Sony cuts PS3 price to $500

Scottish Ninja · Post by **Scottish Ninja** » 2007-07-09 08:30am

From the NYT:

LOS ANGELES, July 8 — Facing slower-than-expected sales of its PlayStation 3 video game system, Sony said it would announce Monday that it planned to lower the price of its console in the United States by $100, to $500, effective Thursday. The lower price of the 60-gigabyte device comes as a rival system, the Microsoft Xbox 360, is inundated with reports of widespread product failures. Microsoft announced last week that it would spend up to $1.15 billion to repair the machines.

The other rival system, Nintendo’s Wii, is hard to find in stores because the company miscalculated demand. Lines still form at stores that announce they have the product, and units are listed by sellers on Amazon.com at up to twice the suggested retail price of $250.

Sony said it would also introduce an 80-gigabyte PlayStation for $600. It had discontinued a 20-gigabyte model earlier.

Although PlayStation 3 is more technologically advanced than its rivals, sales have drastically trailed those systems. NPD Group, a market research company, said that as of May, Americans had bought 5.6 million units of Xbox 360, 2.8 million of Wii and 1.4 million of PlayStation 3.

Since it began selling the PS3 last November, Sony has been criticized for setting the price higher than the competition and including expensive features that most consumers were not ready to use, like a Blu-ray high-definition DVD drive.

Even after cutting the price, Sony will still have the most expensive game console available. An Xbox 360 with a 120-gigabyte hard drive sells for $480, but less powerful versions sell for less.

“There certainly has been resistance to the price,” said Jack Tretton, president of Sony Computer Entertainment America. He said that the lower price of $500 gave the company “a higher level of confidence” that it would sell 11 million PS3 units worldwide, as it had predicted, by the end of its fiscal year next March, Mr. Tretton said. The company is making a similar price cut in Canada.

The company will also sell 10 million older PlayStation 2 consoles and 9 million PlayStation Portable machines this fiscal year, Mr. Tretton predicted.

Analysts said that Microsoft’s huge task of repairing Xbox 360s and the brand’s reputation would allow Sony a chance to gain customers. Given the amount of money that Microsoft is setting aside for repairs, as many as a third to one-half of all Xbox 360s may need to be fixed. Microsoft has declined to specify the extent of the problem.

The product failures could also create discord with its retailers, said Richard Doherty, a partner in the Envisioneering Group research firm. “Best Buy now has to deal with returns instead of selling new products,” Mr. Doherty said. “Sony’s price cut really does change the playing field this summer.”

Mr. Tretton of Sony said that PlayStation 3’s technological sophistication would benefit the company, as more consumers upgrade their video experience.

“If the play was for a couple of years, the answer would be, yes, we overengineered this product,” Mr. Tretton said. “But in the long term, over a 10-year period, this technology will absolutely pay off.”

PlayStation 3’s reduced price equals the list price for Sony’s new entry-level Blu-ray DVD player, which began shipping last month. Consumers who want a Blu-ray machine could buy the PS3 once they realize that the prices are the same.

No comment at this time.

Chris OFarrell · Post by **Chris OFarrell** » 2007-07-09 08:32am

Yeah I've been seeing ridiculous levels of increasing faults with 360's. I'm hearing its down to very shoddy product line quality control in some of the factories in Asia/SE Asia...Microsoft going for the lowest bidder gets bitten in the ass badly.

Its strange over here though, there is nothing LIKE the demand for the Wii that apparently still exists in the states. The whole 'massive shortages' and 'waiting lists' was over with by the end of January here.

Guess its just a different market to the US.

TheMuffinKing · Post by **TheMuffinKing** » 2007-07-09 08:37am

Hello 500$ blu ray player! On a serious note, I might go out and buy one. I'm looking forward to killzone3 or 2 or whatever...

Bounty · Post by **Bounty** » 2007-07-09 08:40am

Lines still form at stores that announce they have the product, and units are listed by sellers on Amazon.com at up to twice the suggested retail price of $250.

