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The market clings on to any hope of PS3 price drop

These days, literally the smallest whisper about falling costs of blue-violet laser diodes will set off speculation about a PlayStation 3 price drop. Yesterday, Sony announced that it would be shipping its second-generation Blu-ray Disc movie player for $100 less than initially announced, fuelling talk of possibly the same cut being applied to the PS3.

Analysts sure seem to think that the lowered price of BDP-S300 is a sign of PS3 things to come. Arvind Bhatia, an analyst with Sterne Agee & Leach Inc., says in a Dow Jones story, "If the cost of Blu-ray is coming down, you can drop the price of anything with Blu-ray in it. "

What some analysts may be overlooking is that falling costs for Blu-ray components do not mean a higher profit margin on the PlayStation 3. While standalone Blu-ray movie players are sold at prices above costs, the PlayStation 3 is sold at a considerable loss – a common penetration tactic in the video game console business.

The PlayStation 3, compared to its competition, is performing below expectations, leading to a conclusion that the video game market is highly price sensitive. Regardless of Sony Computer Entertainment Inc.’s bottom line, analysts have repeatedly called for a lower price in order to stir PS3 sales. "Feedback from retailers continues to indicate that a price cut on PS3 will be important," Bhatia astutely pointed out.

Wedbush Morgan Securities analyst Michael Pachter said in a previous story, "The right question to ask is whether the full bill of materials is below $499, allowing them to cut price and still avoid losing money... The point is that if they're ramping capacity to [5 million diodes], they probably are coming down the cost curve for MPEG chips, dedicated disc drive processors, and every other component. Hard to say for sure, but I'd guess that Sony could squeeze a hundred dollars out of its cost by mid-year, maybe more."

"My guess is that you will see a price cut this year," he continued. "I think that the introduction of the Xbox 360 Elite gives Sony an opportunity to cut price and claim that they offer Blu-ray for only $20 more."

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Games.
By therealnickdanger on 6/5/2007 1:50:40 PM , Rating: 4
They could sell it for $599 if they had a powerful stable of games.




RE: Games.
By Kefner on 6/5/2007 2:02:50 PM , Rating: 2
I couldn't agree more. Why pay 599 for a system with very little exclusives currently available?


RE: Games.
By weskurtz0081 on 6/5/07, Rating: 0
RE: Games.
By Disenchanted on 6/5/2007 6:44:06 PM , Rating: 4
Everyone seems to be up in arms about exclusives. I think exclusives are getting to be a thing of the past, and as such, I won't lend them much value. Yes, exclusives sell systems (particularly at launch), but from a developers point of view, it only limits your audience. To put it simply/crudely, developers care firstly about the game, not the console. If I develop a game for Nintendo, I limit myself to whinny kids, and the parents that buy the games. If I develop a game for Microsoft, I limit myself to drunk college frat boys that like to talk smack over a headset. If I develop a game for Sony, I limit myself to fanboys pining for the "Good-old" days of PS1 (or worse, an audience that won't buy my game because they only use it as a Blue-ray player).

The point is, I just want the game made, and my work seen by as many people as possible. Why? because that means more money in my wallet. If I spend a bit more in production cost, I can make a game that is available to everyone (or at least a majority of people).

So, exclusives, while important money makers, and system-sellers, are not in the best interest of the industry. IMHO they should be left to 1st party developers, and/or houses that are otherwise owned or operated by the hardware manufacturer.


RE: Games.
By MonkeyPaw on 6/5/2007 8:54:40 PM , Rating: 2
True, but then again, Halo 2 sold insanely well for an exclusive title.

I agree with you though. Exclusive titles end up peeving everyone else off. With the vast amount of time and resources it takes to develop a quality game (HL2, for example), why cut a part of your market off?

I wonder if Duke Nukem Forever will be available on all platforms? :D


RE: Games.
By therealnickdanger on 6/6/2007 5:25:27 PM , Rating: 2
Halo 2 is the most over-hyped shovelware I've ever seen. I can't believe I fell for Bungie's lies.

