What is the impact of no PS3 price drop?

[Arwin]

Those offers have been all "old" 40GB stock. Not a bad deal as such, but that there are numbers around to be pushed out as broadly advertised offers from some of the larger electronics retail chains half a year after it was supposed to be discontinued could be construed as a bad sign.

They have been 80GB units in the Netherlands and Belgium, though maybe they were still packed in with sixaxis rather than dualshocks, who knows.

The point is though that this is exactly what you tend to see happening just before an official price-cut hits, isn't it?

 

[Zaphod]

Perhaps. Just pointing out that what was apparently the distributor dumping out old 40GB + Sixaxis stock at a reduced price post-Christmas isn't quite the same as the 25-30% price cut that Ostepop's post indicated.

 

[KongRudi]

It shouldn't have that much of a impact, besides the obvious..
Less money money made on Sony's software, and less losses made for Sony hardware.

PS3 is easily the most value for your money, in most cases.
Unless the games you want aren't available offcourse.

Personally I don't think the Wii really competes with 360 and PS3 in the quality of the games.

If you plan on playing online atleast once a month - and the 360 were FREE, it would take around 7 years before you had paid more for that free 360 compared to the PS3-owner, and the price-difference would continue to increase every year.

If you were unlucky and sat with the arcade, you'd not even have a harddrive, not to mention that no matter what you'll do you'll not be able to browse WWW, or watch Bluray's on 360. :-/

However 360 and all it's acessories ain't free..
360 might be a cheaper option, if you don't plan on using your console online on a regular or long-term basisbasis.

So what is the best price, all comes down on how and how long you're going to use your console, and what you want it to do..

 

[midorigreenwood]

Wow, who to believe? >,>

on one hand we have the Nikkei predicting that Sony Corp will post only its second fiscal year operating loss in its history of 1 to 2 billion dollars.

from NJ5 on the vgchartz forums

1st quarter - 73.4 billion yen profit
2nd quarter - 11 billion yen profit

which means the final two quarters of the fiscal year could MASSIVELY be in the red...... like 2-3 billion US dollars...... which is kinda crazy because it includes the holiday quarter which is usually the biggest earner of the year.

Such huge losses would suggest that Sony would be crazy to cut prices and go further into the red......but then we have Michael Pacther predicting a US$100 dollar price cut in April.

Does he know something that we don't ..... does he have a ninja in Sony's midsts?

a little tidbit from a forbes article

http://www.forbes.com/markets/econo...nics-markets-equity-cx_twdd_0113markets3.html

A full-year operating loss would mean that Sony lost its way during the typically buoyant holiday season since it had posted a first-half operating profit. If the dismal second-half performance continues into the fiscal year ending March 2010, Sony is looking at an operating loss next year of 450 billion yen ($5.0 billion), estimates Tokyo-based CLSA analyst Atul Goyal.

Will Sony do a sega and bet the house on keeping up with Microsoft?

 

[Arwin]

Will Sony do a sega and bet the house on keeping up with Microsoft?

If Sony now makes the PS3 and can sell it cost neutral at $399, and then before April they can reduce costs and sell it cost neutral at $299, then that doesn't change much for the company. You could argue that they should put that cost reduction towards their operating income, but it's not that simple - if they can put the PS3 down to a $299 level that opens up a much larger market than the $399 price level does, and that in turn will open the door to more content sales. And that's where the real money is.

I'd sooner argue that the fact that they have kept the PS3 at $399 so long is because they didn't want to bet the house on keeping up with Microsoft.

 

[midorigreenwood]

Thats assuming that they're cost neutral already and will be able to remain cost neutral on April at US$299.

I'm making the assumption that the PS3 is still bleeding cash....... I guess we'll know more at the end of the month when they release more financial data but it doesn't really look like the economic environment will have changed much from end of 2008 to April 2009.

 

[Shifty Geezer]

With the 65nm RSX and reduced cooling, I think there are substantial savings there. I can't see the current model PS3 bleeding money. Losses are likely small rather than catastrophic if they're there.

 

[dobwal]

With the 65nm RSX and reduced cooling, I think there are substantial savings there. I can't see the current model PS3 bleeding money. Losses are likely small rather than catastrophic if they're there.

A $400 dollar PS3 represented ~44800 yen in Dec 2007. A $400 dollar PS3 currently represents ~36000 yen. The yen has strengthened so much against the dollar that the PS3 is now being sold at the equivalent of $321.00 based on the value of yen prior to the collaspe of the stock market in Oct.

To put into perspective, a 160 Gb sold in US right now, represent roughly the same amount of revenue generated by a 40Gb sold 5 months ago.

 

[zed]

Will Sony do a sega and bet the house on keeping up with Microsoft?

umm no, Ive heard the same thing mentioned about MS + the xbox before. its the same story

gaming is only a small part of both sony + MS, they can crash + burn without bringing down the company, in fact with sony less than 15% of the revenue comes from playstation + with MS its even less than 5%, now the xbox1 was a financial disaster, did MS suddenly cease to exist? nope.

this is completely different than with nintendo / sega where the company is/was practically just gaming fullstop.

 

[midorigreenwood]

A $400 dollar PS3 represented ~44800 yen in Dec 2007. A $400 dollar PS3 currently represents ~36000 yen. The yen has strengthened so much against the dollar that the PS3 is now being sold at the equivalent of $321.00 based on the value of yen prior to the collaspe of the stock market in Oct.

