Prediction Poll: How many PS3's will be sold?

[Crossbar]

The Playstation 3 has so far sold about 5 million units mainly at a price of 600 $/€. That is 50 % higher than the price of the 360 Premium.
It has so far not been sold over the holiday season in the PAL region.

The price will come down before this holiday season, if we are to believe Sir Stringer, which IMO will help push another 5 million units throughout this year, but if we stay conservative and say they only push one million units in each of the major regions (Japan, US, Europe) that would make the total sales about 8 million units by the end of this year.

Assuming that the PS3 will actually sell less the coming years when the price will continue to fall towards the current price of the PS2 and when games are released that actually starts pushing the PS3 hardware is hard for me to understand.

And it´s not like the PS3 will be missing exclusives that will take advantage of the hardware, didn´t some Sony representative mention they had 30-40 BD titles in development at their first party studios this spring. Sony owns quite a few successful franchises that will come to the PS3 over the coming years.

Assuming that the PS3 will sell less than 40 million units over its entire life cycle is a bit naive in my opinion.

 

[TheChefO]

In the end, I find the notion of "Sony should learn from their past mistakes" quite funny.

I do too.


If it were one or two mistakes they needed to learn from, that's one thing. But they screwed up on so many levels, I just hope they understand the many reasons for not repeating a ps2-like performance.

Sure most would think that every company (or person) learns from their mistakes, but Sony did not learn from the ps2 gen when they made a machine which was a PITA to dev for and repeated the mistake with ps3. This mistake was covered up by having weak competition and great timing with ps2.

The mistake of overhyping their machines ability was also repeated with ps3.


So while it may sound like an obvious no-brainer to laugh at, Sony has proven to be bullheaded and blind to their mistakes. Even the obvious ones which are currently staring them in the face they seem to ignore or dismiss. I'm hoping for change on their part to actually be honest with themselves and recognize their flaws.

They have great engineers and great devs, but it doesn't mean much if they keep repeating these types of mistakes in the future.

 

[Acert93]

if they get it down to 399 this year, i think they will. no 399 is not low enough to appeal to the casual market yet, but that means 299 is not far away (possibly next year?) and that seems to be the sweet spot. who knows, we may even see 199 by the end of 2009.

$299 in 2008 and $199 by 2009...

The question is how is Sony reaching $399?

Is it natural cost reduction? e.g. Was Sony losing "$100" per console at $599 in Fall 2006, and now in Fall 2007 at $399 Sony is still losing "$100"?

Or is Sony losing even more now by moving to $399?

Or, if Sony is losing the same $ amount they were losing in Fall 2007 by migrating to $399, are the losses sustainable? Did Sony create a market plan where they intended to have high loses for a sustained period of time?

The PS3 is getting, and will continue to get, cheaper to manufacture. BDR has, and continues to, drop in price. Cell and RSX will be migrating to 65nm. The various axillary chips will also see reductions. EE and GS eventually will go completely bye-bye. Certain features, like WiFi, card readers, and the like could also get the boot. So I am not poo-pooing the idea the PS3 is becoming more affordable for Sony to manufacture.

I just question how sustainable such an aggressive price cutting scheme is for Sony. The PS3 is costing them dearly and the PS3/BDR trojan horse hasn't resulted in the goal Sony wanted (quick domination of the HD media market), which is another financial strain (instead of collateral revenue stream).

I wouldn't be surprised that a $399 unit, as of right now, is only marginally cheaper for Sony to manufacture then it was 6 months ago. With a lot of PS3 sales in the $599 bracket, even with aggressive price reduction (EE, GS, WiFi, etc) Sony will be losing even more money than they were 6 months ago on those $599 units.

The PS3 is more expensive than the 360 to manufacture, and we can see MS's "profit" situation (and they are selling an amazing amount of software and have millions of Live users). I don't expect the HDD 360 models to drop below $299 in 2008, so unless Sony is willing to bite a significant amount of cash over and above what MS is, I don't see that as happening. What would really be the fly in Sony's ointment is if the $50 October price drop happens... $249 Core "Arcade" and $299 Pro.

A PS3 price drop could propel MS into a more main stream price point market and make it more price competitive with Wii.

