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Gadgets Sony Feeling No Pressure to Drop PS3's Price
Marcus Yam (Blog) - February 28, 2007 3:29 PM
Print E-mail del.icio.us 44 comment(s) - last by MonkeyPaw.. on Mar 1 at 5:22 PM
Even with the market's most expensive console, Sony isn't moving on its premium price

The price of the PlayStation 3 has been an area of much debate amongst consumers. Even though the system is underpriced when considering the hardware packed inside the console, many feel that $550-$600 is too still much to pay for what is supposed to be a video games console.

Earlier this month, reports based off of comments from a senior Sony executive in Japan claimed that the company was exploring ways to reduce the cost of the PlayStation 3. Just weeks before, SCEA’s CEO Jack Tretton said that the PS3 would be very difficult to cost reduce due to its advanced hardware.

The latest word on the sensitive subject of PS3’s price comes from Phil Harrison of Sony Computer Entertainment Worldwide Studios. “Well, I'm not sure about the context in which Jack made that comment... but the PS3 technology, as with any of our platforms, starts off life at a high price and then we engineer cost out of it,” he said in an interview with GameDaily. “And that process is an investment that you make to combine chips into a single chip or to reduce components or combine components and redesign things, and that investment is part of our planned R&D effort to reduce cost.”

It may appear that the buying public is still at odds with the PS3’s relatively high price, with some consumers taking the stand not to buy the machine until the price drops. When asked if he feels any pressure to drop the PS3’s price this year, Harrison responds, “Absolutely no pressure at all. I think that the reality of the market is that there's a great deal of software people want to buy, there's a great deal of software coming that will stimulate further activity in the market. We're very comfortable with the plan.”

Harrison does acknowledge that a price cut would be inevitable, but to expect one soon as a reaction to consumer outcry is not in the company’s immediate plans. “At the appropriate time and when we can afford to, the business model of the industry is to pass those savings onto the consumer, but we're a long way away from doing that yet,” he said.

Although Sony remains steadfast on its market pricing, the company is already making hardware revisions to reduce the manufacturing costs. Sony Computer Entertainment Europe announced that PS3s bound for Europe, Middle East, Africa and Australasia will not include the Emotion Engine and Graphics Synthesizer chips used for PS2 backwards compatibility.

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No Pressure
By osalcido on 2/28/2007 4:33:00 PM , Rating: 5
then I feel no pressure to buy one




RE: No Pressure
By OrSin on 2/28/2007 4:37:34 PM , Rating: 1
I see the 360 being able to drop in price first. But MS is not going to Drop while PS3 is so high. If MS did drop price first Sony would be dead in the water ( at least in the US and maybe EU)


RE: No Pressure
By goku on 2/28/07, Rating: -1
RE: No Pressure
By VIAN on 2/28/2007 4:48:14 PM , Rating: 2
Microsoft is still trying to make money off of the 360. MS is so rich if it really wanted to get rid of Sony it would release the 360 with a HD DVD drive and sell it for the price of the Wii. But that isn't MS's goal. MS is trying to earn money too meaning it won't lower the price unless it has to.

But it'll probably lower the price first than the PS3. Then, the PS3 will follow.


RE: No Pressure
By Hyperlite on 2/28/2007 4:49:42 PM , Rating: 1
hell, just the HD-DVD would be enough.


RE: No Pressure
By Scorpion on 2/28/2007 4:57:00 PM , Rating: 2
If Microsoft lowered the price of the 360, Sony would have no choice but to lower the price on the PS3. Both still have to make profits (or at least try to reduce the amount of loss) which is why one doesn't just "undercut the other out of the market". As I recall MS is just now operating right around or slightly above the black for the 360. They probably will be the first to introduce a price cut if they can continue to find ways to cut production costs. I'd expect a price cut sometime this year, but probably closer to next Fall/Winter.


RE: No Pressure
By timmiser on 2/28/2007 11:30:46 PM , Rating: 2
I don't think Microsoft is worried too much with the PS3; people are not buying it in droves. I think if they do cut prices, it will be to get closer to the WII price since that is the system that is in high demand and they may actually do it. On the other hand, it is still way too early to be cutting the price of the PS3 since it hasn't been out all that long. They would need at least until Sept/Oct 2007 before doing any price cuts.


RE: No Pressure
By Scabies on 2/28/2007 4:50:27 PM , Rating: 4
sigh... such fluff. The 360 is a year older, of COURSE it's going to beat PS3 to the price cut. I am sick of people presenting current data as definitive advantages when the same problems (lies, even more problems) plagued the XBOX 360 in its fourth month.
"My 5yr old son is smarter than your 4yr old son"
I'm glad people are here to point out the obvious (and irrelevant) stuff to me.

how's this, PS3 is talking about moving to 65nm, and it's barely out of it's first quarter of existance. 360 is thinking the same thing moving into year two, so if they were both to release 65nm chips today, wouldnt the XBOX be behind?


