Sony considering price cut on PS3

Glock 19 · 02-02-2007, 08:30 AM

Sony Brass Thinking PS3 Price Cuts
By: Yuri Kageyama

For: Associated Press

Although Sony is blaming its faltering profits partly on PlayStation 3 price cuts in Japan, a senior executive said Wednesday that further slashing prices may be in store for the just-launched video game machine.

Pricing is among the factors Sony Corp. is studying as it expects to break even in its money-losing gaming business next fiscal year, said Senior Vice President Takao Yuhara, stressing that no additional price cut has been decided.

"We may look at the price as part of our strategy to expand the market when the timing is right," Yuhara told reporters at Sony's Tokyo headquarters.

The PS3 launched in the United States and Japan in November, plagued with production problems that resulted in shortages and will keep the machines out of Europe entirely until March. The next-generation game player also faces immense competition with Nintendo Co.'s Wii and Microsoft Corp.'s Xbox 360.

Sony's announcement Tuesday that October-December profit slipped 5 percent to 160 billion yen ($1.3 billion), largely because of PS3 startup costs, sent Sony shares down 1.4 percent in Tokyo on Wednesday. Shares also dropped 32 cents, or 0.7 percent, to $45.98 in midday trading Wednesday on the New York Stock Exchange.

Yuhara said red ink in the gaming division for the fiscal year through March could turn out to be worse than the 200 billion yen ($1.6 billion) operating loss that Sony is forecasting for now.

Startup expenses such as advertising and shipping were higher than the company had anticipated. Production delays forced Sony to ship machines by air rather than ships to meet launch targets in the United States.

But Sony hopes to break even in gaming during the following fiscal year, which ends March 2008, Yuhara said. "Such factors, including price cuts to some extent, are factored in" the company's break-even plans, he said.

Game machines generally come down in price over time. But faced with competition, Sony made an unusual move in lowering the PS3 price in Japan by about 20 percent even before sales started.

Even before the cut, analysts say, Sony was already taking a loss on each machine sold; manufacturers typically sell machines for less than their true costs, hoping to recoup the investment by selling games.

Analysts and game fans are watching to see when PS3 prices may drop again, which would depend on its proliferation in the market and cuts in production costs. Sometimes a price cut is timed with the introduction of blockbuster game software, expected to boost machine sales.

Sony has a lot riding on PS3's success, but consumers seem to be snatching up its rival Wii, which costs about half as much as the cheaper, $500 version of the PS3 and comes with a wand that players swing around like a bat, fishing pole or conductor baton, depending on the game.

Nintendo, which makes Pokemon and Super Mario games, saw profits for the first nine months of the fiscal year soar 43 percent and has shipped 3.19 million Wii machines globally.

Sony shipped 1.84 million PS3 machines worldwide through Dec. 31, the company said. The machine has already gone on sale in the United States, Japan and some other countries, but its sale has been delayed to March 23 in Europe, the Middle East, Africa and Australia.

The company stuck to its earlier target of shipping 6 million PS3 consoles by March 31. Earlier, it said it shipped 2 million PS3 machines worldwide by mid-January, falling about two weeks behind its initial shipment targets in Japan.

Yuhara said Sony's earlier price cut in Japan was an effort to respond to the expectations of hard-core game fans and helped get the machine off to a smooth rollout.

"In the PS3 business, production was very tight, but we knew the market wouldn't wait," he said.

But price cuts can be risky for sophisticated machinery like PS3, which comes loaded with next-generation DVD called Blu-ray disk and is powered by a super-chip called "cell."

The challenge Sony faces is to sell the machine in numbers to bring down costs and make money in software sales to make the operation more profitable.

Copyright 2007 The Associated Press.

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Scotracer · 02-02-2007, 10:12 AM

It's good if they do it but seriously, can they do it?

They are already losing too much money per console. Hmm, I don't expect much if any price drop for most markets.

killboy · 02-02-2007, 10:34 AM

Just making that announcement is going to hurt them even more. If I was on the fence about buying one, I'm going to wait now and see if the price comes down.

