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Is Sony Bluffing About PS3 Pricing?
Chris Merris of CNN presents, in an August 24th article, a great look at a possibility that several in the game industry have proposed. Is Sony bluffing about how expensive the Playstation 3 will be?
Without taking any view on which new console will be superior in different features or in whole, the continued comments by Sony representatives about how expensive the new PS3 will be does raise an eyebrow.
Two months ago, Ken Kutaragi, Sony Computer Entertainment president, was quoted in the Japanese magazine Toyo Keizai as “Our ideal [for the PS3] is for consumers to think to themselves, ‘OK, I’ll work more hours and buy it.’ We want people to feel that they want it, no matter what.” Then, Kutaragi told attendees of the company’s PlayStation meeting last month “I’m not going to reveal [the PS3’s] price today. I’m going to only say that it’ll be expensive.” In addition, he said “I’m aware that with all these technologies, the PS3 can’t be offered at a price that’s targeted towards households.”
The company may be simply setting consumers’ expectation, or they may have other plans.
Historically, few consoles have sold above the $300 price point and none were in a position to take a real portion of the market share. The Xbox 360 will be the first machine to really press this barrier. By making all of the quotes about how expensive the PS3 will be, Sony may be doing two things:
First, Sony may be using these claims to misdirect Microsoft into offering a high price point for the Xbox 360 which may somewhat limit sales of the console. While the 360 will sellout this holiday season, the real first mover advantage for Microsoft will come in the first 12 months of sales.
Second, Sony may be using the media to set consumers’ expectations for a high priced PS3 and then actually release it for a lower price point to surprise and entice consumers. Given the continued pre-release talk about how expensive the PSP was going to be and the much lower initial sale price, this is quite reasonable.
The Technology Suits looked into the business strategy of a move like this by Sony and think that it is quite reasonable. If Sony is playing a “bait and switch” game with the price of the PS3, will it hurt Microsoft and the Xbox 360? Not likely.
Even if the PS3 does release around the $300 price point or even less, Microsoft is still in a better position by entering the next generation race 8 to 12 months before the competitors. Console manufactures have historically sold each console at a steep loss per unit, where console licenses for each game sold on the system bring in significant revenues down the line. Many analysts have claimed that Sony in fact often sells hardware at a loss to maintain brand strength and market share, with Sony’s video game revenues and movie divisions subsidizing at least portions of the hardware businesses.
Early adopters and many hardcore gamers will no doubt buy the Xbox 360 at the proposed $300 and $400 prices, and the more expensive bundles of games and accessories will likely increase the overall stigma of a “must have” item. This higher price point will lessen the loss that Microsoft experiences form each console sale and help the bottom line.
When the final pricing for the PS3 is announced and it goes on sale, Microsoft will be in a position to decide whether or not to drop the price to be more competitive with Sony’s release. Plus, Microsoft will have many months to monitor consumer views on the high prices and new technology.
By moving first, Microsoft may be in a position to manipulate the 360’s price to track closer with consumers’ willingness to play and maximize revenues, but Sony will have the extra time to learn from Microsoft’s mistakes, as will Nintendo with the Revolution (We have not forgotten it and are excited to hear more details on the Revolution.). While the PlayStation 3’s hardware specs may be fairly locked down, Sony can continue to tweak the software offering with the console such as media center functionality, DVR capabilities and integration with other digital services.
This should be an interesting business case for someone down the road. Regardless of the moves, consumers should be moved one step closer, with this generation of consoles, to a full home entertainment experience.
Sony PSP Buy cheap Sony PSP in Australia
This bluff makes no sense. It would make people think that Microsoft’s prices for the XBOX-360 are just fine so they buy even more at the inflated price this holliday season, then when the PS3 comes out at a lower price, MS can just lower their price too. That way they can actually make money the first 6 months. They can then lower the price later if they want to. They only way Sony can undercut the price of the XBOX-360 is if they remove the Blu-ray and go with a standard DVD for the basic version and price it at $299. Then they could have a more expensive version with a Blu Ray and hard drive… likely for $500. They might do a Blu-ray without a hard drive for $400. I think MS has priced these for break even prices.
Besides, MS has a lot of launch titles and Sony has never had too many for their launches. MS will be way ahead and might actually be able to charge more.
Bluff makes perfect sense, put word out of an expensive console, so your competitors stress a low price as their main selling point. Then release your console at the same price, while you hype the power of your console.
If Sony is to bluff to set customer expectation and catch the competitor off guard, wouldn’t it be more effective if they bluff about the release date? Ever consider the possibility of PS3 taking on XBOX360 this Christmas?