RE: No Pressure
By saratoga on 2/28/2007 4:54:58 PM , Rating: 2
quote:
sigh... such fluff. The 360 is a year older, of COURSE it's going to beat PS3 to the price cut. I am sick of people presenting current data as definitive advantages when the same problems (lies, even more problems) plagued the XBOX 360 in its fourth month.


I didn't follow teh 360 launch very closely, but I don't recall hereing stories last year about 360s sitting on store shelves unsold 2 weeks after Christmas because they were priced out of most people's reach. That really seems to be the issue here, or at least the issue most people on DT perceive.

quote:
how's this, PS3 is talking about moving to 65nm, and it's barely out of it's first quarter of existance. 360 is thinking the same thing moving into year two, so if they were both to release 65nm chips today, wouldnt the XBOX be behind?


Unless the 65nm shrink lets Sony sell a couple million PS3s all of a sudden, I don't think it would change the relative ranking. It will make the PS3 a little less painful for Sony to sell though.


RE: No Pressure
By AntiV6 on 2/28/2007 5:12:57 PM , Rating: 1
The Xbox360 is getting ready to make the shift to 65nm I believe too. Who cares if Microsoft didn't release it as fast as Sony is. Microsoft had no reason at all to shrink the chips until the PS3/Wii launched.

Sony also HAS to reduce cost or they will continue to price themselves out of the market. Microsoft is making a little bit of $$ on the Xbox360. I bet it will take way longer for Sony to say the same thing.


RE: No Pressure
By Dianoda on 2/28/2007 5:24:02 PM , Rating: 5
You have to remember that there is 'ahem' a shortage of PS3's right now; why would Sony drop the price of their new console anytime soon? You can't even buy them in stores right now, but Sony has made plans known to have the supply issue fixed sometime soon. Then you will finally be able to purchase a PS3 for the unchanging price of $600. Did I say unchanging price? I meant possibly rising price; Sony is actually considering raising the price to help curb the massive demand for the console. If you can find a PS3 in stores, Sony has said it would even be willing to buy it back for twice the price paid.


RE: No Pressure
By JLL55 on 2/28/07, Rating: 0
RE: No Pressure
By JLL55 on 2/28/2007 5:43:04 PM , Rating: 3
An now that I reread, I think you might be kidding... LOL whoops


RE: No Pressure
By retrospooty on 2/28/07, Rating: 0
RE: No Pressure
By patentman on 3/1/07, Rating: 0
RE: No Pressure
By frobizzle on 3/1/07, Rating: 0
RE: No Pressure
By drebo on 3/1/2007 11:43:06 AM , Rating: 4
To those above...

My god, sarcasm is wasted on you people.


RE: No Pressure
By Dianoda on 3/1/2007 12:26:37 PM , Rating: 4
Well said.


RE: No Pressure
By FITCamaro on 2/28/2007 5:45:05 PM , Rating: 3
The Cell chip has been in existence for far longer than 3 months. And has been in use for much longer than 3 months. That move to 65nm isn't just because of the PS3. So don't act like Sony is moving ahead faster than Microsoft. It's actually IBM changing the processing scale of the chip, not Sony. And IBM has been using Cell for more than a year.

And the 360s CPU move to 65nm has been known about since last October. Once again, IBM is handling this since both the PS3s and the 360s core PPC chip(s) are relatively the same. IBM is loving this console generation since it manufacturer's chips for all three consoles.

So both Sony and Microsoft are waiting for IBM.


RE: No Pressure
By goz314 on 2/28/2007 6:38:29 PM , Rating: 2
quote:
IBM is loving this console generation since it manufacturer's chips for all three consoles.


That was just my thought as well. Microsoft and Sony might be hemmoraging cash with every console they sell, but if there is one true winner in the console component supply chain at the moment it has to be IBM. I know it's a bit more complicated than this, but IBM certainly isnt wrapping dollar bills around every CELL processor they send out the door for use with PS3s. I know the arrangement between IBM and MS with the Xenon processor is a bit different, but I would venture to say that IBM is ahead on that deal too.


RE: No Pressure
By retrospooty on 2/28/2007 6:10:03 PM , Rating: 3
"how's this, PS3 is talking about moving to 65nm"

And what of it? Its not going to lower their costs that much. This wont bring $599 down to $399 or anything. More like $20-30 max... And I am being generous.


RE: No Pressure
By SmokeRngs on 3/1/2007 1:08:37 PM , Rating: 3
quote:
And what of it? Its not going to lower their costs that much. This wont bring $599 down to $399 or anything. More like $20-30 max... And I am being generous.


It won't drop the PS3 price for the public at all. Sony will absorb the savings so they aren't losing as much per console. I believe Sony has already stated this.


