The PS3 price drop/ mass market thread (yeah Sony is in BIG trouble..)

it's certainly not a doomsday approach, your perception drew that conclusion, all i am saying is that the Wii pricing cannot be compared to the 360 or especially the PS3, i am more willing to bet that Nintendo brings out a replacement for the Wii much sooner than Sony, because of the much less cost and R&D, Nintendo is probably turning a profit already on the consoles they are selling, M$ just got there recently, Sony is still losing, Sony will be wanting to drag out the useable life of the PS3 much further than M$ or Nintendo, i suspect M$ and Nintendo will release new consoles before Sony does, Sony wants to turn a profit before they invest a bunch more for sure

 

well...I was actually speaking directly to the thread maker..

 

It's expensive. So what? It's intentionally expensive. Did you think it was accidentally expensive??

If you can't afford it now, don't freakin buy it! You were intentionally left out of the demographic. But cheer up, there are 2 other new consoles that may fit you better. If not there is still last gen for you!

And in Sony's mindset, PS2 is still very much on the table. And people who can't afford PS3 should buy or stick to PS2 instead.

Wii is not competing with 360 or PS3. It's competing with PS2. Sony and MS have both said they do not feel their new products they are in competition with Nintendo. Neither should you.

 

This has no relevance to my rebuttal. You were comparing the PS2's original price to its present one, and I was stating that this cannot be compared with your theoretical PS3 chart, as there were too many things that factored into the PS2's pricing strategy that are nonexistent in the PS3's condition...namely, its 1-year head start. You were assuming that, seeing as that the PS2's price took 5+ years to drop less than $200, the PS3 would follow in tune. But, as you stated, the PS2 was a healthy seller throughout its lifetime. As a result, the other two companies had to play catch-up with Sony, not vice versa.
Sony is now in a much more difficult position; as a result, their pricing strategy will be much different in comparison to that of the PS2's. Probably not on the same aggressive level as your chart speculates, but definitely much more dramatic than that of the PS2's.
With that said, I dont think we're on the same page, here. I was assuming that you thought that the PS3 would keep its steep, original price for a very long time, similar to that of the PS2's.

It doesn't. I'm not speaking about the PS3 and mass market success just now. I'll tackle that in a second.

no comment.

Our assumptions on what price appeals to the mass market as "acceptable" or "generally affordable" seems to differ, judging from your comments. I personally believe that the console itself will decide its own price, judging from the mass perception of the product. This will directly coincide with Sony's marketing and efforts to set up the PS3 as a product worth the $500-$600 price tag. We cannot just suddenly assume that the PS3 will not be deemed affordable until it hits that magic number...the number could be anything. It will depend on the PS3, and Sony.

Elaborate, because I believe that the PS3 and the Wii are very different products that appeal to different audiences...ie, the casual crowd, and the enthusiast/hardcore crowd ( or what-have-you...its incredibly difficult to generalize)

perhaps you're misinterpreting my position on this topic, but I agree wholeheartedly that Sony will, in all likeliness, lose their position as the dominant market leader. This does not, however, conclude that I somehow think that Sony is in a world of trouble if they continue with this strategy. In fact, I cant really comment on such a strategy at all, given how shortly the PS3's existence as an actual retail product is.

I think that I answered your other question somewhere in there. I'll elaborate, if you'd like.

 

Good points, Inneficient.

The PS2 is so very viable and the PS brand is strong. The $129 PS2 is peanuts to buy, and still has huge presence at retail. There is your mass market.

Where's the $149 XBox? A fading memory.

Point is, if you knock it off with the console war strawman crap you would look at the bigger picture, you would see that these companies are operrating with somewhat different strategies. Monthly sales totals are not a scoreboard. That is, they aren't the best way to monitor the progress of your team . I'm of the opinion OP is rubbish in general.

 

oh, you didn't quote anyone in particular and replied directly after me so one could only assume you were replying to me

 

fair enough

 

I dont think that I can say much else that will put this debate to rest, so I'll just leave you with my previous comments

 

I dont consider "no, you're wrong", and "no, you're wrong" discussions ones worth continuing. It doesn't seem like we're offering each other topics worth building upon.
just to clear things up...

I was actually referring solely to the PS2, and how MS and Nintendo needed to catch up with it.

the PS3's asking price of $500-$600 was the set, original price to begin with.

Because people were speculating that Sony would attempt to mimic their former strategy (and perhaps rightfully so) with the PS2, and translate it into a successful formula for the PS3 to follow by. But Sony obviously has other priorities...ie, Blu Ray. Regardless of how relevant that is, its probably the truth.

Again, we need to understand that the general public's perception of the PS3 will factor into the equation. But it's pretty pointless to debate on this topic, as it seems that our beliefs differ too much regarding mass market price acceptance.

that is probably true, yes-if they already haven't. Again, it relates to the product itself.

It is absolutely impossible to determine anything related to this as of now. the mass market acceptance price could be $500 one year from now, or it could be $50, depending on the events that occur within that span of time. It could take Sony one year..two...three...who knows? I'm not sure if you're looking at the broad picture in this. The acceptable price range will be determined by many, many, many things...including, but not limited to, the quality/quantity of games of the console, its features, the general perception (whether accurate or not) of the console, the current situation of its competitors, the success/failures/situations of specific hardware/formats that the console is pushing (in this case, Cell and Blu-Ray)...the list goes on.