R.I.P. Halo 1.


RE: Games.
By softwiz on 6/5/2007 2:26:34 PM , Rating: 2
Without exclusives it's not worth $599. They might have been off leaving the $499 SKU untouched.

The firmware IMHO only just recently was updated to be something remotely worthy of the price tag the PS3 commands.

As is, I'd might be inclined to spend $299 on it to use it as a Blu-Ray player in the interim while I wait for games to materialize.

I wouldn't buy the movies either, I'd likely just Netflix 'em, etc. Their online facilities are there yet either, but they were I would probably pay more.

Please, please let me pay extra for the priviledge of running Folding@Home. (kidding) ;)


RE: Games.
By softwiz on 6/5/2007 2:30:11 PM , Rating: 2
Oops...

In case it's unclear I meant Sony's "online facilities" for the PS3 rather anything relating to renting or Netflix.


And the award goes to...
By bighairycamel on 6/5/2007 3:34:44 PM , Rating: 4
quote:
The PlayStation 3, compared to its competition, is performing below expectations, leading to a conclusion that the video game market is highly price sensitive.


I would like to nominate the person who "concluded" the above for the stating-the-obvious award for 2007.




RE: And the award goes to...
By walk2k on 6/5/07, Rating: -1
RE: And the award goes to...
By animedude on 6/5/2007 6:27:59 PM , Rating: 2
I am sorry, but the cute little Wii just creamed the big boys systems.


RE: And the award goes to...
By Disenchanted on 6/5/2007 6:53:48 PM , Rating: 4
Indeed. This whole discrediting the Wii as a console is getting old. With or without HD-out, and a next-gen media standard; it still plays games. Games that people are willing to buy, and games that people enjoy. Even if they don't appeal to everyone, it counts. Whether you want it to or not. So the better thing to do is deal with it as competition, because if you ignore it, it can come back to "bite your butt" before you know what happened.


RE: And the award goes to...
By Xavian on 6/5/2007 6:53:55 PM , Rating: 4
I love how the Wii isn't competition anymore now that it's poised to become the market-leader in the market.


RE: And the award goes to...
By MattCoz on 6/5/2007 7:27:49 PM , Rating: 2
This is quite funny. Before the systems were released, Nintendo kept saying that they weren't competing with the 360 and PS3, and all the Microsoft and Sony fans called that BS. Now that the Wii is mopping the floor with them, they're not competition?


RE: And the award goes to...
By XesBOX on 6/5/2007 10:42:14 PM , Rating: 2
God damn. It's zealots like you that ruin this industry. It's about video games. That's what these things do. And the only "feature" that should matter is how much fun you have playing games on it. YOU are the reason Sony

There's a reason the DS is kicking the life out of every home console system on the market COMBINED.


now that the rumor has started
By thejez on 6/5/2007 2:40:26 PM , Rating: 3
Now that everyone is "speculating" at price cuts... this will hurt their sales even more i think...now even if i was considering buying one of these i would wait... because the price might come down soon. The good part is that if everyone does this they dont have a choice... the market will basically demand the price drop by not buying them at the current level... then in response MS will have to lower their price as well... so its a win for everyone to not buy PS3 right now... ;) or later for that matter (if x360 comes down nice an low)




RE: now that the rumor has started
By Timeless on 6/5/2007 2:54:43 PM , Rating: 2
By your reasoning, you want everyone to basically stop buying the PS3 and X360. That way, we can force a price cut on all consoles. Nice...except for one thing. You will probably kill the console industry by doing so. How? If Sony and MS was forced to drop their price, they would take even bigger losses for each console sold than they are now. Sure Sony and MS can take those losses, but their game divisions probably can't considering they're already in the hole. Of course, this is all pure speculation so don't take what I said seriously.


RE: now that the rumor has started
By FITCamaro on 6/5/2007 3:38:02 PM , Rating: 2
Microsoft soon won't be loosing money on the 360's manufacture. And Nintendo is making a profit on each Wii sold.


