es in the U.S. That left about 7,5 million for Europe, and 450,000 in Japan. $200 had nothing to do with that - look at this for instance

Those numbers are meaningless as the type of gamer I'm talking about is interested only in getting the best game library for as cheap as possible, which means they did not buy an XBOX last generation, but instead bought PS2.

So if you're going to do any numbers, do them on the PS2. How many of it's 100million units were sold below $200?

 

[Carl B]

That is indeed an interesting question.

It seems that via this article here, PS2's shipped (you know how Sony is) equaled 30 million at the time of the announcement. So if we're conservative, let's say 25 million sold by that point. Of course we'll never know how many PS2's would have sold if there was never a price drop - that, as always, is the big unknown on the demand curve.

Anyway Rabid's post #750 on the subject is interesting as well.