What is the impact of no PS3 price drop?

[Shifty Geezer]

...but I definitely can see them doing an Xbox.

I think not. XB lost money on the hardware, right up to the last day. MS's dumb contracts stung them big-time. Sony can cost reduce and manage the expenses so late in the machine's life, it's profitable and a viable concern. Indeed, extending the life as long as possible will reduce the long-term losses as a result of the PS3 endeavour. Whatever they are losing on the hardware sales now, when they have cost reduced and make a profit on the hardware, ever sale is a reduction of net loss. The longer they keep the platform running, the better for them. In stark contrast, the longer XB was on the shelves, the more money MS lost, so they pulled it ASAP.

 

[eastmen]

I think not. XB lost money on the hardware, right up to the last day. MS's dumb contracts stung them big-time. Sony can cost reduce and manage the expenses so late in the machine's life, it's profitable and a viable concern. Indeed, extending the life as long as possible will reduce the long-term losses as a result of the PS3 endeavour. Whatever they are losing on the hardware sales now, when they have cost reduced and make a profit on the hardware, ever sale is a reduction of net loss. The longer they keep the platform running, the better for them. In stark contrast, the longer XB was on the shelves, the more money MS lost, so they pulled it ASAP.

Unless no one buys the system. If the system is continuesly getting the short end of the stick in terms of software at some point it will simply stop selling. Whats the point of continuing to produce a system that isn't moving software. It may become more expensive to keep two systems a float than one. Not only that but the ps3 may allways be a money looser while ist a viable platform.

 

[Cheezdoodles]

I think not. XB lost money on the hardware, right up to the last day. MS's dumb contracts stung them big-time. Sony can cost reduce and manage the expenses so late in the machine's life, it's profitable and a viable concern. Indeed, extending the life as long as possible will reduce the long-term losses as a result of the PS3 endeavour. Whatever they are losing on the hardware sales now, when they have cost reduced and make a profit on the hardware, ever sale is a reduction of net loss. The longer they keep the platform running, the better for them. In stark contrast, the longer XB was on the shelves, the more money MS lost, so they pulled it ASAP.

You realize of course that cost reduction costs money?

Even thought Sony may be able to do varius cost reduction strategies, they all cost money, therefore even thought you rise your product margin by implementing the cost reduction strategies, it may not be beneficially unless you have high enough sales.

This is not a clear shut case, where Sony can cost reduce and just keep the platform going, unless the platform has good enough sales, there will not be any efforts made in cost reduction.

Unfortunately, having good enough sales probably means sony has to lower its price, which means that even further cost reduction is needed.

Its not as simple as you portray it, unless there is a high enough level of sales, the cost of trying to reduce the manufacturing cost of the system will outweight the gain in profit margin.

 

[2008 IQ is unacceptable]

Absolutely, and the closer to 2nd place that 3rd place is, the healthier 3rd place's software market will remain. That's what's interesting about Sony's lack of price cut this Christmas - they've decided to let themselves fall further behind (by how much we'll have to wait and see) because the cost of staying closer isn't worth it.

I don't think they expect to be able to make up all of this lost ground next year - I think they've decided to accept lower market share and potentially shorter lifespan in return for limiting losses on the PS3 project as a whole. They aren't going to do a Saturn and actively and vocally kill the platform before they have a successor ready (and while they can still recover some costs), but I definitely can see them doing an Xbox.

Great point in your last paragraph. Excellent point. The gamecube was a distant 3rd and now this gen nintendo's unrivaled. In terms of sales, which reflects nearly the opposite of my opinion of which was actually better. Would be entirely the opposite if it weren't for the Godsend that is the VC.

For all we know, ms could be last next-gen. You can never protect next gen during the 1st 1/2 of the current gen.

Anyway, sega was doing a balance of brilliant and bad things to the saturn, but soa only saw the bad (and didn't realize that they were making a brilliant move for every move that didn't exactly make sense.) Then, soa, after tom kalinske and all those other ultra-cool and virtuous people left, and bernie came in, declared the saturn dead, demanded soj to accept a new system well before it was best for either branch and to let the saturn die in japan even though it was very successful there.

I mean, if soa hadn't always been so ashamed of the saturn, they would've caught up. The n64's 3rd party support only went up in 98, around the time the saturn died. Nintendo had every responsibility (that they didn't fullfill) to kill the n64 in 99 [Note: I do admit 2000 was nintendo 64's best year though, but then that also adds more support to the theory that sega killed the saturn too early b/c then the 2nd 1/2 of 98 and all off 99 could've been sega's best year if they had stayed with the saturn] and make an optical disc based system that was easier to program for, work their asses off for a year for software, and then met the ps2 to the market at the same time rather than 1 year late like they had been the previous gen b/c they were always too lazy to make great software at a satisfactory time. Like the n64, the gamecube software should've been finished much closer to the time the hw was finished.

