July 9th, 2007
Sony is / is not slashing the PS3 price
Corporate approaches to media relations never cease to amaze me. Just last week, Sony’s president, Ryoji Chubachi, claimed that no price cut on the PS3 was in the works. This morning, however, news from Reuters reported that the PS3 price WILL be slashed by $100.00…at least in the United States.
That’s an important move, and as the article on CNN notes, is likely to result in a counter-announcement by Microsoft vis a vis the XBOX 360 in the coming days (the E3 conference is in Santa Monica this week). Not that Microsoft would be any more likely to fess up to such a move ahead of time than Sony, though “no comment” seems more common these days from Microsoft media relations than outright misinformation.
Nintendo, of course, won’t be slashing a damn thing. They don’t need to. Wiis are still flying off the shelves, a testament to a realization by Nintendo executives that cutting-edge technology is only one of many factors in the decision as to which game console to buy. Useful realization, that, on par with defense departments realizing that billion dollar stealth bombers aren’t a substitute for troops on the ground.
It’s a smart move by Sony, even if they really had no choice in the matter. If PS3’s were flying Wii-like off the shelves, nobody would be talking about price cuts. Is it enough, however, to reverse the fortunes of the next generation in the Playstation game console lineage?
Reports of the 1 billion charge Microsoft will absorb to cover repair costs for the XBOX 360 are certainly good news for Sony. It means that Microsoft has less price flexibility than the per-unit profit they’ve created through cost reductions over the lifespan of the console would otherwise allow them. As noted, Sony’s nightmare scenario would have been for Microsoft to lower prices first.
XBOX 360, however, still has a huge lead over the PS3, and monthly sales have only managed to widen that lead (yes, PS3 is ahead of XBOX in Japan, but nothing but Japanese game consoles seem to do well in Japan; the XBOX is lightyears ahead in the US, Microsoft’s home market). That matters, because the XBOX - not the Wii - is the PS3’s true competition. Both are capable of HD game play, and both aim for higher-end home electronics environments. The Wii is more general purpose and aimed at ordinary TV sets, and in an ubiquitous HD world, will have to make changes. Fortunately for Nintendo, per-console profits from day one, fast sales and low prices will make that a lot easier. It’s possible to contemplate buying a new console every few years if the price is only $250.
Microsoft fumbles might provide Sony some breathing room, but game trends are pretty clear. I don’t think a $100.00 drop is enough to revive the PS3’s flagging fortunes.
What do you think?
John Carroll has delivered his opinion on ZDNet since the last millennium. Since May 2008, he is no longer a Microsoft employee. He is currently working at a unified messaging-related startup. See his full profile and disclosure of his industry affiliations.
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