RE: No Pressure
By bigboxes on 2/28/2007 9:17:26 PM , Rating: 2
quote:
then I feel no pressure to buy one


I was going to say the same thing! LOL


Ha Ha!
By sxr7171 on 2/28/2007 4:57:17 PM , Rating: 5
Sony saves me thousands in psychiatrist bills by supplying me with laughs everyday - sometimes twice in a day!




RE: Ha Ha!
By Naviblue on 2/28/2007 6:32:28 PM , Rating: 2
SCEA’s CEO Jack Tretton sounds like a complete idiot, makes people wonder who is running things around there. The public statements that this guy makes is either very unprofessional or semi professional at most. Saying things like “If you can find a PS3 anywhere in North America that's been on shelves for more than a few minutes, I'll give you 1,200 bucks for it.” The people are waiting for a viable excuse for all the crap that’s been happening and he outright denies things that we all know? We’re not your drinking buddies Jack.


RE: Ha Ha!
By nomagic on 2/28/2007 10:39:59 PM , Rating: 2
You misundertood him. He is PAID to act like a complete idiot. He has to pretend that PS3 is selling like hotcakes. It is called marketing!


RE: Ha Ha!
By hecksign on 3/1/2007 9:26:57 AM , Rating: 2
and the comments made by our fellow in Dailytech about sony also supplying me with laugh.
More news about sony please....


If I were shopping for a console...
By PWNettle on 2/28/2007 7:20:41 PM , Rating: 2
I play PC games and haven't played consoles in ages - I just prefer mouse, keyboard, and buggy as hell software that gets released before it's finished. Doh. Errr...

Anyways, if I was buying a console now one of my main deciding factors would be, do I buy a system that doesn't have an HD disc player I don't want/need - ever, or do I buy a more expensive system that does have an HD disc player I don't want/need - ever? ~$200 more for the system with the HD player I don't need. Hmmm.

I mean, if I did want an HD player I surely wouldn't want it bundled with a gaming console.




RE: If I were shopping for a console...
By timmiser on 2/28/2007 11:46:41 PM , Rating: 2
So please elaborate why you wouldn't want an HD player bundled with your gaming console?

I think it's safe to presume that most people that buy a next gen console have an HDTV, most people don't have an HD player already and since the HD player will eventially replace DVD's, most people will want to purchase one eventually. So why wouldn't you want it bundled with the console and save money versus buying a stand alone player?


RE: If I were shopping for a console...
By kelmon on 3/1/2007 2:55:04 AM , Rating: 2
I'll field that question: I wouldn't want an HD-DVD or BluRay player bundled with my console because it will almost certainly be poor when compared to a dedicated unit (such as was the case with the PS2) and because it will likely be obsolete. It's like the old problem of selecting a queue in a supermarket - whichever queue you choose it will be the slowest. Guaranteed whichever HD disk format you choose the other one will win and your investment will have been worthless. DVD did well because there wasn't really any competition but that's not happening this time so I have no intention of giving Sony money for a BluRay drive that stands a reasonable chance of going the same way as Betamax. Once one of the formats has "won" the war and become the standard then I'll make a buying decision but not until then.

I'll also note that the suggestion that people buying consoles have HD televisions as well is almost certainly wide of the mark.


By Lakku on 3/1/2007 11:40:19 AM , Rating: 2
Except in this case, it's not poor when compared to a dedicated unit. Sure, there will be better dedicated Blu-Ray players at some point, but the next gen consoles can all have their firmware and the way they playback movies updated, so they can up made better down the line (to a certain extent) as well. At any rate, the PS3 actually IS the best HD player out right now, a lot of it due to the fact it has HDMI 1.3 (the first CE device to have such) and the fact it is loads movies faster then stand alone units, and plays them back just as well. Many AV mags have said so, and I would agree, except that Sony disabled 720p BD output, which is ridiculous. Aside from that, it works well as a BD player and happens to play games.

On a side note, I feel BD is better then HD-DVD and I have both. BDs right now have uncompressed audio on the majority of them, and most HD-DVDs don't seem to actually be produced with linear PCM tracks, even though they can be. Most HD-DVDs use DD+ while a lot of BDs I have watched all had linear PCM 5.1 to 7.1 tracks. Just my two cents, but I like BD better right now.


By timmiser on 3/1/2007 2:17:44 PM , Rating: 2
Not sure what you mean by "poor" compared to standalone units. Both X360 HD-DVD and PS3 are out and have proven that their picture quality is at level with other stand alone players so that assumption has already been disproven.

The X360 and PS3 are designed with HDTV's and intended for HDTV's so I don't think that my suggestion was off at all.


Arrogance
By medavid16 on 2/28/2007 9:10:29 PM , Rating: 3
Lol, i think that's Sony arrogance (NOT confidence) coming into play again.