More on topic, in 02-03, who expected microsoft to be ahead this time, and sony to go from 1st then to 3rd this time? I hope everyone can be honest and answer an honest no to that question lol.

 

[function]

I think not. XB lost money on the hardware, right up to the last day. MS's dumb contracts stung them big-time.

This is true, but MS could have avoided losing money on the hardware by pricing it higher. This would have had a severe impact on their share of the software market though (from which they hoped to derive their profits) and meant the Xbox withered and died taking their reputation as a console vendor with it. Instead they decided to kill the Xbox when it suited them - it cost them billions, but it was probably worth it.

Sony can cost reduce and manage the expenses so late in the machine's life, it's profitable and a viable concern.

But they can never cost reduce so it's competitive with the 360 arcade, or probably even Premium, so that doesn't guarantee they can be profitable (they need to stop bleeding money on the hardware AND have a healthy, none withering share of the software market).

Indeed, extending the life as long as possible will reduce the long-term losses as a result of the PS3 endeavour.

It will, but only if they can continue to sell games, which is entirely dependent on their ability to maintain an active userbase that attracts publishers (in increasingly competitive times). And they have to do this while not bleeding money on hardware which they need to keep selling while being cost competitive with 360 hardware.

Whatever they are losing on the hardware sales now, when they have cost reduced and make a profit on the hardware, ever sale is a reduction of net loss.

Indeed it will be, but I wonder how many PS3's they'll be able to sell at a profit if the 360 can undercut them, and how many PS3's they'll be able to sell if they lose the support of the software market, which could happen if they don't sell enough games (which will happen if their userbase gets too small in proportion to their rivals - which is IMO the possible issue surrounding uncompetitive console pricing this Christmas).

The longer they keep the platform running, the better for them. In stark contrast, the longer XB was on the shelves, the more money MS lost, so they pulled it ASAP.

I wonder how easy Sony will find it to get out of the Xbox trap: they're losing money on the hardware in order to fight for userbase, without which the software market dies and the platform has no chance of recouping losses.

It is possible for a niche player to survive long term (see the Neo Geo), but they have to have something unique to offer so that a group of people will select them over (or in addition to) their rivals. In gaming terms the PS3 offers almost nothing over its main rival - in some ways it actually offers less (at this time).

 

[function]

Anyway, sega was doing a balance of brilliant and bad things to the saturn, but soa only saw the bad (and didn't realize that they were making a brilliant move for every move that didn't exactly make sense.)

To be fair to SoA, SoJ didn't consult them over the Saturn, and pushed them into the 32X without letting them know that Saturn was coming. SoJ utterly self-destrcuted Sega and wiped out their profitable American and European branches in a frenzy of emo-style self harm.

The important lesson from the Saturn/PS1 era was: you can be successful with superior hardware that costs more, you can be successful with inferior hardware that costs less, but you'll struggle to be successful with inferior hardware that is hard to develop for and that costs a huge amount more to manufacture than anyone reasonable would ever consider. (A lesson in hardware design that Sony forgot this time round, it seems!)

[EDIT] - The PS3 is superior to the 360 in an awful lot of ways (BluRay, build quality, wi-fi etc) but when it comes to delivering games the PS3 is consistently slightly behind as demonstrated by Eurogamer's consistently one-sided face-offs. The advantages of the 360's graphics chip have been talked about here in some depth, and are no doubt part of this. It won't bother most people, but once this idea is out there in the "core gamer's" mind I expect it makes justifying the PS3's higher price difficult. [/EDIT]

Of course, it didn't help having Sega of America publicly write off their own console (Sega rock), but this only sped up the inevitable.

More on topic, in 02-03, who expected microsoft to be ahead this time, and sony to go from 1st then to 3rd this time? I hope everyone can be honest and answer an honest no to that question lol.

I expected MS to improve as they have, but not for Nintendo to find the success they have, and not for Sony to mess up the way they have - the PS3 is a great machine in its own right, but not a great machine to throw into the games console market. That said, I think Sony are right to now be thinking about limiting their losses from the PS3, develop what they can using it (their online network for example) and be staving off mega-losses until they can get back into the fight properly next generation.

