A Wall Street analyst reports that a price reduction for the PlayStation 3 will happen "in the next couple days."
Mike Hickey with investment-banking firm Janco Partners told investors on Wednesday that he expects Sony will drop the price of the console to respond to sluggish hardware sales.
"Recent channel checks indicate increased speculation for a PS3 price cut announcement from Sony in the next couple of days," Hickey wrote.
Currently the PS3 is the most expensive of the three "next-gen" consoles on the market. The Playstation 3 with an 80 GB hard drive runs $399, while the 160 GB model is priced at $499. By comparison, the most expensive Xbox 360, which includes a 120 GB hard drive, retails at $399 and the economically priced Wii, when it can be found on shelves, sells for $249.
While many Playstation fans argue that the PS3 more than makes up the price difference with its Blu-ray drive, with the economy as it is, consumers are looking harder than ever at the PS3's spendy price tag.
In fact, Hickey believes the PS3's price would have to drop by at least $100 to make a big difference in Sony's sales numbers.
"We think the company needs to reduce the current price by USD 100 to effectively restart unit velocity at retail. We believe the market is expecting a PS3 price cut in April or by June at the latest."
Hickey also adds that he's heard murmurs of a Blu-ray-free PS3 in the works. Without the Blu-ray hardware, the console's production cost would shrink enough to rationalize a substantial price drop.
I have my doubts about this rumor. It makes no sense that Sony would remove the Blu-ray from consoles when, in many ways, Blu-ray was the Playstation 3's raison d'etre. From the day the Playstation 3 was introduced, Sony all but said it was selling the PS3 below cost in order to win the "format war" over HD-DVD. Abandoning that niche would be admitting that Blu-ray hasn't delivered as hoped.
And it's just not in Sony's corporate culture to ever admit such a defeat.
But I wonder: Given that we're three years into the new console cycle, hasn't anyone who's considering buying any gaming console already purchased one? And if not, would a $100 difference now make you get off the fence and buy a PS3?
Or are we all too worried about losing our jobs and paying our mortgages to consider such a creature comfort?
Comments
I would buy one the day they announce the price drop.
As for the price drop, as in cutting the price tag of the PS3 by $100 USD, you will find out that will not happen anytime soon. Sony stated before that they have to generate some profit from the PS3 soon. Also, if you remember, Sony was again looking throughout the company and finding out what sectors are not profitable and which ones are; Sony Computer Entertainment (SCE) has not been making profit for some time now, and 'theoretically' could have been on the chopping block. I believe Sony (as a whole) understands SCE can become very profitable, but wants them to show that they can make some profits from the PS3. This means that a price drop will NOT happen until they are still making profit after the price drop.
This does not mean that the consumer will be left with a $400/$500 USD machines. SCE is going for a value-added model for the PS3, this means a lot of bundles, a lot of interoperability among the PSP, a lot of amazing games, and countless others. This "100 price drop" will be seen in those bundles, not in the PS3's price tag.
As for the Blu-ray-less PS3...this is also not going to happen. If Sony's only reason to have a Blu-ray player in the PS3 was to win the format war, then they would have removed it from the console one year ago when Blu-ray won. It is still early in the PS3's life cycle and everyone knows that software is profitable in these early stages, not hardware. If Sony removed the Blu-ray player then how would they sell Blu-ray movies? How would they sell PS3 games? What's left for Sony to sell to consumers besides downloadable content through the Playstation Network? This does not fit their value-added model, and, utimately they would lose more money by not including the Blu-ray drive.
Look at how customers might look at this Blu-ray-less PS3(remember, many still do not know that PS3 games are on Blu-ray discs, many don't know that Blu-ray discs are Blu-ray discs, and many don't know that the PS3 can play Blu-ray discs. So a $100 USD price drop occurs, and many customers get the new Blu-ray-less PS3 only to find out that their new God of War 3 PS3 game will not work in their PS3, or that their new <insert the greatest Blu-ray movie title to ever come out here> Blu-ray disc does not work; yet this persons friends can play them on their PS3. See the confusion, see how Sony might lose consumer loyalty, just to save a few bucks (I could go on for ever about the draw backs). It's not worth the lose of consumer loyalty (as in any business), confusion, and lose of revenue due to lack software sales just to save a few bucks.
When it comes to Sony, you have to remember that they are at least one step ahead us. They are a business and have to plan well in advance of how they will do business and fight competition, where consumers only talk about the here and now due to the fact they don't know what will happen later on.
Trust Sony, they know what they are doing.
If it dropped 100 I would buy it.
I think you greatly underestimate the power of a $100 price drop. I have patiently waited for a next gen console but refused to pay top dollar. Of course the PS3 has more features and obviously is more advanced than the Xbox360. And clearly the Xbox 360 has a great selection of games that appeal to traditional gamers... but neither of those realities is enough to persuade me to buy into the next generation. To reach the mass market consumer these companies must sell at a mass market mainstream price.
Whatever mind altering drug Sony management is definitely causing delusional thinking. If they don't wake up and smell the coffee they will loose market share at an amazing rate.
Remember there really is a worldwide recession going on. Either take care of your customers....or your competition will.
Normally I don't comment on my own stories, but I just have to ask (if any of you commenters return): The "next -gen" console market has a pretty wide range of prices (from $250 to $500, more or less). If you haven't bought a PS3, what price do you think it should be? And if you're like Mike and haven't bought a next-gen at all, what price would a console have to hit for you to buy? Keep in mind that the Xbox has had several price drops -- I think it's around $100 cheaper than when it started -- and I believe (I could be wrong about this.... old brain cels) there was a Playstation price cut already (if I remember correctly, I think it was $50).
All this talk about price cut pretty much kills sony's sales until they do it, because now everyone will wait for it. I would hate to be Sony right now!
