Xbox 360 price cut possible for E3 - Will Sony cut PS3 price in return?
By Dave Parrack
Would a price cut for either the PS3 or Xbox 360 finally push you over the edge and make you purchase one of the current-gen consoles? There is strong speculation today that both consoles may soon be heading down in price to make them just as readily affordable as a Nintendo Wii.
While the price of a current-gen console isn’t the main reason why most people would choose one over the other, a certain price point does certainly help bring hardware in to the budget of the mainstream consumer. The Wii proves this beyond doubt as its low price point from release onwards has massively helped it sell in the numbers it has to the very wide demographic it has.
Which makes the rumours of late surrounding the Xbox 360 getting a price cut an interesting twist in the sales battle. If Microsoft do decide to lower the price of the 360, will Sony be forced to follow suit almost immediately or risk losing the sales momentum it has started to build?
The speculation has been prompted by a thread on the High-Def Digest Forums which purports to show scans of a Kmart advert launching on July 6th. The ad shows the 20GB Pro model on sale for $299, a drop in price of $50, or 15%.
The timing of this price cut would be very clever, coming as it does, just before the E3 conference, and therefore either stealing Sony’s thunder, or maybe even forcing it to launch a fightback and drop the price of the Playstation 3 in return.
This is all great news for the consumer as it would bring the prices of both consoles down, and in to the realms of affordability by a whole new layer of consumers. If more people then purchase a console, it ensures the lifespan of the hardware, and also increases games developers willingness to throw money at making games for the machine.
Michael Pachter has given his view on the rumour, and in his typically condescending and know-it-all manner, he has expressed his belief that an Xbox 360 price cut makes perfect sense at this point in time. He told GI.biz:
Microsoft has historically been a price taker - meaning that they typically wait for Sony to cut first. However, they haven’t been in the position of having a cost advantage before, as they do now.
Sony will have to respond if they see 360 sales increase significantly - say to over 300,000 a month in the US. I believe that every 360 sold is one less potential PS3 sold - and vice versa - and expect Sony to behave rationally.
I can easily believe that Microsoft will decide to cut the price of the Xbox 360, and soon. This should and probably will mean the console starts selling in larger numbers, and therefore put the pressure on Sony to reply in kind so as not to lose too much ground in the race for second. But as Sony have already lost over $3 billion on the Playstation 3 to date, can it actually afford a price cut at this stage of proceedings?
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June 27th, 2008
Not if they want to balloon their 3.3 Billion Dollar loss. They could do it but they are going to be placing all there bets on their non-gaming stratgey. If they would stop being stuborn and charge for online and create revenue streams to off set their expenses and make some games available now, then sell at a loss wouldn’t be to bad but ultimately I believe they have backed themselves against a wall. PS3 is like a console in progress that is getting it together after launch instead of being prepared from day 1
June 27th, 2008
The difference between Microsoft and Sony is like the parable of the man that built his house on the rock and the man that built his house on the sand. If you don’t have a good foundation then your house will wash away when the storm comes.
June 27th, 2008
“If they would stop being stuborn and charge for online ”
You say that today, yet if they did it, tomorrow you’d be going :: ‘0MGZ L0LZ PS3 UZERS H4VE TO PAY NOWZZZ OMGZZZZZ’
Besides, Sony is creating revenue streams, remember that statement you twisted beyond belief? You know, the one about growth in NEW areas? Hence Sony running a Movie/TV service in the Summer - Thats a revenue generator right there. I know I will buying if the price is right (which of course remains to be seen).
You also need to remember that Sony/PS3 isn’t about to go anywhere as it is not just a PS3 manufacturer, its an electronics behemoth. Same for MS (cept with shakey software).
On a sidenote here, does anyone know if the 3bn losses take into account cell R&D? Because isn’t the cell supposed to be used in many many sony devices such as TV’s, dvd/blu-ray players etc. In which case, is it really a %100 PS3 loss?
June 27th, 2008
SW
Your absolutley right. I would say that. But even thought it might me funny and a good joke at the time it would be a good stratgy because all these free things you guys like to boast about is actually killing the machine you love so much. As for the Movies I will laugh at that too because I thought it was all about bluray but It is funny because for a company that owns Movie Studios you would think they would have had this in place already. Sony has a store connected to it’s Sonic Stage program that probably sells music but I never went there even though I have the program so I’m not sure what the content is all about. But yes the movies will help but is it enough to off set this huge operating cost. On 360 you have the online cost, acrade sales, themes, Gamer Pics, Movies/TV, XNA, downloadable content and all the accessories you can buy like face plates. All these help bring money back to off set operating cost. A foundation built on Rock not the sand.
June 27th, 2008
Hmm. So you like paying more each year for online play. You like paying more for faceplates and other sidestream items. Microsoft has a good market if your willing to buy all these extras.
As far as sony’s losses. When the cost gets low enough there will be millions and millions of ps3s sold just like the ps2. the Cell production will drop the “production” price the ps3 and Sony will be making a profit on each ps3 sold. They already said the production price was at $400 the currrent price of the ps3. Plus all the royalties from Blu-ray. Sony has solidified its future profits.
June 27th, 2008
CAD,
Sony’s losses are mostly from manufacturing costs, not operating costs.
-Arvis
June 27th, 2008
@CAD
Though those item’s are making money for M$ why should you have to pay for those items.
Alot of you pay for is free for us (online gaming, theme, pictures packs). I can’t believe that they are making you pay for Themes. That is just wrong in so many levels.