...actual queues, seven months after launch? I don't know whether to be impressed at the Wii's popularity or shocked at Nintendo gross underestimate of demand.

It at least explains why I can't find one.

Resinence · Post by **Resinence** » 2007-07-09 08:48am

Bounty wrote:
Lines still form at stores that announce they have the product, and units are listed by sellers on Amazon.com at up to twice the suggested retail price of $250.
...actual queues, seven months after launch? I don't know whether to be impressed at the Wii's popularity or shocked at Nintendo gross underestimate of demand.

It at least explains why I can't find one.

That's what happens when your product appeals to the lowest common denominator.

Chris OFarrell · Post by **Chris OFarrell** » 2007-07-09 08:57am

Resinence wrote:
Bounty wrote:
Lines still form at stores that announce they have the product, and units are listed by sellers on Amazon.com at up to twice the suggested retail price of $250.
...actual queues, seven months after launch? I don't know whether to be impressed at the Wii's popularity or shocked at Nintendo gross underestimate of demand.

It at least explains why I can't find one.
That's what happens when your product appeals to the lowest common denominator.

Which is a rather good thing for a product specifically designed to not appeal to the traditional gamer market but a whole wider general market?

Stravo · Post by **Stravo** » 2007-07-09 09:00am

How long did it take for the previous generation game consoles to get a price cut? I take this as an implicit admission that they fucked up on the pricing of this thing. On the plus side, my interest is now piqued for getting this the PS3, the Bluray player being the feature that is prodding me to get this.

General Zod · Post by **General Zod** » 2007-07-09 09:18am

Stravo wrote:How long did it take for the previous generation game consoles to get a price cut? I take this as an implicit admission that they fucked up on the pricing of this thing. On the plus side, my interest is now piqued for getting this the PS3, the Bluray player being the feature that is prodding me to get this.

None of the consoles in the previous gen lineup cost more than $300 at launch. This is where Sony seriously screwed the pooch this time around. $500 is still a bit steep imo. Perhaps if they lowered it to $350 I'd consider it.

Ace Pace · Post by **Ace Pace** » 2007-07-09 10:04am

No previous launch has had a price cut this quickly, however the Xbox360 is on it's way to longest period without a price cut.

My thoughts are summed up by this.

Not three days after emphatically saying that a price cut wasn't in the cards, Sony announces a $100 price cut on its PS3 console with 60GB hard drive - now available for the low, low price of $499. Ok guys, nice move. So now you're forcing Microsoft to lower its prices and trying to re-define the console wars at the high-end of the market. Sure, higher volume, lower margins, pressing for share. Makes sense. But it doesn't address the larger issue - you are now fighting Microsoft for a smaller piece of the pie.

Sure, the pie has been expanded because the Nintendo Wii is drawing in new buyers - specifically casual gamers - into the console market. But even more than that, the Wii is taking sales away from both Microsoft and Sony due to its fun user experience and low price point (less than half that of the 60GB PS3, even after the price cut). Bottom line: the Sony and Microsoft "window to the family room" strategy versus the Nintendo "gaming should be fun and accessible to all" strategy is going to keep them at a higher price point, with the hope that people will see value - lots and lots of value - in its other applications. As I've written before, I think this is a big and scary bet with odds that, as an investor, I don't particularly care for.

So Sony, sure, go and engage Microsoft in a race to the bottom (of profits, that is). You are still missing the big picture. It's the product that needs work, guys. Not just the price that needs lowering. And like I just wrote about EA, it is going to call for a wholesale change in strategy and not merely an incremental shift in tactics.

Lisa · Post by **Lisa** » 2007-07-09 11:43am

If i was in the market for high def and had the tv to support it I'd consider it. I'm not that much of a gamer but it would make a nice replacement for my dvd player, specially if I could get a reasonable price on blueray blanks

Pelranius · Post by **Pelranius** » 2007-07-09 11:49am

I'm just curious, but if you're going for broke and cutting the price by $100, why not just shave off an extra $20 or $50 while you're at it? Sony has plenty of cash reserves the last time I checked.

