Wedbush Morgan Securities analyst Michael Pachter (try saying that when you are drunk) has said that he expects a Playstation 3 price drop by April this year. He then specifically predicted that the 80gb PS3 SKU would drop by $100. He added, “Once the PS3 is at a more affordable price point, we think that sales of that device will once again begin to grow.” (via 1UP)
Pachter also said he expects the Xbox360 premium SKU to drop in price by $50, so the PS3 still wont have any upper hand even after such a drastic price drop.
Analysis after the jump.
A price drop of 25% would surely boost the sales of the PS3, but to what cost? The current manufacturing cost is about $440 so Sony would make a loss of $140 per unit. Sony is no stranger to making a loss per unit but given their current financial situation is it a wise idea to pin the hopes of turning a profit on PSN and software? Yes, at the current price they are making a $40 loss but that is easily negated, or easier than $140.
If I were Sony, I would carefully consider:
- The date of the price drop, so it avoids the Xbox360 price drop (and subsequent media storm) to maximise sales.
- By what price it drops, to keep expenses under control.
- What software launch it should coincide with, to generate the maximum effect and sales.
Sony and the Playstation brand are in a very interesting space where the pressure is on to make a big impact in the market that is being dominated by the Wii, and the Xbox360. So, 2009 will be an interesting year for the Playstation 3. I don’t even think the PSP is relevant anymore, except when a title with ‘Final Fantasy’ is released.
Ironically, Chris Pereira (author of the source article) stated, “Quite a fuss has been made over the price comparison chart Sony released last week which pitted the PS3 against the Xbox 360 and Wii in a comparison of value.” It seems that chart has made a fuss everywhere.
Source: 1UP
Last Updated: January 14, 2009
janrik
January 14, 2009 at 11:55
With a 1.1 Billion Dollar loss for 2008.. can they afford to drop the price?
Fred
January 14, 2009 at 12:16
Can they afford not to?
Fred
January 14, 2009 at 12:23
I’d say make it $150 cheaper and start charging $50 per year for PSN.
janrik
January 14, 2009 at 12:45
That might work, but how many PS3 gamers will go for that?
I will not be happy to pay for Live and PSN… and when it comes down to that, I will rather be on Live then.
ewie
January 14, 2009 at 12:48
Problem with PS3 is that they will have massive stock on it.
If we take november ndp numbers which was down 20 % off last year, and looking at vgchartz data it look like ps3 is down 500 000 units over last year holiday season.
Sony would most likely have made sure seeing the rest of the year was 50 – 100 % up year to year to have enough stock on hand , to meet at least a 50% increase over last year holiday, so at the moment they will be sitting with about 2 000 000 units which was manufactured at a high price of at least $450 a unit. These units still have to be sold and will lead to a loss of between 50$ and 100$ a unit. So over the holiday season they sold just above 3 000 000 units, which could relate to $ 300 Million in losses, + a further $ 200 Million on stock losses for the next quarter. So look like about $500 Million might be attributed to the ps3.
This does not even take in effect the strengthening of the yen with about 20% – 30%, which could add another $100 Million to the loss.
And with the yen looking to strengthen to about 50 or 60 to the dollar, no price cut will happen this year.
Remember Sony have a lot of additional cost like the psn network that cost a lot of money to maintain as well.
Wolfy
January 14, 2009 at 14:59
Looks like Free PSN might be a thing of the past if they still plan on making money off this darn good machine
Wolfy
January 14, 2009 at 15:01
Think of it this way. Most PS owners just wanna see the compition crash and burn and, and see they’re team guns blazing. So i think they’ll pay for PSN. When push comes to shove
Wolfy
January 14, 2009 at 15:03
“….Sony you went wrong with your PS3, i’ll rather play my 360…”
such a catchy song that is
Rufus Cole
November 12, 2009 at 17:34
This turned out to be spot on and a very forward looking blog. I fear the same as Wolfy. That their online PSN start charging a monthly subscription rate, akin to the Xbox Live. One thing is for sure with the holiday season approaching and after further price cuts only in October it is important to Compare PS3 Prices, particularly for those who are seeking the all important Blu-ray player. Indeed the Blu-ray player might have been Sonys achilles heel after all, rather than their planned and profitable USP.