New PS3 Pricecut

Surprised it didn't mention the drop in standalone BD player prices as affecting the PS3 sales, especially given the numbers of people who had been buying the PS3 to use primarily as a BD player until this fall's rollout of fully-spec'd name-brand BD players for under $300.
 
Why Sony needs to (but can't) drop the price of the PS3 | The Digital Home - CNET News

In a report that could send shock waves through the video game industry, market research firm iSuppli has detailed the real cost and new savings found in Sony's second-generation Playstation 3.

iSuppli's report, issued Monday, says that the current PS3 model contains 2,820 individual parts, including Nvidia's Reality Synthesizer, IBM's Cell Broadband Engine, and Toshiba's I/O controller, which are now made using 65-nanometer process technology, compared to 90-nanometer technology formally employed in the previous iteration. That has drastically reduced the PS3's power supply cost by 30 percent from $30.75 to $21.50.

Sony_Playstation_3_(20_GB)_270x270.jpg
The costly PS3
(Credit: Sony)

Kionix's three-axis accelerometer in the PS3 controller has replaced the Hokuriku Electronic Industry Co. part, saving Sony an estimated $1.45 per unit.

But perhaps the most important cost savings is in the console's vaunted Cell processor from IBM. According to iSuppli, the latest PS3 includes a new version of IBM's Cell Broadband Engine, which is priced at $46.46 -- 28 percent lower than its original cost in the first-generation hardware. A new version of Nvidia's Reality Synthesizer, the console's GPU, at $58.01 per unit is now priced 30 percent lower than it was in the first generation.

Altogether, Sony's second-generation PS3 features a 35 percent total cost reduction from the first-generation model. In dollars and cents, today's PS3 costs Sony about $448.73 to produce, compared to the old model's $690.23 price tag. That said, the lower cost doesn't include software, box contents, and royalty expenses.

Realizing that, and considering the PS3's current price tag of $399, iSuppli has found that Sony is still losing money with each sale of its console. But Andrew Rassweiler, director and principal analyst at iSuppli, believes Sony may be able to break even in 2009.

"With its new-generation PS3, Sony has come closer to breaking even, although it probably hasn't quite reached that mark yet," Rassweiler said in a statement. "With iSuppli's estimated PS3 cost at $448.73, the product retailing in the United States at around $399 and taking into account other expenses, the PS3 may be able to break even in 2009 with further hardware revisions."

Great, but is that enough time? With Microsoft and Nintendo outselling Sony's console each month with ease, Sony's window of opportunity is almost closed.

According to NPD, sales of the PS3 fell 19 percent in November from a year earlier, and according to a report in The Wall Street Journal, analysts are expecting "flat or lower PS3 sales" again in December. Compare that to the Wii's incredible sales numbers and the Xbox 360's jump of 8 percent over last year, and it's apparent that things aren't going so well in the Sony camp right now.

Paying a penalty on pricing
As I look for an answer to why this is happening, I don't see how it can come down to anything else but price. All in all, Sony's hardware and library of games are viable, and Blu-ray is an added bonus for some. But when it comes to price, the average consumer who wants to buy a console will balk at picking up a PS3 because it's so expensive when compared to Microsoft's Xbox Arcade and Pro models or Nintendo's Wii.

There's no secret that Sony's console is priced too high. And although Sony zealots try to pretend that it offers more value and is the "Cadillac" of the video game industry, it's abundantly clear that what consumers want -- an affordable console -- isn't something they find in the PS3. Value or not, consumers want to save money.
Sony knows this and although it's unwilling to admit it, the company seems to want to compete on price too. But with financial troubles unlike anything it has ever seen, Sony is trying to turn a profit and limit losses to keep shareholders happy.

In essence, Sony finds itself in a dangerous position: it needs to make money, so it wants to keep its prices high, but by doing so, it's not selling as many units and its goal of becoming profitable byway of the "value" argument simply isn't working. And as the recession deepens and consumers are looking to save money wherever possible, Sony is quickly finding out that it's not a good time to be the "value leader" instead of the "cost leader."

I truly believe Sony's gaming division wants to drop the price of the PS3 and knows all too well that price is the single factor holding it back. But when a console that has been available for over two years still costs $448.73 to produce and the parent company is in financial trouble, dropping the price to a more suitable level -- $299 -- is almost out of the question.

I get that. I just don't think Sony can expect consumers to like it.
 
The PS3 is bargain priced at $399 when you consider all it does....top-notch gaming console, BD player, and runs Unix. Personally, I cannot imagine why anyone would pay $250 for a toy like the Wii. There is probably a large percentage of people who would still pick the $250 Wii over a $299 PS3...just to save $50. Go figure!
 
