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Thread: "PS3: What If...?"

  1. #1

    Ninja "PS3: What If...?"

    http://money.cnn.com/2005/08/24/comm...ming/index.htm

    Quote Originally Posted by CNN Money
    NEW YORK (CNN/Money) I'm starting to wonder if Microsoft might have gotten suckered.

    As you may have heard, the company unveiled plans last week for two pricing levels for the Xbox 360. The $400 package is significantly more expensive than console prices of the last few generations, but it offers everything you need to really see the machine at its best. A bare-bones $300 version falls into traditional pricing structures, but won't fully showcase the power of the 360.

    Microsoft would never acknowledge that perceived competitor pricing played into its decision and that may very well be true. But it's worth noting the company made the plunge past the $300 point at the same time Sony has been shouting far and wide to anyone who will listen - that the PlayStation 3 is going to be an expensive piece of hardware.

    Last month, for instance, Sony Computer Entertainment president Ken Kutaragi reportedly told attendees of the company's PlayStation meeting "I'm not going to reveal [the PS3's] price today. I'm going to only say that it'll be expensive."

    At that same event, Kutaragi mentioned "I'm aware that with all these technologies, the PS3 can't be offered at a price that's targeted towards households." And just one month earlier, he reportedly told Japanese magazine Toyo Keizai "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."

    Now, before the emails start, I should probably mention that, like the rest of you, I have absolutely no firm idea what Sony will charge for the PlayStation 3. It may indeed be as expensive as the company has been warning.

    But just for argument's sake, what if Sony is playing a high-stakes round of chicken?

    After all, the company has almost a year before the PS3 hits the streets (or more if you believe some conspiracy theorists) and we probably won't see it in the U.S. until next holiday season. Wouldn't it be a sharp marketing move to set consumer expectations for a high price, then surprise them with something drastically lower?

    It's not like Sony hasn't done so before. The PSP, when it launched in Japan, cost just $186, despite rampant speculation the portable device would cost upwards to $300. Granted, those were analyst expectations and not company proclamations, but Sony sure didn't go out of its way to guide those analysts lower. In fact, it even stayed silent after Atari CEO Bruno Bonnell lobbed a public verbal grenade, predicting the machine would cost $500.

    By prepping consumers to spend $400 or $500, then announcing a retail price of $300, you convince them they're getting a bargain and potentially create an even bigger buying rush than a system launch normally does.

    Microsoft, meanwhile, scares off some potential buyers with its $400 price tag, giving it a smaller head start in the race to a substantial installed customer base and erasing some of the competitive advantage it has in being first to market.

    There's a flipside to this hypothesis as well. Sony might have been talking up higher prices to convince Microsoft to make the first move.

    While a few historical consoles have crossed the $300 price point, none were serious contenders for significant market share. The Xbox 360 is a test case and one that could meet some consumer resistance.

    But it also gets buyers used to the idea of paying more than $300 for a video game machine. If the PS3 does, in fact, come out at a premium price, it won't be the first time consumers have seen a higher price. They might be unhappy about it, but by the time the PS3 hits shelves they will have had time to adjust to the fact that prices are moving up.

    Don't misunderstand: The Xbox 360 will sell out this holiday season with ease. After that, the images in the crystal ball get murkier. And Microsoft's decision to offer two pricing tiers may have been solely tied to the cost of the hardware. But Sony is quite adept at using the media to its advantage. And I can't help shake the feeling they've done so again.

  2. AKA bluff. Only people with skills are good at doing this. I think the PS3 will be around the same price point though. 350+
    Dont be a robot, be human.
    PSN: Di3heart

  3. I would be absolutely smitten if Sony launched at $360.99. Do it Sony. It would be perfect.
    Buy Yakuza and Oblivion. Help yourself, help TNL.

  4. #4
    Quote Originally Posted by Andy
    I would be absolutely smitten if Sony launched at $360.99. Do it Sony. It would be perfect.
    If it's less than $500, I'll have one day one. I agree with the lovely thought of spiting Microsoft though.

  5. what did ps1 launch at? I thought it was like $400

  6. Saturn launched in the US at $400, and PS1 launched at $100 less, kicking Saturn's uphill battle in the console race up several degrees. For the sake of amusement, I'd love to see SCEA pull the same move on MS that they did on Sega 10 or so years ago.

  7. Wait - this guy writes articles about money for a living? Can I have his job? Let's break it down:

    Projected PS3 manufacturing cost is $494. Let's be generous and assume that number includes overhead, shipping & assembly expenditures in addition to components. Now let's say Sony gets a $10 royalty from every game sold. It's probably smaller than that, but let's go with that for now.

    So if they sell it for $299 - assuming the wholesale wasn't less than that, which is a huge assumption - all they need to have happen is for every single person who gets one to buy an average of TWENTY GAMES for them to be right back where they were before they launched the thing. I don't have the numbers, but I think the PS2 tie ratio is like 7.

    They better do well on those peripheral sales, because even after everyone buys 20 games they haven't even paid for their marketing costs, let alone made a dime off it.

    Even if this fantasy land scenario happens, the only to see a cent of profit is for them to keep the retail cost artificially high after manufacturing costs drop, in which case you cease to be competitive in the marketplace and lose marketshare, so it's counterproductive.

    This CNN guy's dreaming. I'm calling $399, but initially only sold as a mandatory $460 "value pack" which includes a memory stick and maybe a Blu Ray movie or something. There's no way they eat hundreds of dollars in cost on every single unit just to try and lowball Microsoft. When you're kicking Nintendo's ass and they still have a higher profit margin than you do, there's something wrong with your business model. Sony will have the most attractive high definition movie player on the market when they launch, they'll have no problem moving units at a high price.
    -Kyo

  8. If PS3 debut at $360, it will be a barebone system and you will have to spend another $50 just on 'accessories'.

  9. I dig CNN Money, but this article is speculative tripe and doesnt have any basis in reality.

    If the PS3 really does cost $494 to manufacturer (and there's no indication that it doesnt), Sony really CANNOT afford to take a $194 bath on every unit sold. The company as a whole is hurting really, really bad (just read an article on Bloomberg Avantgo about how S&P is planning to downgrade their rating) and, indeed, gaming is the only thing keeping it afloat.

    This article is like an ad for Sony, its real bullshit.

  10. Sony gets more than $10 profit for each first party game sold.
    No gnus is good gnus.

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