Sony drops PS3 price a bit

[Elliott]

A price cut before it's even released? That would basically be putting up a neon sign screaming "DESPERATION" to everybody. I don't think I'd believe the Inquirer on this one (or anything for that matter).

[Slimy]

CHIBA, Japan, Sept 22 (Reuters) - Sony Corp. on Friday cut the price of its new game machine PlayStation 3 by 20 percent in Japan, in a surprise move that will attract more customers but likely widen losses in its game division.

The announcement comes amid concerns among industry specialists that PS3's high price tag could prompt some gamers to turn to rival consoles, Microsoft Corp.'s (MSFT.O: Quote, Profile, Research) already available Xbox 360 and Nintendo Co. Ltd.'s Wii.

Sony, which will launch the latest version of its blockbuster game gear on Nov. 11 in Japan, now plans to sell a version of PS3 with a 20-gigabyte (GB) hard disk drive for 49,980 yen ($430), down from the previously announced 62,790 yen ($540).

"This will drive PS3's unit sales," said Hirokazu Hamamura, president of Japanese game magazine publisher Enterbrain. "It is still more expensive than its rivals, but the revision has put the machine within the allowable range of game machine prices."

Microsoft currently sells its Xbox 360 in Japan for 39,795 yen ($342) and Nintendo will be launching its Wii console on Dec. 2 for 25,000 yen ($215).

If Sony had left its previous price unchanged, game players in Japan would have nearly been able to buy both the Xbox 360 and Wii for the price of one PS3.

The decision, however, created investor doubts over the consistency of the company's market strategy and the validity of its market research, said Masaki Iso, chief investment officer at Yasuda Asset Management.

"Sentiment might change if the product sold well as a result of this. But it is still received negatively because the company changed its mind after comparing its price with others."

The price cut is the latest in a series of adjustments in Sony's PS3 game plan as the nearly $30 billion video game industry heads into the critical year-end shopping season.

Sony earlier this year pushed back the overall PS3 launch from spring 2006 to November.

Then, this month, the company further delayed the European launch to March 2007 due to inadequate supply of a key component.

At the same time, Sony cut by half its PS3 shipment estimate for calendar 2006 to 2 million units, while maintaining its target to ship 6 million units by March.

The electronics maker will keep its planned prices of $499 in the United States and 499 euros in Europe for the 20-GB model.

All PS3 consoles will be equipped with a Blu-ray high-definition optical disc drive, preventing Sony from selling PS3 cheap. The company was expected to lose money initially on each PS3 console it sold, even at the previous price.

It is not unusual for console makers to incur substantial losses first, only to make profits later through lucrative software sales. The bigger the user base of a console, the more software game makers can sell.

"What is important is that we get more consoles sold to make up for the price cut and get more game makers and chip makers in our camp," Ken Kutaragi, head of Sony's game unit, said on the sidelines of the Tokyo Game Show.

Sony said in April its game unit is expected to post an operating loss of 100 billion yen in the year to March 2007.

KBC Securities analyst Hiroshi Kamide said the price cut would be a further burden on Sony's game unit in the short term since constraints on PS3's supply capacity will make it hard for the company to offset the lower per-unit revenue with a bigger volume.

But the negative effect is likely to be limited since the price cut will be implemented only in Japan, he said.

Sony also said it will equip 20-GB PS3 consoles with High Definition Multimedia Interface (HDMI) ports to connect with high definition TVs for better graphics and sound quality.

Previously, Sony said only the 60-GB console, which is priced $100 higher than the 20-GB model, would come with HDMI ports.

Game software maker Koei Co. Ltd. on Thursday cut its annual net profit outlook by 8 percent, hit by the PS3 delay.

But the price cut is good news for Koei if it means speedier PS3 sales that would lower per-game development costs quickly, said Koei executive Kenji Matsubara.

"We want Sony to beat our expectations of 1 million console sales by year-end and 4 million by March," Matsubara said.

Koei plans to launch several software titles for PS3, such as the "Fatal Inertia" racing game and "Bladestorm" action game.

Shares in Sony closed down 1.9 percent at 4,770 yen, while the Nikkei average lost 1.26 percent.