To put into perspective, a 160 Gb sold in US right now, represent roughly the same amount of revenue generated by a 40Gb sold 5 months ago.

yup, it looks like its stuck at Y90 and stronger for the foreseeable future without some drastic intervention. eg: the Yen slowly weakened to Y94 after a couple of weeks but the release of some weak US retail and employment data and BOOM, back to Y89 in a short period of time.

The problem in the short to mid term for companies like Sony is that the Ministry of Finance/Bank of Japan seems happy to only talk tough rather than going the direct intervention route as long as currency fluctuations are not too batshit crazy.

It may be that market volatility is too great and could negate their actions from 1)the mad rush of other countries to devalue their own currencies, 2)risk adverse investors rushing to the Yen, 3)the continual unwinding of the yen carry trade.

It could be that its better from their point of view to talk tough and appear to be in control then to go the direct intervention route and spook the market if their actions end up having little effect in this economic environment.

 

[Cheezdoodles]

Dollar vs yen should not be a problem for companies like Sony. This is what futures\forwards are made for, you can remove all the valuta risks super easy, at near zero cost.

Any half competent financial advisors should be able to completely hedge away these kinds of risks by futures\forwards.

 

[dobwal]

Dollar vs yen should not be a problem for companies like Sony. This is what futures\forwards are made for, you can remove all the valuta risks super easy, at near zero cost.

Any half competent financial advisors should be able to completely hedge away these kinds of risks by futures\forwards.

Sony only hedges a portion of its future sales and Sony has been negatively impacted by the strength of the yen against the dollar for quite some time. The stronger the yen becomes the harder it will hurt Sony.

 

[Cheezdoodles]

Sony only hedges a portion of its future sales and Sony has been negatively impacted by the strength of the yen against the dollar for quite some time. The stronger the yen becomes the harder it will hurt Sony.

Dont you mean Sony only hedges a portion of its cashflow with futures ?

(Because as its worded right now, i read the following: Sony has a lot of speculative future positions and only a small portion of these positions are hedged -> which would have to imply that their position in derivatives have to be much higher than their USD cashflow...)

To bad for Sony, they should have just hedged their entire u$d Cashflow.

 

[joker454]

I've read somewhere that Sony is planning to spend 2 million euro's for advertising in the UK alone for KZ2.

Irregardless of marketing, the problem is that without a price cut they are going to have a very hard time pulling in new users into the PS3 fold, it will mostly be sold to existing PS3 owners. A $500 price of entry (PS3+KZ2+tax) is rough. I'm really surprised that Sony didn't time a system price cut with the KZ2 launch. There aren't many games that can generate such a huge amount of hype, why not capitalize on it? A KZ2 launch combined with a price cut would have been a good one-two punch.

 

[Carl B]

A KZ2 launch combined with a price cut would have been a good one-two punch.

I think you've got to follow some more of the financial threads to glean into why that would be a net negative for Sony at the moment.

Best to let KZ2 sell as many consoles on its own as it can - and just sell a lot of the title itself - and lower the console price later to take the next step along the supply/demand curve. Sony's not in a position right now where they can make aggressive install base grabs though.

 

[Nicked]

I think you've got to follow some more of the financial threads to glean into why that would be a net negative for Sony at the moment.

A $50 cut would pay for itself when people are picking up a $60 KZ2 with it though, especially since they're selling a great clip of software according to their financials. Besides that I really think your exaggerating the situation.

 

[zed]

MGS4 anyone?

IIRC ps3 NPD sales doubled for that.

sony gamedivision finally posted a profit last week for first time in ~2-3years + u want them to cut the price + drive them into the red straight away again

it makes much better sense a pricecut around the middle of the year.

get two bites of the cheerie, this game + later a pricecut (though I think itll only sell ~300k in marchNPD)

 

[Carl B]

A $50 cut would pay for itself when people are picking up a $60 KZ2 with it though, especially since they're selling a great clip of software according to their financials. Besides that I really think your exaggerating the situation.

Well, you're welcome to your opinion on the matter of course, and I'll leave it at that.

sony gamedivision finally posted a profit last week for first time in ~2-3years

It's not their first in that time, but was no less surprising for other reasons.

 

[Cheezdoodles]

A $50 cut would pay for itself when people are picking up a $60 KZ2 with it though, especially since they're selling a great clip of software according to their financials. Besides that I really think your exaggerating the situation.

So you believe that if you cut price by $50 everybody who is going to buy a Sony PS3 console for the reminder of this console generation will spend $60 on Killzone 2?

If no, then either you need to rethink the logic in your post, or take a economics class or two.

 

[eastmen]

A $50 cut would pay for itself when people are picking up a $60 KZ2 with it though, especially since they're selling a great clip of software according to their financials. Besides that I really think your exaggerating the situation.

Well if that $50 cut costs them $50 more per system sold I'm not sure how that would help sony. Remember informed rumors put the KZ2 budget at 40m plus then advertising. Sony is expecting to make money back from that. When you factor out the product costs and retailer cuts Sony is most likely making under $45 per copy sold. So depending on how many ps3 units it moves and what its total sales are it could actually be a net loss for sony