Sony needs a reality check. Didn't demand catch up with supply... ALREADY? The price is high enough to drive down demand, they should really get going on the cost reduction so the CONSUMERS can be passed on with the savings, driving up the demand again.

I think everyone agrees, the PS3 is powerful. I am a PS3 fan at heart. But come on, the wave of events have made things really difficult to defend and I've had it as a Sony fan. It is just ridiculous.

And the PSP would've died if not for the homebrew community. They need a reality check there as well.




RE: Arrogance
By anonymo on 3/1/2007 1:15:28 PM , Rating: 2
Sony is not feeling the pressure because they don't do things like "Feel pressure" or "Listen to their customers" or "Admit they were lying" or "Don't blatantly say outlandish things to make themselves look better to the ignorant"


Hey DailyTech. Got a question...
By jtyson on 2/28/2007 6:21:10 PM , Rating: 1
How is this news?

Explain it to me.

In what way, shape or form is this news?

In what capacity could you possibly consider this article news?

A Sony executive makes a statement expressing that Sony has created a business model that will play out over the course of the coming years, and (surprise surprise) Sony didn't schedule a price cut within the first SIX MONTHS of the console's release (can you believe the audacity of Phil Harrison?).

For anybody with any type of business-oriented brain functionality, this constitutes "common sense".

At Daily Tech, this constitutes "breaking news".

I would just like to point out that none of the PlayStation 3's competitors (one of which has been on the market for well over a year now) have announced a price drop. In fact, their executives have made equally "unconscionable" statements.

But that... well, that's simply not news.




RE: Hey DailyTech. Got a question...
By Micronite on 2/28/2007 7:01:04 PM , Rating: 2
Turns out DailyTech also reports on XBox360 not cutting prices. Did you have the same problem when they printed this article?
http://www.dailytech.com/article.aspx?newsid=4767


RE: Hey DailyTech. Got a question...
By jtyson on 2/28/2007 7:28:44 PM , Rating: 1
Hmmm... okay Micronite, let's compare articles:

From the Xbox 360 article:
quote:
With the Microsoft's console priced a comfortable $100 below its prime competitor Sony's machine, there is little reason to adjust pricing.

From the PlayStation 3 article:
quote:
...$550-$600 is too still much to pay for what is supposed to be a video games console.

That's a level playing field if I ever saw one! Wouldn't you agree?

I should also add that:

A) The Xbox 360 had been released for a full year when that article was written, compared to the PlayStation 3's three and a half months.

B) No, Micronite, I don't consider the Xbox 360 article news either.


...
By yacoub on 3/1/2007 7:59:58 AM , Rating: 2
I wish there was a way to rate down Phil Harrison as a human being. =P




RE: ...
By MonkeyPaw on 3/1/2007 5:22:24 PM , Rating: 2
Or at least his comments. Maybe then he would realize how many people don't believe him. ;)


Sony Price Drop
By wallijonn on 3/1/2007 11:05:07 AM , Rating: 2
It is very likely that it won't be the consumer which will apply the most pressure on Sony to drop their prices, but the game developers. Supposedly the Wii has already sold 4 million units world wide, the Sony 2 million units world wide. As a developer the larger number user base represents the greatest potential for me to make a profit. Therefore, if by year's end the Wii has sold 12 million units and the PS3 has sold 4 million units, then developers will leave Sony and start to code for Nintendo.




By timmiser on 2/28/2007 11:49:40 PM , Rating: 2
So whatcha think about that new Vista ditty?


By kelmon on 3/1/2007 3:02:24 AM , Rating: 2
There may be something in that but that's not necessarily a bad thing. Nintendo is clearly going their own way this time and seem to have selected a path that appeals to both the media and consumers so everyone's a winner. Sony, on the otherhand, has evidentially gone stark starring mad this time around, the media has picked up on this as a long running joke, and consumers won't go near the thing since they apparently aren't crazy (except for the loonies lining up for the console's release and paying silly money on eBay). Microsoft has produced what can probably best be called a solid release that it likely most in line with what people were expecting from the "next generation" consoles. In that respect I do think you could call it boring (it was what I expected, for better or for worse) but it's definitely not a poor product.


By somegeek on 3/1/2007 10:15:49 AM , Rating: 1
"...Sony, on the otherhand, has evidentially gone stark starring mad..."

That's what people said about the Wii's controller and the name "Wii".

"Heh, heh, it looks like a TV remote!!, Heh, Heh!"
"Wii??!, OMG, Sounds like wee-wee! Heh, Heh!"
"Nintento should fire it's marketing department!! LOL!"

"...definitely not a poor product."

The Sega Saturn and Dreamcast weren't poor products either, but, like the Xbox, they failed to get the attention of the mainstream. Even with the high price, the Playstation 3 has much wider appeal than the all-too geeky Xbox 360.


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