General Zod · Post by **General Zod** » 2007-07-09 11:57am

Pelranius wrote:I'm just curious, but if you're going for broke and cutting the price by $100, why not just shave off an extra $20 or $50 while you're at it? Sony has plenty of cash reserves the last time I checked.

Sony's already losing money on every PS3 sold. They're cutting back costs specifically because the PS3 is seriously hurting their wallets so they have to do something to try and jack up sales. The last I checked their consumer electronics division wasn't doing so healthy.

InnocentBystander · Post by **InnocentBystander** » 2007-07-09 12:05pm

Chris OFarrell wrote:Yeah I've been seeing ridiculous levels of increasing faults with 360's. I'm hearing its down to very shoddy product line quality control in some of the factories in Asia/SE Asia...Microsoft going for the lowest bidder gets bitten in the ass badly.

I read in the newspaper over the weekend that they're planning a MASSIVE billion dollar recall on them.

Count Dooku · Post by **Count Dooku** » 2007-07-09 12:20pm

InnocentBystander wrote:
Chris OFarrell wrote:Yeah I've been seeing ridiculous levels of increasing faults with 360's. I'm hearing its down to very shoddy product line quality control in some of the factories in Asia/SE Asia...Microsoft going for the lowest bidder gets bitten in the ass badly.
I read in the newspaper over the weekend that they're planning a MASSIVE billion dollar recall on them.

It's not a recall, they're just taking a billion dollar loss. What they decided to do is extended the warranty to 3 full years, and give everyone who paid for repairs their money back. Seems like a great deal to me. It's just a shame they produced a product with such a glaring problem. I'm just glad they took the extra few steps and made good on the problems.

I just read on TeamXbox that Microsoft is going to start shipping all new Xbox 360's with a newer, smaller, cooler processor core (for both the CPU and GPU) starting in September. It'll save them money because less material is needed to make it, and there are far less steps in the manufacturing process. Seems like a big step toward a price cut. They also told TeamXbox that they'll have a response to the PS3 price-cut very soon. Woohoo for the 360!

Praxis · Post by **Praxis** » 2007-07-09 01:06pm

I wonder if Sony is applying the same "improvements" as the European models to get the price down (you'll recall they took the PS2 processor out of the European PS3's and made it use emulation instead, which reduced classic game compatability).

Honestly, it's not a horrible deal now. Consider that Microsoft charges $100 for WiFi; If I wanted an XBox 360 with WiFi, it would cost me $500 ($400 for Premium, $100 for WiFi). Same price as a PS3, but the PS3 also has a Blu-ray player (which are normally around $500 anyway) and 40 GB more hard drive space and HDMI and an SD/CF card reader and bluetooth and you can install Linux!

Actually, this makes the PS3 quite competitive compared to the 360.

Unfortunately for Sony, most people look at the up-front cost and don't add up the cost of adding WiFi and the extras. And more importantly, Sony simply doesn't have the GAMES to get people to come over. If both systems had an equal game library I'd buy the PS3 over the 360 because of backwards compatability, the ability to upscale PS2 games, Blu-ray, Playstation Home, bigger hard drive, Linux, WiFi, etc, etc.

But the 360 just has better games.

I'll continue to hold out on both systems till I get a HDTV.

Chardok · Post by **Chardok** » 2007-07-09 01:08pm

Personally, I feel it's too little, too late. Since I've gotten my Wii, I have completely lost interest in the 360 AND the PS3. Sorry Microsoft, you had your chance.

TheFeniX · Post by **TheFeniX** » 2007-07-09 01:40pm

Count Dooku wrote:It's not a recall, they're just taking a billion dollar loss. What they decided to do is extended the warranty to 3 full years, and give everyone who paid for repairs their money back. Seems like a great deal to me. It's just a shame they produced a product with such a glaring problem. I'm just glad they took the extra few steps and made good on the problems.