 

[TheChefO]

Assuming that the PS3 will sell less than 40 million units over its entire life cycle is a bit naive in my opinion.

I think the reasoning behind that thought process is a difference of opinion on the snowball effect and when it will kick in and or how powerful it is.

PS2 steamrolled it's competition and became the defacto standard. Your friends had it, you had it, your family had it, your little brother had it. It had something for everyone and was priced open enough to be a sale to everyone. It seems this gen the market is segmenting. Nintendo is scooping up casual gamers left and right. In fact, I'd almost say it was a pointless venture for MS or Sony to try and sell to this crowd as it is firmly in Nintendo's hand.

Who knows how many casual gamers are out there, but it is a chunk.

The other chunk is hardcore and traditional gamers. As is, MS is giving them plenty of reasons to choose xb360 over ps3.

The more devs that see xb360 sales and are lured into producing on xb360 (in some cases exclusively), the more this steamrolls into sales of something which interests your cousin, your friend, your neighbor, etc. Support follows userbase and the cycle continues.

If this support/userbase snowballs next year when xb360 hits mainstream pricing, I see ps3 hitting below 20m. If not, I see them getting a bit more than 40m as they make a bit of a comeback in 2008 and 2009.

I predicted long ago (last year about this time) that this support and userbase would snowball by the end of this year, But this was based on a more aggressive pricecut schedule by MS.

In this market, I think Sony will have a shot to sell decently this gen.

 

[TheChefO]

A PS3 price drop could propel MS into a more main stream price point market and make it more price competitive with Wii.

And this is the most interesting point of all.

On one hand, Sony can take more losses in the short term and try to secure some momentum in this race. Or, Sony can sit it out and wait for their BOM to drop enabling a pricecut.

Consequences for option A could be worse for them than sitting on existing prices as pushing MS into a mainstream pricepoint this year with such a hot library and momentum could push the snowball effect into this year and kill any shot Sony has of coming back next year.

Tough call.

 

[Crossbar]

I think the reasoning behind that thought process is a difference of opinion on the snowball effect and when it will kick in and or how powerful it is.

Yeah and it probably also depends on what part of the world market you are closest to.
Sony is selling at even numbers all over the globe, which is probably where they want to be.

 

[TheChefO]

Yeah and it probably also depends on what part of the world market you are closest to.

Sony is selling at even numbers all over the globe, which is probably where they want to be.

Agreed on the first part, questionable on the second part.

They are selling much better than MS in Japan, not so sure about EU at this point though.

WW sales seemed to be a bit behind MS though week to week.

 

[djskribbles]

$299 in 2008 and $199 by 2009...

The question is how is Sony reaching $399?

Is it natural cost reduction? e.g. Was Sony losing "$100" per console at $599 in Fall 2006, and now in Fall 2007 at $399 Sony is still losing "$100"?

Or is Sony losing even more now by moving to $399?

Or, if Sony is losing the same $ amount they were losing in Fall 2007 by migrating to $399, are the losses sustainable? Did Sony create a market plan where they intended to have high loses for a sustained period of time?

The PS3 is getting, and will continue to get, cheaper to manufacture. BDR has, and continues to, drop in price. Cell and RSX will be migrating to 65nm. The various axillary chips will also see reductions. EE and GS eventually will go completely bye-bye. Certain features, like WiFi, card readers, and the like could also get the boot. So I am not poo-pooing the idea the PS3 is becoming more affordable for Sony to manufacture.

I just question how sustainable such an aggressive price cutting scheme is for Sony. The PS3 is costing them dearly and the PS3/BDR trojan horse hasn't resulted in the goal Sony wanted (quick domination of the HD media market), which is another financial strain (instead of collateral revenue stream).

I wouldn't be surprised that a $399 unit, as of right now, is only marginally cheaper for Sony to manufacture then it was 6 months ago. With a lot of PS3 sales in the $599 bracket, even with aggressive price reduction (EE, GS, WiFi, etc) Sony will be losing even more money than they were 6 months ago on those $599 units.

i think if they drop it to 399 this year, they would probably lose more money per system compared to when they were selling it for 599. but i think its more important for Sony to increase their install base asap and don't let the gap widen TOO much. i didn't say i think well see 299 in 2008 for sure, but i think its possible if we hit 399 this year.