By melgross on 6/5/2007 4:10:42 PM , Rating: 4
That's what MS said about the first X Box, but they continued to lose money anyway.


RE: now that the rumor has started
By thejez on 6/5/2007 4:11:16 PM , Rating: 2
dont forget... this worked for the PSP... resellers weren't moving them and they basically said lower the price or we arent selling these anymore... guess what happened....


By Timeless on 6/6/2007 2:33:09 PM , Rating: 2
How long has the PSP been out? Compare to the PS3, the PSP is old. The PS3 has been out for a year. The PSP took, what, four years for a price cut? Find a better example please.


By Mitch101 on 6/5/2007 2:56:05 PM , Rating: 1
Excellent point.

360 sales might just be down too because there are rumors on that side of the pond that it will drop $100 when 65nm chips are being used and prior to the holiday season. Sony might not make the move until Microsoft does but what is bad for Sony is that Microsoft can go deeper in cuts because they currently make $75.00 per console sold. Dropping $100.00 they make it back on the first game you buy for the console.

If Microsoft drops $100 off and offers a free game then the PS3 could be in bigger trouble from a profit margin potential.

I like the PS3 but I think Sony may have overcost the manufacturing of the unit. Its a bargain for its $600.00 especially considering what Sony is paying to make them. Heck they nearly lose the cost of a Wii on each. I commend sony for delivering next generation but someone should have said NO when they stood to lose so much per console.


Or with lower Blu-Ray prices
By phaxmohdem on 6/5/2007 2:06:45 PM , Rating: 3
Sony can stop losing so much money per console.




RE: Or with lower Blu-Ray prices
By vitul on 6/5/2007 2:34:26 PM , Rating: 2
that to, but if they dropped the price to $450 they would probably outsell the 360. cheaper then the elite but just a little more then the premium but with blu ray. it would be the smartest thing they could possibly due. plus 65nm will save cost as well.


RE: Or with lower Blu-Ray prices
By Timeless on 6/5/2007 2:40:18 PM , Rating: 2
Slashing the price by $150 is no small feat. Considering that the PS3 is currently losing money on each PS3, I don't think Sony can afford to slash prices by $150. Maybe $50-$75 I would think, but not by $150. Besides, this is all pure speculation so I will wait until I can get a straight answer out of Sony's mouth before I say anymore.


RE: Or with lower Blu-Ray prices
By Proteusza on 6/5/2007 2:38:20 PM , Rating: 3
They wont drop the price, because they have already paid. They have a surplus of PS3's, these will all have still cost the original amount to make. Any lowering of the price makes their losses on the console even worse.


RE: Or with lower Blu-Ray prices
By Ravenlore on 6/5/2007 5:23:34 PM , Rating: 2
quote:
They wont drop the price, because they have already paid. They have a surplus of PS3's, these will all have still cost the original amount to make. Any lowering of the price makes their losses on the console even worse.


True they paid but it has only been a guess as to how much the cost of the PS3 is. The componet price drop is happening all the time, the reduction in size of Cell chip is happening, and the chip failure rate is happening. Remember that the Cell had a high failure rate thus they were tossing a lot of chips out losing costing money, but now most are being made thus the cost is coming down. Not to mention that Sony is actively looking at wasy to reduce the cost as a whole and redesign PS3 as soon as possible.

Will the price drop. I am sure it will as MS is going to drop the price of Xbox360.


By Ravenlore on 6/5/2007 5:47:27 PM , Rating: 2
In addition, they are looking at the long run sure they did not sale these consoles and will take a loss but, later they will make the money back.. LOOK at PS2. They lost lost of money per conosle and sold MILLIONS more at less lost but overall the loss are comparable. Still in the end they sold even more conosles later and made a profit per conosle.

PS3 can sell for years untill something new comes along. I do not think that another console with the same increase in graphics will sell well in 4-6 years like the difference between Xbox and Xbox 360. SO they can make their money back PLUS money made from games.