The PS3 is bargain priced at $399 when you consider all it does....top-notch gaming console, BD player, and runs Unix. Personally, I cannot imagine why anyone would pay $250 for a toy like the Wii. There is probably a large percentage of people who would still pick the $250 Wii over a $299 PS3...just to save $50. Go figure!
I totally agree!! In fact i want to buy another PS3! We have three x360 now it's time for PS3's!!:up
 
My predictions...

We'll see a $50-$100 cut in the PS3 in March as rumored, and then pending further decreasing costs we'll see another for fall to bring it closer to the Xbox 360 price points.

I could see the Xbox 360 staying at this price for all of 2009. At some point, maybe not in 2009, the $299 model becomes $199 and gains the internal 256mb of Flash memory the Arcade has. Then the only difference between the arcade and pro models (if they continue with those 2 SKUs) will be bundled games.

The PS3 is bargain priced at $399 when you consider all it does
Because of 'all it does' it's too expensive to be bought to do just one thing, leaving consumers waiting for price cuts. Also, anyone who's excited to put Unix or any other OS on their video game console has probably already bought one. This leaves top-notch (but 3rd place) gaming console, and (expensive) Blu-Ray player. Also, 'all it does' should be changed to 'all it still does' with the features/hardware that have been removed.

I cannot imagine why anyone would pay $250 for a toy like the Wii.
Ask all your friends, neighbors and relatives, they've probably all bought them. 32 million sold worldwide and growing every day. It just works, and it's just fun (and relatively, it's just cheap, I am sure Nintendo is thankful Sony is providing a nice big price difference to compare their unit to 'the competition' as if any is needed). That's why the Wii works, and that's also why tacked on motion controls fail on the PS3... they generally aren't intuitive and they generally aren't fun and have to be patched around or alternatives to those controls built in the game.

Remember guys, this is the PS3, we're supposed to want to work more jobs to afford it, and pay a premium to play it just because it's a Playstation, per Sony.

I missed the conflicting stuff at the end amongst the disaster that is the Home launch.... from the OP's article:

In October, Sony Computer Entertainment of America head Jack Tretton told Thomson Reuters that the PS3 was selling faster than expected and would reach full-year sales targets even if the global economic crisis hurts holiday sales. "We are tracking at 100% up over last year ... about 30% ahead of where we should be," Tretton said in the interview.

However, nearly two weeks later, Kazuo Hirai, president of Sony's game unit, told Bloomberg TV that "I don't think we can meet [our PS3 sales target] easily, but I think we don't have to give it up at this point."

"Interestingly, this statement came out barely two weeks after Jack Tretton, SCE US head said that PS3 sales are 30% better than expected," Goyal wrote in a research note. "We are not sure what the executives intend with these confusing reports or whether there is just no communication between them!"

The gross mismanagement of formerly one of the most popular brands in the world continues. Also, how did we go from the PS3 being profitable this year 'we promise' to
Atul Goyal, analyst with CLSA Asia-Pacific Markets, argues that Sony's gaming business is among the top loss-making businesses for the company...
 
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Ask all your friends, neighbors and relatives, they've probably all bought them. 32 million sold worldwide and growing every day. It just works, and it's just fun (and relatively, it's just cheap, I am sure Nintendo is thankful Sony is providing a nice big price difference to compare their unit to 'the competition' as if any is needed).

We bought one (Wii) for Christmas last year. It got played for a month, due to the novelty effect and the halo around the brand.

It's been collecting dust since.
 
We bought one (Wii) for Christmas last year. It got played for a month, due to the novelty effect and the halo around the brand.

It's been collecting dust since.

That's a good point. A lot of Wii's were bought as impulse buys. People caught up in the marketing hype. I considered one myself even though I had never bought a game console before. I'd be interested to see "attach rates" for Wii software vs. X-Box and PS3. Regardless, the Wii hardware is a moneymaker.
 
Ours is collecting dust too, but to call it a foolish purchase is to make yourself look foolish. It's a modern day rubicks cube, but it's also redefined mainstream gaming. Hard to call the market leader just a fad.

Before it launched I was hoping it would fail Virtual Boy style so that Nintendo would go pure Software and we'd see Mario and Metroid on all systems.

Another thing to consider, as the PS3 drives back into desirability price-wise this year, is we're going to start hearing about the next consoles soon... the 360 celebrating it's 4th birthday this year, we could see the next Xbox mid-2010 before that holiday season. This is going to create a 'well might as well wait' for those wanting to spend more on a console... at that point why buy a PS3 when in several months you could buy the next gen Xbox?
 
