Microsoft has taken the only course of action it really had left at this stage of the game, and cut the price of the Xbox 360 across the range in the US. Will Sony now be forced to act and cut the price of the PS3 in retaliation?
The prices of the Xbox 360 range were cut in North America on Friday. This means that one of the next-gen consoles is below the $200 pricing sweet spot that is thought to guarantee increased sales for the first time this generation. As Mike showed on Friday, while the Arcade Xbox 360 is now cheaper than the Wii, to turn it in to a console with any worth, it’s likely to set you back much more than the $199 being charged at retail.
Industry analysts have loved this development in the current gen console war, with Jesse Divnich claiming it almost guarantees the Xbox 360 will win the sales battles over Christmas 2008. But the one thing which could prevent this happening is if Sony counters with its own price cutting strategy and brings the price of the PS3 down substantially to put it more in line with the Xbox 360 and Wii.
Sony CEO Howard Stringer stated ahead of Microsoft’s announcement that the price of the PS3 wouldn’t be cut before 2009. And now, Julie Han of Sony’s corporate communications department, has reiterated the commitment to the current price point, and talked up the other aspects of the console instead. She told Gamasutra:
Weâ€™ll obviously see the natural lift [in sales] with the price cut — but how sustainable is that in the long term?
Weâ€™re really confident that consumers are making choices driven by value, and we know PS3 offers that value across the board, with the built-in Blu-ray player the broadest and deepest software lineup in the industry, with LittleBigPlanet, Resistance 2, Motorstorm [Pacific Rift]… weâ€™re quite confident our holiday sales will be good.
We try to stick to our strategy… we feel the PS3 offers the value at that price point. There are no plans to do any price cuts.
There is definitely a case for stating that the Playstation 3 still offers the best value for money, especially for people also in the market for a Blu-ray player. But to sell the millions of consoles each of the three console manufacturers are after selling, price rather than features is a key decision-maker for your average, mainstream consumer. And on that score the Xbox 360 wins out, even if it is a lame version of the console.
Any argument against this can instantly be blown out of the water by the fact that sales of the Xbox 360 have already begun to rise. Punch Jump reports that sales of the Arcade SKU rose 1,712% on Amazon on the first day of the price cut. Sales of the Pro SKU rose 504%, while sales of the Elite SKU rose 231%.
It’s clear that Sony aren’t going to cut the price of the PS3 any time soon, probably because it can’t afford to rather than it not wanting to. The Wii will continue to dominate in all territories and I can see the Xbox 360 seeing a resurgence in light of the latest round of price cuts, at least in the short term.