PS3 may just have 2 revisions. One revision now or next year, and again in 4 more years.


Misdirection.. (again)
By XesBOX on 6/5/2007 2:59:08 PM , Rating: 3
I've been talking since the very beginning of the console war about one particular thing, and as time went on I felt more and more as though I were the only person who seemed to have noticed; Sony failed to do any market testing for either introductory pieces of technology. What this means is that the price set for the PS3 was set in order to recover the high cost of manufacturing brand-spanking-new technology. And in return for Sony's failure to create a set of products that used the same technology (the Blu-ray players for example), the consumer was forced to pay higher prices for bleeding edge technology. It also means that those same consumers were paying for all the bugs as they were acting as Q&A, all while Sony was riding their high horse and carrying (as usual) their nose in the air.

The problem isn't the cost, it's the spectrum. If all 3 units were priced at 600 dollars, things would look VERY different. Because it's at that point that branding comes into play more than anything. Nintendo is, and has been for some time, branded as a system for kids. Microsoft.. well.. "I won't buy anything made by Microsoft" was an argument I've heard time and time before. And all you're left with is Sony.

I've always had personal bias against Sony, but primarily it's because of the way they treat their consumers, hell, even the way they treat the people selling their product. But in the end, the image is everything. And the people who haven't been burned by Sony in the past, or aren't aware of just how nasty they can be to deal with, will almost always believe the hype.




RE: Misdirection.. (again)
By walk2k on 6/5/2007 5:30:03 PM , Rating: 1
Ok Kreskin, how is it that you know Sony didn't do any market testing?

Did your huge brain just pull this knowledge out of the ether?


RE: Misdirection.. (again)
By XesBOX on 6/5/2007 8:44:38 PM , Rating: 2
Are you kidding? Name a new piece of technology (which includes miniaturizing) that wasn't put out in small quantity to the market at a high price (due to manufacturing costs) so that consumers who WANTED to be the first that have their hands on it could make the choice to do so. Sony doesn't fall under those guidelines with the PS3 because BOTH the Cell chip and the Blu-ray are not exclusive to the system. I'll even put it in Sony's own words, 'We think of the PlayStation 3 as an entertainment system, not just a video game console.' In one sentence they managed to suggest that the entire fan base and the target audience (the gamers) were nothing more than elitist consumers and that the system was not designed with them in mind.

Had the Blu-ray stand alone players had been available even 7 months before launch of the PS3, the price would have been affected. And if they had designed another product that utilized the Cell chip, like they suggested in their marketing of the Cell, then the price of that would have dropped as well, and the gamers wouldn't be paying $600 a system.


RE: Misdirection.. (again)
By Timeless on 6/6/2007 2:42:34 PM , Rating: 2
I'll take it from Sony's own words. THEY NEVER SAID THEY WERE ELITIST! They said that they wanted to think of it as an entertainment system, not just a video game console. They said, "not just a video game console". They didn't say, "it isn't a video game console." See the difference? Where is the text did they openly shout, "Our console is for the elite".


RE: Misdirection.. (again)
By XesBOX on 6/6/2007 9:57:52 PM , Rating: 2
Sony says: "$600"

And not just a video game console?

Oh right.. so the people who are buying it strictly as a cheap Blu-Ray player.. you know.. that has nothing to do with the fact that it stoped being about the gamers.


RE: Misdirection.. (again)
By Timeless on 6/7/2007 1:48:57 PM , Rating: 2
You must have your head on backwards or something. It's Sony's fault now that game developers want to take their time with a game? A game console is defined by the game it has. The fact is that Sony has no good games right now doesn't mean Sony doesn't care anymore. They want you to buy it. You forget that they are LOSING money. Why would they not want you to buy it? Get your facts straight.


Player or Chips.
By Mitch101 on 6/5/2007 2:40:25 PM , Rating: 2
What is driving down the price of Blue-Ray the drives or the chips that render the video in the stand alone players?