Let’s hope that the pricess for the Movie service will not be too outrages like Xbox.
$10 to rent a movie for one day?
June 27th, 2008
Arvis I know that. when I’m talking about cost I’m talking about the entire cost of the PS3 Business. 3.3 Billion Loss is obviously from the manufacturing side of it. But besides game which is not a big factor on PS3 what else do thay have to off set the cost of manufacturing the PS3?
June 27th, 2008
Hey Arvis here is a question for you.
Is not the manufacturing cost part of the operating cost?
June 27th, 2008
7.5 million PS3 at a 400 dollar loss equals 3 Billion. 50 million at 60 dollar profit equals 3 Billion dollars. Sony will make money don’t you worry about that.
June 27th, 2008
CAD - the costs are inclusive. this is why they cut the SCE staff in europe and in NA.
unless MS hammers the price down more than $50, there prolly won’t be too much growth, but given the fact they are killing the ps3 in sales uin the largest markets with teh current price point, the drop will only fan the flames. they need to get to the coveted $199 price point. bringing the price down to even $299 (speculation) for the premium isn’t going to do it.
Sony obviously is not in a position to match the price drop. their pipe dream of selling online movies is still just a dream. sony hypes a lot of stuff that never comes to pass or is a shell of what was hyped. not to mention the userbase would have to be muuuuuch bigger for sony to see any real money from such a service.
the price point is also the key. d/l movies are one thing, but if not affordable, few will bite. the rub is; by offering a competing hd movie experience, they’re hindering their own bluray strategy. besides, they only get a percentage of the d/l movie sale/rental. the rest goes to the studios, service providers, etc…
time will tell, but a price drop, ANY price drop, will surely sell some. it’s just too bad sony didn’t have a better strategy.
June 27th, 2008
Hmm I’m not sure what the ‘Arcade’ section of live is, however the PSN does have games produced for the PSN (Pixel junk etc) as well as a selection of PSOne games you can purchase as well as PS3 games.
Wallpapers, themes, and even some music from games, I would rather keep free. Yes they could charge, but I think it would annoy people more than anything, I mean who wants to pay for a graphical theme?
Addon content, depends on the game. MGS4 DB was free, most ‘game’ addons cost $$ tho - which of course is fine.
June 27th, 2008
@Kev
I think there are ways they can make the DL content different from the BR Content.
DL content could be locked to 720p or below, or stripped of extras etc. I would prefer to get cheaper ‘just the movie’ content than the bloated offerings you get from a DVD/Bluray.
But yes, the price AND how the movie is handled (e.g. treated as a rental, content locked to the PS3) will make or break the service.
June 27th, 2008
SW,
I’m not sure that Sony would want/need to differ DD movies from what they offer on Blu Ray. Their goal is to become the leading provider of HD entertainment, so I doubt that they are overly concerned with HOW they accomplish this goal, as long as they do accomplish it.
-Arvis
June 27th, 2008
the 3.3 billion is from manufacturing, not the r&d. they stated that in part of their conference call.
They are concerned about how they accomplish the goal, because they stated return to sustained profitability, is in blu-ray movie distrubtion, that is by far there biggest potential money maker, and they have to try to not hurt the fragile blu-ray market with there own download service.
June 27th, 2008
If 360 and PS3 were the exact same price, im pretty sure everyone that likes hd will choose ps3…..why wouldnt you want to have a bluray player for such a low price?…then you can go to blockbuster and rent movies in bluray…and you get awesome games…what a deal….you cant argue with that……and i like online war games…and a big one coming up is SOCOM: Confrontation…..that it going to be sweet
June 27th, 2008
The problem Sony and their devoted fanclub have is that no matter what they say most adults will never unload $400 on a game console with a DVD player, even if it is a high def one.
People can go on about the PS3 until they are blue in the face but it makes no difference.
June 28th, 2008
when i think about the difference it is funny that Sony needs the dl movies while microsoft says no to bluray. Makes you wonder who is right
June 28th, 2008
Sony…Music-Television-Movies-Games-TV-Electronics-Radio-PC-Music Players- Rolly-Blu-ray Disc- Cell Broadband Engine. Sony Is The Worldwide Leader In Electronics And In Films Since 2000 Undefeated In Movies. Has The World Record For Most Video Game Console Sold Worldwide 127 Millions And Counting. Has the Most Game Developers Studios Even With Microsoft And Nintendo. Sony Is Bound To Take Over The Entire World Of Electronics Is A Beast. Sony Is Company With The Most New Products And Most Passionate About Business Than Any Other Company. They Can Make Profit From Anything They Have A Bank In Japan…
June 28th, 2008
I seriously hope your not American Ivan… or you will be charged with treason…
I say NO to Downloading movies… why should I pay to have a soft copy of the movie if I can just get it for free from utorrent??
Plus I like having hard copies and boxes and manuals thank you very much… I like having a collection I can touch and see… and can pile up in my bed and pretend to swim in a big ocean of DVDs… ahem… I mean… NO TO SOFT COPIES!!!
June 28th, 2008
and who do you think makes the chips and the electronics?? CHINA!!! thats why they’re so cheap… god bless the chinese and their terribly low wages…
June 28th, 2008
Brooklyn, NY Lol i didn’t know we had law is not only Chinese who have low paying jobs there’s other countries a lot more.
July 1st, 2008
I thought the objective of a gaming console was “gaming”. Creating an all-in-one media hub might not have been a smart strategy by sony, at least for the present.