 

[Blade47167]

It is possible for a niche player to survive long term (see the Neo Geo), but they have to have something unique to offer so that a group of people will select them over (or in addition to) their rivals. In gaming terms the PS3 offers almost nothing over its main rival - in some ways it actually offers less (at this time).

Sony's First & Second Party developers are amazing and incentive enough for me to buy the console. I still believe people seriously doubt the power of the playstation brand. Once PS3 is able to get down below $300 territory I expect next year to really pick up. 3rd party games are selling enough on the PS3 to recoup the extra developments costs by now surely. And if they don't the game was most likely sh*t to begin with and most people probably didn't want it in the first place.

 

[Shifty Geezer]

Even thought Sony may be able to do varius cost reduction strategies, they all cost money, therefore even thought you rise your product margin by implementing the cost reduction strategies, it may not be beneficially unless you have high enough sales...

Good point.

Its not as simple as you portray it, unless there is a high enough level of sales, the cost of trying to reduce the manufacturing cost of the system will outweight the gain in profit margin.

Well, given the scope of a thread post, it unlikely anything is covered in enough detail to be comprehensive, unless we all post Joshua Luna sized missives

 

[patsu]

This year, PS3 is still trying to appeal to the core gamers demography.

There is no limiting factor per se on PS3's cost base. The HDD is revenue generating because of Playstation Store (Unlike XBox's HDD in its early days). Blu-ray is also revenue generating in its own right. The Cell and GPU are the only stuff tied to the PS3 platform although the former is "shared" with Toshiba for their CE businesses. These will get shrunk over time anyway.

I am more wary about the server infrastructure since there is no subscription fees to fund the growth. Sony took the faster but more difficult route to grow their network base. I believe they are seeing good responses so far ($120 million revenue ?).

At the end of the day, the Playstation brand and network are strategic to the entire Sony group. They will do whatever it takes to further their corporate goals. The same way MS had to invest billions on Xbox to get things moving.

 

[Laa-Yosh]

Assassin's Creed was, and still is one of the most visually stunning games of the generation. It has a well established, familiar setting. This counts for something.

I can only second that. Both the amount of stuff on screen and its quality are very impressive. Scale, textures, models, shadows, animation, the game has it all.
Too bad they didn't make the gameplay more varied but I still had a pretty good time with it.

 

[Laa-Yosh]

That is true but I will also remind it (as GTA IV) in the future as one of the most boring and uninspiring games of this generation.

It disturbs me that such games are selling in big numbers and more creative titles (like LBP) are struggling. This gives the signal to produce more boring and uninspiring…

AC is creative and fun, the problem is that it's highly repetitive. What it needs is a few more interactive systems to create more emergent gameplay instead of the basic 5 types of information gathering that's used in all 10 or so main missions and it'd be one of the best games ever.

As for GTA4, missions were getting repetitive too, but I had a lot of fun with that game for at least half the time as well. Did not regret purchasing it so far and I have yet to try the multiplayer.

 

[obonicus]

AC is creative and fun, the problem is that it's highly repetitive. What it needs is a few more interactive systems to create more emergent gameplay instead of the basic 5 types of information gathering that's used in all 10 or so main missions and it'd be one of the best games ever.

I think that repetitiveness is just part of a bigger problem. They created this amazing world and this really cool way to traverse it, but they didn't really add that much compelling gameplay to it. None of the sub-missions were a that much fun, and the 'target kill' bits usually relied on the weaker gameplay elements (the combat) rather than the stronger ones (the free-running). To me, it's as if they had these great features but didn't quite know how to build a game around them.

 

[Dr. Meaty]

"You dare steal in my presence? That will cost you your life!" Seriously, after all of the time and resources they obviously put into creating that amazing open world, they only had twelve bucks left to record all of the dialogue, so they gave the pizza guy a 12-dollar tip and he came upstairs and recorded all two-and-a-half minutes of voice work for the entire game. It boggles the mind.
Back on topic, yeah, they need a price cut. After seeing some of the latest KZ2 previews, I looked up PS3 prices just now, which I hadn't actually looked into recently, and I was pretty shocked to find that you still can't get one for less than $400.

 

[2008 IQ is unacceptable]

I honestly can't understand why the ps3 is as unpopular as it is. I know it's more expensive, but it's really far less expensive when it all adds up. I wish people would look at valuerice rather than system MSRP alone.

Of course, I have neither system b/c they can't do anything my pc can't. Except the ps3 hasa superior version of AitD and can do superior audio.

 

[Rangers]

I honestly can't understand why the ps3 is as unpopular as it is. I know it's more expensive, but it's really far less expensive when it all adds up. I wish people would look at valuerice rather than system MSRP alone.