I personally could never predict that the 360 would hit such a landmark when Gears came out..but look now. many could have predicted (and the probably did) that the console itself wouldn't cement itself into the market as a product appealing to mass audiences until Halo 3 hit shelves...but that goal may already have been accomplished with the absurd success and praise that Gears is enjoying at this instant. But we'll have to see.

And if we must focus on shareholders...well, what of them? Are they pushing for a Blu-ray home-run? Are they willing to sacrifice the share of one market for another?

Which is more valuable-Blu Ray, or the PS3? This question must be answered before their potential banking on the success of the PS3 is even speculated upon....because its obvious what Sony is dedicated to, as of now. The precious investments Sony has made on PS3 and, more importantly, Blu Ray, and their future, really depend on multiple things. I simply cannot comment on how Sony's going to deal with such a situation, as the situation itself is partly cloaked in undecided events that Sony may or may not have a key role in.

I cannot comment on the consumers or how Sony will appease them. Price drops, killer apps, multimedia features, viral marketing campaigns, bundles, events, meaningless numbers...who's to rightfully say? We're trying to analyze a console's future thats hardly even gotten out of the gate. Furthermore, you ask how they'll appease them until they reach the magic number? Well-dare I go off on this tangent again-the magic number will be altered by everything that I've just gone over....

Whatever the magic number may be, it will always, always, always be affected by too many things to count. A computer could cost $80,000, but if it prints money, is that considered the "mass market acceptance" number? Maybe i'm not reading you correctly, but it seems to me that you believe that a console will just suddenly start selling better by 50% once it reaches a number that everybody loves. The number will always depend on the product, and even the individual. There's just no way to analyze it and come to a set-in-stone conclusion.

Developers? Well, thats definitely the wild card of the bunch. Sony could tempt them with money...MS could tempt them with more money. Sony could buy them out...MS could buy them out first. Sony could sign a contract...MS could sign a contract and slip them a check with 9 zero's. The Devs may predictably flock to the largest userbase-but if life were that simple, then MS would have monopolized yet another market 3 years ago.

So what do you end up with? A blurry situation that we'll probably never be able to safely analyze. However, I can say without too much risk of uncertainty on my own part (I'm sure you're getting tired of me being indecisive and indifferent towards all of these situations) that third parties will be much more independent in their actions this gen, and much less dedicated to specific consoles, as this race will be a much closer one, without a doubt.

I understand that I'm being an indecisive, complicated bastard, but thats how I've always perceived this console and its future...as well as the future of the console market as a whole. Perhaps thats why I find this topic difficult to swallow, as it seems that, these days, we can never accurately predict anything without being proven completely wrong a week later.

 

The problem with this line of thinking is that a lower price doesn't automatically equal more sales for the system. It's possible for the PS3 to "win" this generation while never lowering the price, and it's possible for the PS3 to "lose" even when selling for $1.

You could buy a new PS1 in the store not long ago and it was cheaper than the PS2, but the PS2 sold more while they were both on the market.

So what really drives sales? A lot more factors than price.

 

The fact is that this quoted "fact" is in fact not a fact at all.

It may get reset in places like this, but not in the business world.

It is this that muddies your argument. The 360 and Wii and the PS3 are all competing with the PS2. And in terms of profitability, they are getting spanked. Day in and day out. One day the PS2 will hand over the torch to the PS3, but that day has yet to come.

 

Sony Corporation has not made a loss in over 10 years. So I don't know where you are getting your information from. It tells you something about the improvement in CE and SPE that the company is still forecasting a profit for this fiscal year given all the catastrophe's that have occurred.

The comments on Sony's debt from people also seems odd to me. Many people just take the total liabilities from the balance sheet and proclaim that Sony has a debt of $60bn! The reality is that Sony's long term debt has been stable for many years hovering at the ~$5-8bn level.

The biggest change in recent years has been the change in the way in which "Provisions for Risks & Charges" (includes provisions for pension funds, repairs and maintenance, litigation claims, etc.) has been accounted for. A large amount of this (~80%) of this was shifted to "other liabilities" on the sheet in 2005. I think you'll find this has a lot to do with Blu-Ray/PS3/S-LCD and Stringer’s reforms.

Total liabilities have increased at an average rate of ~6% year on year since 2002. The largest jumps were 13% from 2005-2006 and the same in 2003-2004. Meanwhile total assets have increased at an average rate of 7% year on year in the same period.

A manufacturing company always has a lot of liabilities because there are more risks involved. However liabilities do not equal debts.

Microsoft's advantage is in free cash flow. Sony's margins are small, and they cannot afford to go as heavy in price competition without taking on more debt (which they are more than able to do even with their current rating). However this is assuming Microsoft HE is given free reign from the rest of the company and that limits on the division’s budget have been removed - that is debateable.

Footnote: (All data taken from Thomson One/Datastream 2002-2006)

 

I didnt read the whole thread but something most people are ignoring everytime they are trying to make estimations on Sony's losses and its course with the PS3 is that Sony has a profitable and succesful console in the market. PS3 losses co exist with PS2 profits and although these profits most likely wont be able atleast initially to cover up the losses, still these can also help Sony push for price drops.

 

Absolutely, and also they seem to forget all other very very profitable businesses Sony has, from TVs (they're overpriced for a reason you know!) to the movie industry and all sorts.

But some people seem to feel better when they believe that sony iz teh doomzorz

 

Yeah exactly and avaya described it perfectly
Its like the other time when Sony had a reduction in profits and people interpreted this as "making losses" when Sony still continued making profits