 

[RobertR1]

Sony has no choice but to drop the price to $399 in NA to remain competitive and not let the gap widen with MS' holiday push and strong lineup. This is just my opinion so please don't start "list wars." The Wii will ofcourse sell amazing amount becuase it's the mass market golden child.

If they let the gap widen too much and sales are poor, Sony will be close to facing mass market rejection in the US. What does that mean? Everyone and their friends will be so focused on their Wii's and 360's, the PS3 interest will be drop.

 

[nelg]

$299 in 2008 and $199 by 2009...

The question is how is Sony reaching $399?

Is it natural cost reduction? e.g. Was Sony losing "$100" per console at $599 in Fall 2006, and now in Fall 2007 at $399 Sony is still losing "$100"?

They must be losing less. After all they could afford to sell the division that was an important part of the vertical integration that enabled them to manufacture it cost effectively.

 

[AlphaWolf]

Sony has no choice but to drop the price to $399 in NA to remain competitive and not let the gap widen with MS' holiday push and strong lineup. This is just my opinion so please don't start "list wars." The Wii will ofcourse sell amazing amount becuase it's the mass market golden child.

If they let the gap widen too much and sales are poor, Sony will be close to facing mass market rejection in the US. What does that mean? Everyone and their friends will be so focused on their Wii's and 360's, the PS3 interest will be drop.

The problem they face is that I doubt MS will let it go without countering. A $399 ps3 will probably wind up facing a $329 or less 360. MS had a huge run from release without a price drop but immediately met Sony's (pseudo?) price cut with one of their own.

 

[Natoma]

Right now, the PS3 is selling on par with how the 360 sold through its first year to this point. They really need to drop the price though to close the gap.

 

[Diamond.G]

Why isn't the "real" money for Sony also going to come from content sales?

How well is their content selling? At this point I didn't think anyone but Nintendo made a nice profit on hardware sales. Sony could be riding on the BR wave, afterall BR is outselling HD DVD nearly 2:1 by most accounts.

 

[Shifty Geezer]

How well is their content selling?

How well are BRD's selling? How much profit is MS's gaming division making because of content? All these plans are long term, and at the moment no-one's cashing in. MS is making money from content (anyone have figures how much) but as a real cash-cow, they'll be needing sales to pick up lots and lots over the next years. For Sony to profit from BRD, they need BRD players and content to sell. In that same long-term vein, Sony are also intending to make loadsa sales from downloadable content. I don't see MS's position as any different from Sony's in this regard, except being further ahead in rolling services out.

 

[TheChefO]

The problem they face is that I doubt MS will let it go without countering. A $399 ps3 will probably wind up facing a $329 or less 360. MS had a huge run from release without a price drop but immediately met Sony's (pseudo?) price cut with one of their own.

Exactly.

That is one tough call for them to make.
I'm not sure how I would choose to act in that situation.

Grow more at the risk of your competitor(s) countering and exploding their marketshare,
or
Wait when software and lower BOM enable a better shot at reclaiming marketshare...

I don't know.

I'd probably wait and hope MS doesn't drop price again. But they must be ready to drop to $400 if MS does another pricedrop before the end of the year.

 

[Crossbar]

Exactly.

That is one tough call for them to make.
I'm not sure how I would choose to act in that situation.

Grow more at the risk of your competitor(s) countering and exploding their marketshare,
or
Wait when software and lower BOM enable a better shot at reclaiming marketshare...

I don't know.

I'd probably wait and hope MS doesn't drop price again. But they must be ready to drop to $400 if MS does another pricedrop before the end of the year.

Are you really serious? Do you think Sony would play a wait and see game, and if MS drops the Premium price from ¨$349 to $329, Sony would drop the PS3 from $500 to $400?

I think the proportions of those numbers are way off.

Sony will lower the price of the PS3 before the christmas holidays anyways, they know it is priced to high for the main stream market. They don´t have to look at Microsofts moves to know that. The question is how much they will lower the price. $50, $100 ....? If they will introduce a low end module, as Titanios detective work suggest, they may be willing to subsidise it more than the current 80 GB unit and keep the 80 GB unit as a hi-end SKU. Hell we don´t even know if they will still be subsidising the 80 GB unit at all if they keep the price at (or close to) the current level.