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I dont think the console is a failure, but the mismanagement of the brand could have books written about it. The PS3 will do well, it's going to take 5-7 years to do it IMO.

As a BD trojan horse? It succeeded in the fight to kill HD-DVD and drive early adoption there, but it's a failure outside of that IMO.
 
I'd be interested to see "attach rates" for Wii software vs. X-Box and PS3. Regardless, the Wii hardware is a moneymaker.

NPD hasn't released attach rates since March, that I've seen. Back then they were:

Xbox 360: software sales ratio: 7.5
Wii: software sales ratio: 5.3
PS3: software sales ratio: 4.6

The problem Sony has gotten into is they can't price match the 360. For any price cut they implement, MS will match it.

For winning the HD video war, the PS3 was a winner. Unfortunately, Joe Public doesn't yet care about HD video.

As a game machine, the PS3 is a disaster. Every game Sony was counting on to be a system selling savior hasn't come through. Although Metal Gear Solid 4 bumped PS3 sales for a couple of months over the 360, it didn't have the game changing impact everyone though it would. Little Big Planet wasn't even in the top 20 in sales its second month out even with heavy marketing by Sony. Resistance 2 only made it to 8th place in November. It will be interesting to see where it shows up in the December sales.

November sales for the PS3 were horrendous. They only sold 378,000 units compared to the 360 which sold 836,000. The December margin will probably be worse since the people only buying it as the least expensive Blu-Ray player now have cheaper options.
 
I have been waiting for this price point . . . now I will buy a PS3 for some gaming, Blue Ray and Netflix streaming.

The wife is interested in Wii for WiiFit . . . if anyone wants to send me a PM and let me know what your willing to sell your dusty Wii for, I can run it by her but I cannot promise anything.
 
The PS3 is bargain priced at $399 when you consider all it does....top-notch gaming console, BD player, and runs Unix. Personally, I cannot imagine why anyone would pay $250 for a toy like the Wii. There is probably a large percentage of people who would still pick the $250 Wii over a $299 PS3...just to save $50. Go figure!

Bottom line is that families and kids...small ones create profits for a company. Nintendo has the name and the brand that kids bother their parents for. I am a 360 owner and a Wii owner and I have more fun when I play games for the WII. Yes the video game people struggle to understand it, but the WII has something special that brings people together. It is a party machine. People that never played a video game can play with a touch of a button. It is a back to basics machine that will continue to find success for many years to come. It doens't matter to the masses about what technology is crammed into a gaming machine. They want to have fun...and I bet anything people will want to bowl at a big family party then play anything on the 360 or PS 3. That is the difference.
 
Quote all the numbers you want, I still think it's all about price.

The PS3 has come close enough to catching the 360 in terms of good games available (personally, I think the exclusives are now better, although I'm sure I'll get roasted for that), but the 360 dropped it's price going into a holiday season marred by economic crisis and the PS3 didn't - it's as simple as that.

Could turn out to be the worst decision in the history of the PlayStation brand if things keep going the way they are...

(And another thing I'm sure I'll get killed for: I don't think the Wii should even be included in these discussions anymore - it's just not targeting the same audience)
 
Quote all the numbers you want, I still think it's all about price.

The PS3 has come close enough to catching the 360 in terms of good games available (personally, I think the exclusives are now better, although I'm sure I'll get roasted for that), but the 360 dropped it's price going into a holiday season marred by economic crisis and the PS3 didn't - it's as simple as that.

Could turn out to be the worst decision in the history of the PlayStation brand if things keep going the way they are...

(And another thing I'm sure I'll get killed for: I don't think the Wii should even be included in these discussions anymore - it's just not targeting the same audience)
AGREED!:up
 
I would buy a Wii just for the interactivity and Wii Fit. The PS3 and 360 are geared towards the more serious gamers, much like a gaming PC. One can buy a PC that will do e-mail and surf the web, but the gamers will spend the dollars for a higher quality, faster machine.

With the tanking cost of BD players now, however, the PS3 is going to have to do some serious revamping SOMEWHERE.
 
Quote all the numbers you want, I still think it's all about price.

The PS3 has come close enough to catching the 360 in terms of good games available (personally, I think the exclusives are now better, although I'm sure I'll get roasted for that), but the 360 dropped it's price going into a holiday season marred by economic crisis and the PS3 didn't - it's as simple as that.

Could turn out to be the worst decision in the history of the PlayStation brand if things keep going the way they are...

(And another thing I'm sure I'll get killed for: I don't think the Wii should even be included in these discussions anymore - it's just not targeting the same audience)
Good point. While I prefer the PS3, I can certainly understand why gamers would jump on a serious gaming platform like the 360 when it is less expensive than a PS3.
 

Playstation Home Beta

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