Grindstone · 02-02-2007, 11:20 AM

Damned if they do, damned if they don't. Sony is recognizing that they grossly over-exagerated their loyal install base. That wouldn't be a problem if the price wasn't so outlandish. The interesting thing to note is that it would be the second price cut for Japan in 2 months. Ever heard of that happening for a launch console? Nope? Me niether.

remixFA · 02-02-2007, 01:29 PM

Quote:

Originally Posted by Grindstone

Damned if they do, damned if they don't. Sony is recognizing that they grossly over-exagerated their loyal install base. That wouldn't be a problem if the price wasn't so outlandish. The interesting thing to note is that it would be the second price cut for Japan in 2 months. Ever heard of that happening for a launch console? Nope? Me niether.

i doubt that the cuts would specifically hit japan, as they have already been reduced, what 20%. Im sure the cuts would more than likely be bringin the US down that 20% to get the sales up. Im sure they really thought that the world would just buy it like nuts no matter what the cost, because it was a PS3.
Think again suckas!!

In the latest game informer, there was an article from the head guy from Valve. They asked his opinion on things like windows vista (he used to program windows), the wii, and the ps3. I love what he said about the PS3.

**quoted from magazine**
"I think its really clear that sony lost track of what customers wanted and what developers wanted. I'd say, even at this late date, they should just cancel it and do a "do over". Just say, "this was a horrible disaster and were sorry and were goin to stop sellin this and stop trying to convince people to develop for it"

This comming from a major game developer. I think its safe to say that Valve isnt going to be porting many games to PS3. I wonder how many other developers agree but arent saying much.

Grindstone · 02-02-2007, 01:55 PM

Makes you wish other developers were as candid with the PS3. Unfortunately, he has also been labeled as a Msoft shill, since he worked there for 12 years prior to working at Valve. But I do agree with his findings on Sony losing sight of the gamer and developers, but there is no way Sony will "do over" the PS3. For better or worse, it will never change.

02-02-2007, 02:17 PM

I dont see them cutting prices for a long time In Europe(and most place if you ask me) and thats all that matters to me so im not bothered by these rumours, For one its not even out here yet and talk of price-cuts is stupid and false, and Sony only put up the price of the PS3 in Ireland to €630(extra €30 over rest of europe) Becuase they feel the Irish market are used to getting ripped-off(which we do!) and have always been a strong-sony market.

Jay2984 · 02-02-2007, 02:55 PM

Its a possibility that a price drop could happen in Europe when it is released in a few months. If sales of the PS3 arent up by then I wouldnt be suprised if Sony didnt offer it cheaper.

Blank · 02-02-2007, 07:33 PM

Sony said that they won't be making a price cut until something like 2009. If they go ahead and do this, you know there's something wrong.

remixFA · 02-02-2007, 08:53 PM

Quote:

Originally Posted by Grindstone

Makes you wish other developers were as candid with the PS3. Unfortunately, he has also been labeled as a Msoft shill, since he worked there for 12 years prior to working at Valve. But I do agree with his findings on Sony losing sight of the gamer and developers, but there is no way Sony will "do over" the PS3. For better or worse, it will never change.

in the same article, he also doggs Windows Vista (he used to program microsoft windows yrs ago) saying it would be easier for most people to upgrade to a mac than load vista (and a few other things), and thought the winner would probably be the Wii.. i think his days as a MS lover are waining. Of course for some reason they never ask him his opinion on the 360.

if for some reason Sony drops the price in other regions, it is a huge sign of troubles in sony's court.

in which case i can finally say "goodbye sony!"

THE KING IS DEAD, LONG LIVE THE KING!!

stonespike · 17-02-2007, 12:33 AM

Uhh... I think I read somewhere that the price cut for the PS3 is expected in 2009.

Yes. You read that correctly.

2009.

FlyACL · 17-02-2007, 03:28 PM

It was clarified in a recent interview that what they said was a "cost reduction". Meaning they intend to reduce the cost to produce the PS3. Not the price they charge for it.

Blasterpez · 22-02-2007, 02:03 AM

Yeah, wouldn't make sense to be dropping the retail price when so many people are still clammering to get one. Also, i guess Sony lost big bucks on the PS3 and it isn't making a whole lot per sale per console, so i think they will keeping that price nice and high for quite a while. I'll wait for the new, slim, ps3 in about 4 years.