[…] Pierce: If Sony is to bluff to set customer expectation and catch the competitor off guard, wouldn’t it be more… […]
[…] While no playable games were available at the Tokyo Game Show 2005 and the industry continues to debate possible prices for the PS3, Sony revealed strong support for the upcoming PS3 at the conference, by stating that 71 publishers are developing 102 games. […]
[…] […]
I have a friend that has the ps3 and the 360 he got them of when he to japan. the grapic arent that great they did improve just a little. the games still suck.
Even the development platforms are hard for mid-sized and small developers to come by for testing new titles. I highly doubt your friend could even have a dev platform, and there is no way he has games for the 360 and PS3
Should’nt the consumres be worried if the ps3 is really expensive just look at the psp how many psps do you see in a guy’s poch=ket
Microsoft is smarter than to beleive what sony is saying. I predict it will be a very close race with these two. Both systems have impresive specs but I a sony
guy.
I think that that all of this extra technology isnt necessary, i would kill for a PS3 but i will never afford it if it costs $500. They should ,make add ons for things like controlers and other items. Make the ps3 with a small hard drice and the blue ray. In the long run they will make more with a lower price
Wel I’am a father of two and i do enjoy myself playing games too, I do have all the stations sinds the begining, remeber atari at my home for my kids
because I think it’s ok.
I have Only one suggestion, please sony & Micorsoft do the best you can to save our childeren. How? My two children do spend more of there
times home by plying games, istead to be in the park or else on the street maybe smoking pot. So what i’m trying to say is please stop fichting each
other about who’s the best and give the childeren of world the change to buy you product and you may help alot to save our future childeren by keeping them
playing games at home instead doning else on the streets in bad company. So think this and you will win more than you ever thought before. Just sell
them a afortable price range 200-350 no more.
Tony Scholten
Look I think that when the ps3 comes out it wil fly off the shelves. Why do i think that, because i’m a gamer myself
and i know how hard it is to choose. But i have faith that sony will do great, because microsoft let me down
with launching two systems trying to save $. Just like the situation with the handhelds, psp clearly blows it’s
competition out of the water. But i was thinking about price when i bought the ds, which was a lot better than i expected.
Since i have a ps2, xbox, a ds, and will soon get a psp, i have plenty of choices to choose from for th next gen.
Right now i’d put my money on the ps3, and by the graphics im willing to get there two days before launch.
Plus by pre ordering it lowers the final price because you can pay for it ahead of time to ensure its yours, the
choice is yours.
this makes perfect sense — i cannot wait till its out cause i’m willing to wait for more than 3 days in line for it.
sony has the upper hand on microsoft now if they release it at the same price, or at a lower price (hopefully) they
will have won the console war! GO SONY!
I cannot wait!!! i have full support behind sony and I’m praying to god that it will be great. if you look at the psp - that was awesome and some true genius at work there. I hope that sony will pull through and then i can get one and be happy!!! i ‘m hoping that its in my price range though. and if they sell it at the price of the ps2, wouldn’t they get a tone more money in the long run???
no matter what sony would of did, bluffing or not. ms would still have there low price 360 b/c they will make there money on there releases. and it is said that they will not lower there prices when the ps3 hits. but even if the ps3 does have a lower price 360 will just match it knowing it has more titles out making it more game for you money at the time for the people that want a system right then and there. and even though technology wise its the same the 360 is completely amazing for being only ms 2nd system. bill gates and ms
complete genioues and know exactly what they are doing so by the time there 3rd system comes out sony and gaming will be like the nintendo and gaming,
almost obsolete.
and i would like to add yeah sony leads in gaming right now b/c they have been around gaming so long and MS has basically caught up with two console releasees
so what does that look like for in the future? MS has the power to release any technology they want and sony really cant do much about it, i mean if you just think
about it for a minute you would realize how dominate MS is in the computer business and to think they cant own the gaming business either, i mean come on, i like
both systems, and i plan on buying the ps3 when the price does drop cuz to me nothin is better than owning everything thing, but time and time again i have
heard people choose the xbox over the ps2 after finally playing the xbox when they were hardcore sony fans, i mean do people really think MS put everything
they had into the 360?
Yes the PS£ prices are a big time rip of.
The only better features it has is that the graphics are only a tiny weeny notch better.
Now for the 360 you get a detatchable hardrive, and everything else the ps3 has like dts, wirless controllers etc.
if you want the 360 to have bluetooth just get a USB bluetooth dongle and plug it into the 360 usb ports there you go. A futureproof games console. And then again you can get wifi, webcam, xbox live (which is
better as sony took their time so now more got an xbox 360). with this you can sync your mobile phone with bluetooth. And if all you do is game and email on your pc, just get this.