I think we can be pretty certain that the price point of $500 for the PS3 will be changed downward for christmas, but that´s about it.

 

[TheChefO]

Are you really serious? Do you think Sony would play a wait and see game, and if MS drops the Premium price from ¨$349 to $329, Sony would drop the PS3 from $500 to $400?

I never stated a figure for MS so please don't put words in my mouth.

And yes I am serious. By Sony dropping price to $400, they may push MS into dropping to $300 for premium and $200-250 for core. That's mainstream pricing just before Christmas with an attractive software lineup and momentum.

Who knows how many MS may sell in this current environment with such a lineup and mainstream pricing.

Wii will also likely be production constrained thuse pushing many of those sales to the next affordable box (MS).

This decision isn't as clear cut as you make it out to be.

 

[Crossbar]

I never stated a figure for MS so please don't put words in my mouth.

And yes I am serious. By Sony dropping price to $400, they may push MS into dropping to $300 for premium and $200-250 for core. That's mainstream pricing just before Christmas with an attractive software lineup and momentum.

Who knows how many MS may sell in this current environment with such a lineup and mainstream pricing.

Wii will also likely be production constrained thuse pushing many of those sales to the next affordable box (MS).

This decision isn't as clear cut as you make it out to be.

I picked the numbers from the post you quoted in your previous response, in that post you said that Sony may lower the price to $400 if Microsoft dropped the price once more and now you say MS may drop the price if Sony drops the price to $400. I am not sure what you really believe.

I think you are over-estimating the likelihood of tactic price drops, most price drops are strategic ones and planned well ahead. Remember the interview with Stringer in the beginning of the summer. Perhaps they may offer some kind of temporary bundles with games, controllers etc. or some other kind of marketing efforts, but fast price drops will hardly be done in response to the competition.

 

[TheChefO]

I picked the numbers from the post you quoted in your previous response, in that post you said that Sony may lower the price to $400 if Microsoft dropped the price once more and now you say MS may drop the price if Sony drops the price to $400. I am not sure what you really believe.

I never said if MS drops to $330 or $320 or any other number. The rumor has been ps3 @ $400. Such a drastic cut would likely push a reactive cut of at least half that amount. ($50)

As for timing and planning, MS has been behind the 8ball on that one for months and they still are. Historic cuts of successful consoles have been ~18months after launch and $100 off cost bringing it to $200.

As for Sony, to think they have been executing "to a plan" to this point is laughable. They intro 2 sku's, they drop the cheaper sku after "poor sales of the cheaper model". Then they drop the price of the 60gb model back to the same pricepoint of the recently discontinued model. All the while introducing a different model to the EU market with partial hardware emulation. All within half a year.

They have been all over the map trying to balance units and finance.

This is the latest question in that realm of how they will move forward as they haven't been clear in this respect. In fact, I'd say to this point they have been a lot closer to cost control than userbase expansion and thus, they may just wait for BOM reductions and not drop price again this year.

I think you are over-estimating the likelihood of tactic price drops, most price drops are strategic ones and planned well ahead. Remember the interview with Stringer in the beginning of the summer. Perhaps they may offer some kind of temporary bundles with games, controllers etc. or some other kind of marketing efforts, but fast price drops will hardly be done in response to the competition.

Somehow I doubt that these companies don't react to eachother's pricedrops as historically (and recently) pricedrops are right next to eachother on the timeline.

They may choose to do a value add though as you said. In fact, wasn't this rumored to be in MS's plans weeks (months?) ago to include two games in the box before Christmas?

 

[Johnny Awesome]

I actually think MS is looking at their own sales and not really worrying about Sony's price. They saw their August numbers hit 276,000 in the US and they will be monitoring what happens in September and October. If they jump to 400,000 or so, I think they will hold fast at $349 no matter what Sony does. They might bundle some games though.

If they don't gain enough traction from Halo 3 at the new price point (almost inconceivable IMO) they will probably lower to $299 before the Thanksgiving shopping begins.

That's what I would do if I ran a successful manufacturing company. Wait a minute... I do.

MS should consider putting Kameo and Viva Pinata into a Core bundle for $279 and putting Forza 2 into a Premium bundle for $349. That would be the nail in Sony's NA coffin, $399 or not.