If its the chips in the stand alone player then the PS3 will lose more money for sony if they do a price drop.

On the other hand if the cost of the drives are what is coming down, and they should by now, then the PS3 price can be dropped.

I think they lose like $241.00 on each PS3 sold. I would bet Sony would try selling the PS3 with a free game of choice before opting to drop the price and lose more money on the console. Something to bridge the gap a little between the lose per machine.




RE: Player or Chips.
By Mitch101 on 6/5/2007 2:41:34 PM , Rating: 2
I should refrase that even though the diodes have come down in cost Im sure the other components make up the entire cost of the units drop in price. My bad. Time for another cup of coffee.


RE: Player or Chips.
By Teletran1 on 6/5/2007 6:21:06 PM , Rating: 2
I love how everyone is quoting those iSupply numbers like they are gospel. Some of those figures were suspect to say the least. I don't doubt the PS3 was selling at a loss but $240 is a joke.

Initial yields of the Cell were horrible, not the case now. There is no way it currently costs Sony $120 for the BR drive in the PS3. There is no way that the RSX costs them $120+ when you as a consumer can go out and buy the whole graphics card with 256MB of RAM for that price. They can fab them on their own. RAM prices were at an all time high at the launch of the PS3. Costs have come down. They can drop the price.

The big question is whether or not MS is too greedy that they want to milk Halo3 sales at the current 360 prices.


RE: Player or Chips.
By Xavian on 6/5/2007 6:51:00 PM , Rating: 1
How do You think SCE (Sony Computer Entertainment) managed to lose $2 Billion?

In order to lose that much in one year suggests they losing quite a hefty amount on the PS3 (the blu-ray trojan horse).

The Problem is, is that the PS3 isn't selling well anywhere, its doing worse than the Gamecube in Japan (the PS2 was the fastest selling console in Japan, till the Wii came along), It cannot outsell the GBA in the US and In Europe, there are reports that sales are slowly drastically.

So if Sony has Produced 6 Million of the Things and they only managed to sell 3 Million in all regions and the Launch hype is over, that's 3 Million PS3's sitting around waiting to be sold, Sony has stuffed the channel as much as they can to keep their fiscal predictions.

Microsoft never profited from the Xbox at the end and i fear the same fate will befall the PS3 and Sony. Problem is, Sony doesn't have the money to burn.

Will Sony's advances in the HD format market with the PS3 be able to overcome the massive loss caused by the PS3? Personally, i don't think it ever will.

Sony bet the farm on Blu-ray and will lose everything.


500 for 60 gig ps3
By fearsjohn on 6/5/2007 5:06:39 PM , Rating: 2
what is interesting is that i traded in my ps2 about six months ago and got the ps3. Gamestop gave me 100 dollars off of the 600 dollar price. now i have a ps3 that plays ps2 games ps1 game dvds and blu-ray discs,plus i can do folding at home on the ps3 better than my desktop which is a 5200 x2 at 2.8 gigs. all of this for five hundred is not bad. not to mention my 360 was $400 without the 200 dollar hd-dvd the backwards compatibility sucks, and it does not have wireless internet like the ps3. and don't call me a fanboy because im not the games for the ps3 suck right now but i have not been that impressed with the 360 games but they are getting better. i love forza 2 it is awesome.




RE: 500 for 60 gig ps3
By darkpaw on 6/5/2007 5:18:35 PM , Rating: 2
I was strongly consering that deal. Needing two sony branded controllers killed it for me though. My original controller stopped working years ago and I've just got a generic. Also needing to turn in the memory card would make it a bit difficult to save games. Woulda been nice if they offer some options like system + 2-3 games or the system + the controllers or whatever.

Then again I'm not a very big gamestop fan in general.