My 360 recently blew up and MS covered it. The whole process wasn't that painful as MS pays for everything. They direct ship you a box with pre-paid labeling. You strip your 360, package it, ship, and wait about 10 days.

The only weird part was how much trouble the tech support guy went through to make damn sure I knew how "cool" MS was being by paying for everything. In fact, there was this long pause at the end of the conversation when he (for the 5th time) explained to me how painless this process was. I finally said "Thanks?" and he let me off the line.

I would have laughed if I wasn't so weirded out by the whole ordeal. But hey, at least I can play Guitar Hero 2 again.

On topic, I've been wondering for a while when Sony was going to realize that it matters less what you want to sell something for than what people will actually pay for it.

Praxis · Post by **Praxis** » 2007-07-09 02:55pm

Apparently, if you're smart about it, you can get a PS3 for $399 and also Get 5 movies with it.

Sony gives you $100 off your first purchase if you get a Sony Card, and the Blu-ray group is giving away free movies to anyone who buys Blu-ray players (of which the PS3 is included).

General Zod · Post by **General Zod** » 2007-07-09 03:08pm

Praxis wrote:Apparently, if you're smart about it, you can get a PS3 for $399 and also Get 5 movies with it.

Sony gives you $100 off your first purchase if you get a Sony Card, and the Blu-ray group is giving away free movies to anyone who buys Blu-ray players (of which the PS3 is included).

So that explains why Blu-Ray is doing so well on the market. . .

Hotfoot · Post by **Hotfoot** » 2007-07-09 03:18pm

General Zod wrote:
Praxis wrote:Apparently, if you're smart about it, you can get a PS3 for $399 and also Get 5 movies with it.

Sony gives you $100 off your first purchase if you get a Sony Card, and the Blu-ray group is giving away free movies to anyone who buys Blu-ray players (of which the PS3 is included).
So that explains why Blu-Ray is doing so well on the market. . .

The fact that the Blu-Ray library has a better selection of movies has a bit more to do with it than that. Though that certainly doesn't hurt matters.

Praxis · Post by **Praxis** » 2007-07-09 03:50pm

Hotfoot wrote:
General Zod wrote:
Praxis wrote:Apparently, if you're smart about it, you can get a PS3 for $399 and also Get 5 movies with it.

Sony gives you $100 off your first purchase if you get a Sony Card, and the Blu-ray group is giving away free movies to anyone who buys Blu-ray players (of which the PS3 is included).
So that explains why Blu-Ray is doing so well on the market. . .
The fact that the Blu-Ray library has a better selection of movies has a bit more to do with it than that. Though that certainly doesn't hurt matters.

And the fact that PS3 owners have no games to play so they end up renting a lot of movies.

Schuyler Colfax · Post by **Schuyler Colfax** » 2007-07-09 04:18pm

Praxis wrote:
And the fact that PS3 owners have no games to play so they end up renting a lot of movies.

I still have hope that the games coming out on the later half of the summer might change that. (Lair anyone?)

General Zod · Post by **General Zod** » 2007-07-09 04:20pm

Elite Pwnage wrote:
Praxis wrote:
And the fact that PS3 owners have no games to play so they end up renting a lot of movies.
I still have hope that the games coming out on the later half of the summer might change that. (Lair anyone?)

You aren't one of those PS3 early adopters were you?

Schuyler Colfax · Post by **Schuyler Colfax** » 2007-07-09 04:25pm

No.
I don't own a PS3, but I've played it, and I'll admit most of the games suck. But, I'm not going to give up on it and when something for the PS3 comes out and wows me I'll buy it.

DPDarkPrimus · Post by **DPDarkPrimus** » 2007-07-09 05:32pm

If Microsoft cuts the 360 prices by $50-$100, it's gonna be like a boot to the teeth for Sony.