Of course, I have neither system b/c they can't do anything my pc can't. Except the ps3 hasa superior version of AitD and can do superior audio.

I cant either. Blu Ray, great looking games (really great looking games), the Sony name, pretty reasonably priced now. I mean you walk into Wal Mart electronics they have a PS3 kiosk set up, and games like GT5P just look amazing.

I've just always been somewhat shocked this generation that joe (american) six pack walks into Wal Mart and chooses 360 over PS3. Not being sarcastic, I really am. I would think that just "playstation" branding would be the deciding factor for most J6packs.

I dont think PS3 is going anywhere, it should maintain a steady third place. And really as long as it's owners are getting 99% of games as multiplatform, I dont suppose they should care what it sells that much. 99% of games are on both PS3 and 360.

 

[Shifty Geezer]

I honestly can't understand why the ps3 is as unpopular as it is. I know it's more expensive, but it's really far less expensive when it all adds up. I wish people would look at value : price rather than system MSRP alone.

Value means squat if you just plain can't afford it

 

[BadTB25]

I honestly can't understand why the ps3 is as unpopular as it is. I know it's more expensive, but it's really far less expensive when it all adds up. I wish people would look at valuerice rather than system MSRP alone.

Of course, I have neither system b/c they can't do anything my pc can't. Except the ps3 hasa superior version of AitD and can do superior audio.

I think it's a great value if you're looking at having all of the items that the PS3 offers. The problem is the 360 also offers great value at $200-300 less.

The only feature you're really missing is the ability to play Blu-Rays. The rest are optional and probably are not what the majority of consumers are looking for are are informed about. I have a 80BG Backwards compataible PS3 and I only use it for mostly the occassional Blu-Ray/DVD from Netflix and a small stable of PS2 and PS3 games (altogether I own 8 titles, mostly PS2).

In addition, Sony really botched the PS3 launch. Other than Motorstorm and Resistance, the other games were really underwhelming--although I still want Heavenly Sword. I'm looking forward to Killzone and will eventually pick up LBP and maybe even Motorstorm 2, but Sony really needs to bring on some compelling products that just SCREAMS PS3. The titles they have, while great, just doesn't do it yet IMHO.

 

[DuckThor Evil]

The PS3 is good value, if you care about Blu-ray, but other than that, the value simply isn't there. As a pure gaming machine it is pricey compared to the competition and thus not good value. The PS3 would have to really excel in game quality and quantity to be called good value against the X360. If you look at the situation objectively, you can see that it doesn't.

The standalone Blu-ray players are also coming down in price and soon the Blu-ray advantage is not much more than being able to watch a Blu-ray movie and play a game with one box, instead of two.

Great games are coming that much is for certain, but if you are more expensive, it's really hard to be better value.

 

[patsu]

In general, the PS3 won't be for price sensitive folks this fall. Sony is trying to sell to mid-tier Blu-ray enthusiasts (being one of the best Blu-ray players on the market), core gamers (based on exclusive games) and its fan base (based on brand and build quality) right now.

For people with these traits, the Playstation Card may have more draw (Get a PS3 for US$250 + some reward points). Other than that, I don't think Sony is interested to engage in a price war with Microsoft. They will make their own pricing move when they are able to manage the cost better. There are other interesting business models with a $399 (aka "expensive") console afterall.

Meanwhile, we will continue to see Sony trying to innovate and differentiate based on content and services. I think they will be forced to integrate their services better. Otherwise, the fragmented features will simply waste their resources with no perceived benefit to the end users.

Playstation Home can be an added revenue source (separate from Playstation Network), but at the rate (and approach) they are running, it seems more like another niche application. Sony management may have to reposition Home later.

 

[Crossbar]

Looking at it from Sonys perspective there probably is no gains for Sony to be made by subsidizing a price drop at this point in time.

Let´s make some assumptions.
I think it is reasonable to believe Sony will sell roughly about 3 million PS3s worldwide through November and December of this year at the current price point. Maybe a little less I don´t know.

How much more would they sell if they had lowered the price point with $50? I don´t think it would have made that much difference. Let´s say 1 million more units would get sold even though I seriously doubt it. That extra million of PS3 sales would cost Sony about $200 millions in subsidies. That extra million of PS3 owners would need to buy a hell of a lot of games to make up for that in game royalties.

Point is that a few extra sales of PS3 units are very expensive for Sony at the moment as the costs of the hardware prohibits Sony to go for a mass market price point. Their money may be better invested in PSN and games that will help build the PS3 brand until the hardware costs of the PS3 have come down to let them set a price of $299 or similar.