RE: 500 for 60 gig ps3
By BPB on 6/6/2007 8:16:13 AM , Rating: 2
This is something I've been saying for some time. Technology-wise you get real bang for your buck with the PS3, which I do not yet own but intend to buy. I have an Xbox, Xbox 360 Elite, and 2 Wii's (probably gonna either give away or sell the 2nd unit because 1 is enough). The Wii games are the most family friendly AND fun. If you can get past the Wii not being cool to certain hardcore types, it's a blast. Especially when you have 4 or more playing at a time. The Xbox served us very well for years, but I'm kinda regreting my Elite purchase. The 360 games are better, but maybe not worth the added cost. Add the noise volume of the unit and I wonder. Though I do love using it as a Media Extender for TV/DVR and music via my Vista PC.

My daughter has been begging for a PS2, so I'm thinking I'll wait and get a PS3 so she can play PS2 games and I can have a blu-ray player.

In the end, I have no trouble believing Sony loses big on this unit. The technology is too good and current for them not to be losing money.


Price cut unlikely but
By darkpaw on 6/5/2007 4:18:35 PM , Rating: 2
I really think a price cut is unlikely. I doubt the lose figures everyone throws around are accurate, they were based on an analysts material costs over a year ago. I think Sony's recent financial results show that they are losing signicant money though, and doubt that they would cut the price unless they were forced to by a large 360 price cut.

What Sony really could do at a very minimal cost to themselves is bundle 2-3 games with the system, just as HD movie players are doing now. They pay almost nothing for the games, but can increase the percieved value to the buyer. It costs Sony a lot less then a price cut, but makes up for it in other ways.

Of course they could just release some good games too, but that takes time. As someone on the fence about purchasing a PS3 (mostly for a movie player currently), either a price cut or nice bundle would make it an easy decision.




By Ravenlore on 6/5/2007 5:10:54 PM , Rating: 2
PS2 is selling like crazy selling more than Xbox360 and PS3 together. Why?? The games are still there, and the cost of buying games is less, while the game play is the same!! The only difference is that games are better looking. Xbox 360 games are not that much better than Xbox games and if like the PS2 the Xbox was still being made and games still coming out for it then I think that its sales would also be better than Xbox360 and PS3!!

The cost would not be that much of a big deal if the games were worth it. TO me shooters, RPGs, Action, ... follow the same formula, same idea, same movements... as they did with PS2/Xbox/GC!!!, the change from 2D to 3D was huge then from PS1,N64 to Xbox whas refined from chunky unorginized graphics and ideas to great games and presentation. But looking at this gen what has improved so MUCH???




Irregardless
By IceTron on 6/5/07, Rating: -1
RE: Irregardless
By Nightskyre on 6/5/2007 3:48:15 PM , Rating: 3
quote:
Irregardless

Irregardless isn't a real word. Regardless is what you're looking for. Stick to your 360, Wii, and dictionary.

quote:
so screw ya

You know, I always wonder about people like you. What kind of prepubescent whiny anger do you harbor to feel the need to lash out at Sony in a public forum? (A forum that, most likely, will never reach the ears of those you seek to debase)


RE: Irregardless
By ElFenix on 6/5/2007 4:00:04 PM , Rating: 2
http://dictionary.reference.com/browse/irregardles...

english is a very nice language in that its actual users determine whether something is a word or not. irregardless has entered the popular parlance, regardless of what english teachers across the country think.


RE: Irregardless
By FITCamaro on 6/5/2007 4:57:43 PM , Rating: 2
Woot, leet, noob, etc are not real words. No matter how many people say them worldwide.


RE: Irregardless
By IceTron on 6/5/07, Rating: -1
RE: Irregardless
By bplewis24 on 6/5/2007 5:50:10 PM , Rating: 5
Can we get a ban here please?

Brandon


RE: Irregardless
By herbiehancock on 6/6/2007 2:39:05 AM , Rating: 2
OK...but let me find my magnifying glass and tweezers so I can figure out what's hair and what's supposed to be that "big" thing.


"You can bet that Sony built a long-term business plan about being successful in Japan and that business plan is crumbling." -- Peter Moore, 24 hours before his Microsoft resignation

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