PS3 $400 Price Drop Rumor

[John Crichton]

Nice to hear about the reduction, though!

Well, it is just a rumor for now.

 

[Vigilance]

I think it's going to happen though.

Sony can see the numbers, they need to do something dramatic if they're going to get out of 3rd place, or at least get to a point where they're competitive.

They're being outsold in the US by the 360 and the Wii, and in Japan, where they're used to dominating, they're getting outsold by the Wii.

And not by small margins either. Three or four to one.

That's a dangerous spot to be in if they're going to get first tier support from top-notch Japanese developers like Square, who have already said after the two FF titles they have announced, they'll be taking a wait and see attitude on the PS3.

I think a pack-in game would be even better for the PS3 as a console.

The pack-in Blue Ray seems like it might do more to help Sony win the format war with HD-DVD.

Still, a cheaper system and a better pack-in movie than Taladega Nights certainly can't hurt.

 

[drothgery]

I think it's going to happen though..

My skepticism is mostly based on the lack of a good answer to 'how does Sony make a PS3 that costs them at least $100 less than an 80GB PS3 to make, but that people will actually buy for $400'?

A smaller HD won't save them more than $10. They'll need to cut out other stuff. The rest of the PS2 hardware? Wi-fi? Wired controller? They'd probably need to do all of that to shave $100 off the production cost of the PS3. And I think if they did that they'd have another 20GB PS3 or Xbox 360 Core, which no one would actually buy.

 

[reanjr]

... if they did that they'd have another 20GB PS3 or Xbox 360 Core, which no one would actually buy.

Quite like all the other PS3s

 

[Vigilance]

My skepticism is mostly based on the lack of a good answer to 'how does Sony make a PS3 that costs them at least $100 less than an 80GB PS3 to make, but that people will actually buy for $400'?

A smaller HD won't save them more than $10. They'll need to cut out other stuff. The rest of the PS2 hardware? Wi-fi? Wired controller? They'd probably need to do all of that to shave $100 off the production cost of the PS3. And I think if they did that they'd have another 20GB PS3 or Xbox 360 Core, which no one would actually buy.

Well first, they have made the system cheaper, by taking out the emotion engine, which made just about all PS2 games work on the early PS3's.

They're replacing that with software emulation, which doesn't work as well, but it seems to have done ok with the 360.

Second though, they're already taking a loss on the console, so now they're going to take more of a loss.

That's just the nature of this business. The 360 is sold at a loss, the PS2 was sold at a loss for most of its life cycle.

If the install base reaches a critical mass, you make that money back by licensing games.

 

[Ankh-Morpork Guard]

Well first, they have made the system cheaper, by taking out the emotion engine, which made just about all PS2 games work on the early PS3's.

They're replacing that with software emulation, which doesn't work as well, but it seems to have done ok with the 360.

Second though, they're already taking a loss on the console, so now they're going to take more of a loss.

That's just the nature of this business. The 360 is sold at a loss, the PS2 was sold at a loss for most of its life cycle.

If the install base reaches a critical mass, you make that money back by licensing games.

But if this happens, what I believe drothgery was suggesting is that there will be no reason to buy th 80GB PS3 beyond getting 40GB more space for a great deal more money.

Which will kill the 80GB model, most likely. A model that was just released, and killed two others.

It just...doesn't make sense.

 

[Vigilance]

But if this happens, what I believe drothgery was suggesting is that there will be no reason to buy th 80GB PS3 beyond getting 40GB more space for a great deal more money.

Which will kill the 80GB model, most likely. A model that was just released, and killed two others.

It just...doesn't make sense.

Well, a few things spring to mind, one is that the HD size isn't as big a deal in the PS3, since you can put your own HD in there.

Also, it's possible this new price structure was inspired by the recent 360 price drop, or Sony realizing they needed to do something dramatic to get out of 3rd place.

But what Sony has been thinking with the PS3 from the beginning has escaped me.

 

[drothgery]

Well first, they have made the system cheaper, by taking out the emotion engine, which made just about all PS2 games work on the early PS3's.

The PS2's graphics chip is still in there, though.

Second though, they're already taking a loss on the console, so now they're going to take more of a loss.

That's just the nature of this business. The 360 is sold at a loss, the PS2 was sold at a loss for most of its life cycle.

Err... no. The 360 was initially sold at a loss, but it wasn't a large one, and it's being sold now at around break-even point (the Elite is almost certainly sold at a profit). If not for the hardware failure issues, it'd be being sold at a profit. The same went for the PS2 (it was profitable by its second year). The only console that was ever successful at gaining market share while being sold at a loss long-term was the original Xbox. No console ever made money this way (the Xbox division at MS has had all of one profitable quarter to date -- when Halo 2 launched, though it's likely the current quarter will be the second one).

Selling hardware at a loss for more than a brief initial period is emphaticly not the nature of the business. Nintendo has never done it, Sony didn't with the PS1 or PS2, and Sega's attempt with that strategy drove them out of the hardware business. If you're trying to build market share because you think it's important to be in the console space long-term, and you've got a hugely profitable business to rely on, then you can gain market share that way (as per Microsoft). But you're not going to make money.

 

[Vigilance]

Hmmm... thanks for the info Drothgery, I actually didn't know that consoles typically broke even so quickly.

The X-box being the oddity would perhaps explain why MS dropped it so quick, despite the fact that it still has 50% more market share than the 360, I heard they stopped licensing games for it altogether.

I guess, continuing to support an odler console you were losing money on wouldn't seem like a good deal.

 

[Ankh-Morpork Guard]

But what Sony has been thinking with the PS3 from the beginning has escaped me.

While I do agree that Sony has been a bit baffling, I have a hard time believing they'll release a 40GB PS3 so much cheaper than the newly released 80GB model that got rid of the other TWO previous versions.

After finally working to get rid of the two other, extra models, I just don't think they would put out yet another model and bring the whole problem back again.