I can not believe that any credible writer would print the rumor to remove the blu-ray player. The PS3 games are written on blu-ray discs....remove the blu-ray, you can't play the games!
But to answer the question, I have been holding out for the price drop, once it drops $100, I will buy.
Even though I am already an owner of the console, I think this would give Sony the sales they are looking for.
This article is silly. Sure a price drop would help (although sales are on par with the 360 despite the higher price compared to the 360 at a similar point in the lifespan). Dropping bluray is actually impossible, and would NOT save Sony much money, in fact probably causing Sony to lose sales as some people have bought the PS3 on the strength of the bluray features. Bluray isn't exactly floundering in the market no matter how hard anti-sony folks online push that fact. Lets not listen to anymore so called Analysts and their hairbrain schemes - most of them are the reason there's a recession to begin with.
I think if you ask lots of PlayStation 2 owners who haven't purchased a PlayStation 3 yet why they haven't, it's all in the price. Yeah yeah, all these techies will drown you in their "but it has Blu-Ray" speeches but I don't think that really even matters to the people who are holding out. The people who wanted Blu-Ray movies bought a Blu-Ray player and it wasn't the video gamers. Think how many PS2s were sold and the price relative to all of that?
Personally, I feel the only people making an argument against a price drop are the people who already bought one and will throw a fit whenever it happens. It's going to happen, it has to happen. Now would be better than ever. Sure, the Wii owns the market right now but, as an owner of a Wii (and its wonderful price), and an owner of a PS2 wanting a PS3, the game selection for the Wii sucks. It's just not that appealing.
Here's the other part to the equation on not buying a PS3 for $399. You're also looking at buying a game (around $60), another controller (ridiculously overpriced at $55), and probably another HDMI cable ($30-$90) or a set of component cables. Add tax to all this and what does that add up to? $399+$60+$55+$30+ 7% tax= $582!
That's a lot of money just to play games. Even with the $100 off price, you're still looking at around $475 just to play games.
How do all you techies propose common people get the money together for that when credit is tight, jobs are hard to find or underpay, and you've got bills to pay?
Isn't this how our country go in trouble to begin with?
I can tell you that if the ps3 dropped to $299 sales would go thru the roof. Why? Because most people know the PS3 is cutting edge....but still want a clear cut bargain! A great many people remember that the ps3 debuted at $599. So to get a ps3, even without backward compatability at $299 - is a hands down bargain.
Sony should realize that time is on the side of the mass market consumer. The longer it takes them to lower the price - the cheaper things like used games for the system become. Also, the longer the delay - the greater the chance Microsoft will reduce their console's price. So, the mass market consumer is in no hurry.
Unfortunately for Sony, Microsoft has a more aggressive pricing strategy.
Without getting bogged down into the discussion of internal cost of manufacturing, etc. Microsoft is winning the psychological battle. I think no matter where a person's loyalties are - most people would agree that the makers of the xbox360 seem more willing to use price as a weapon against their competitor.
Now, here is the real kicker. Microsoft is already at $199 for the arcade. The least desirable xbox 360. But the real meat and potatoes model is priced at $299. When Microsoft moves that model to $249 - then sales will explode.
Finally, one thing the next generation race has shown us is true. Comparative marketing (for the ps3) has been a failure. Why? Because advancing thoughts that point out all of the extra features the ps3 has (cell, bluray, wireless, etc) and then using those features as justification for spending $100 more than your closest traditional competitor....well, they just fall flat. Why, because the basic objection is one of affordability. If your basic objection is one of affordability, you don't need to be convinced that a Mercedes Benz is a good car - that point is not contested. For a consumer unwilling to pay the price point - the feature comparisons are almost a moot point.
I don't think Sony understands this. Especially when the graphics of the two systems right now are so evenly matched.
Wow, that is a tough sell.
Stevie got it. I have a ps2 and the only thing stopping me from getting a ps3 is the price. I paid full price for my first ps2 and I wish i would have waited. I'm on my second now. I would be real mad if I paid 600 dollars for the new ps3 and a few years down the road it messes up. Drop that price fast!!!!
How can you even report on the possibility of Sony dropping the blu-ray? If they did that then most the games, which are recorded on blu-ray discs, wouldn't work. You just lost any credibility you had...
Hi my name is charlie and i have been looking around to buy a new game console and to tell u the truth the ps3 is out of my price range sorry sony but the xbox is cheper but if u were to drop ur prices i might reconsider. droping the price a 100 usd would change my mind very quick
Drop the PS3's price to $299, and everyone looking for the best Blu-Ray player on the market will buy one.
In other words, it will broaden its customer base hugely.
My bf and I realize that the $399.00 price tag gives us what we pay for, but it's just too much cash to fork over. $299.00 would put it square in our budget and we'd get one the day the price drops.
PS3 without Bluray? I`ll have whatever you`re smoking
I am also going to buy one the day it drops. It's not that I can't necessarily afford to buy one at $399, but it just looks like a price drop has to happen soon. BestBuy has been giving away a $50 gift certificate AND Guitar Hero 3 with the purchase of a PS3. If I actually wanted that game I would've already bought it (I have that game on the Wii already). So I guess I don't care if they give me $100 worth of extra crap that I'd hafta buy anyway, or if they just knock the base PS3 price down to $299 - it's the same affect on my wallet.
Sony (or BestBuy), throw in a 2nd controller or let me pick the free game instead of just GH3, continue to give away the $50 gift certificate, and I'm in!
I aggree with most of the posters here. $400 is too much. I'm a big fan and all but I will not reach for my wallet until the price has gotten to $300. I'm not interested in Wii or Xbox- I guess I'll keep playing my old PS2 games til that day comes. Or maybe by then there'll be something else?
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