($1=116.41 Yen)

Source

[PL_ Veteran]

This still doesn't make up for the daylight raping the UK got with it's ?425 price tag.

For that I could get an Xbox 360, a ?100 HD-DVD player (if that's how much it is) and a game.

Or a Wii pack, 3 controllers+nunchucks (assuming that comes to ?40 for the two together) Opera Wii (?10), 4 traditional controllers (assuming they cost ?25 each), leaving me with ?15 spare to fish around and get a GameCube game with.

[cashman Veteran]

A price cut before it's even released? That would basically be putting up a neon sign screaming "DESPERATION" to everybody. I don't think I'd believe the Inquirer on this one (or anything for that matter).

Hey, didn't Microsoft cut the price of the xbox in the UK just a few weeks after launch here because they wern't selling consoles? I'm pretty sure its better to sell out your consoles than it is to have it sitting on the shelf collecting dust, even if it is at more of a loss.

[Doli]

A price cut before it's even released? That would basically be putting up a neon sign screaming "DESPERATION" to everybody. I don't think I'd believe the Inquirer on this one (or anything for that matter).

Desperation? There was good chance that the PS3s would have sold out at launch at the old price anyways

[Chicane-UK Veteran]

Well - i'll say one thing. This is exactly why competition is healthy. Helps keep the prices low as all the manufacturers try their hardest to win your custom!

[dnast]

Agreed.

Japanese gamers are going to care jack sh** about buying a Blue Dragon Xbox360 bundle when RPGs they actually want are on the PS2, DS, and PSP. Unless if MS is going to bundle the next Final Fantasy or Dragon Quest with the Xbox360, they are not going to spend a ton of money on a new conosle for one unknown RPG.

Japanese Most Wanted Games according to Famitsu:

1. FFXIII

.

.

8. Blue Dragon

Of course FF and DQ will still be the most attractive RPGs in Japan, but don't think that BD is off the radar and nobody will spend the dough to play the game in Japan. There's no telling how many systems it'll sell, but it's clear that people want it.

[ Source ]

[dnast]

It's funny how a price cut could be considered a bad thing. Wasn't the high price tag everyone's problem with the PS3?

I know it was for me, but for some odd reason a price cut seems like a good thing to me. :/

[ienhz]

http://news.bbc.co.uk/1/hi/technology/5369720.stm

Only in Japan :/

If that's set in stone, then that's BULL.

I guess Sony is desperate in not losing Japan... sigh.

[spenser.d]

Well it's a lot less of a loss to them by lowering the price in the territory that's getting the least (considering it only makes sense to lower prices in territories that are getting them at all).

They're already suffering a massive loss on production cost as it is, as far as we know.

-Spenser

[deck]

Forgive me, as I am the topic starter and I'm about to go off topic for a moment, but what does everyone have again the Inq? It's not the tabloid, it's the informal UK tech (and other interesting) news site.

[L3thal Veteran]

What about the US PS3?

If you are going to add HDMI to the 20gb version in Japan, why not add it to every 20gb worldwide so there's 2 versions and not 3?

[-Anthony]

Wow, look at who has negative comments about the price-cut. I am suprised.

Anyways its good to see Sony listens to feedback. HDMI on 20 GB.

[AlphaPrime]

What about the US PS3?

If you are going to add HDMI to the 20gb version in Japan, why not add it to every 20gb worldwide so there's 2 versions and not 3?

20GB HDMI is worldwide. Every PS3 will have HDMI now.

[yukycg]

What about the US PS3?

If you are going to add HDMI to the 20gb version in Japan, why not add it to every 20gb worldwide so there's 2 versions and not 3?

they did, all 20GB PS3 will include HDMI.

[-Anthony]

They fear the Blue Dragon bundle =P It is odd though, since Japan is the only territory they have a chance to do well in. I guess maybe they don't want to leave their best bet any room to fail (or they're countering the Wii or Wii60).

Lets hope the emoticon meant you were kidding.

[giga Veteran]

Triple Merged

[Tech Star]

I hope this will apply for the USA latter....GO SONY!!!! :D

[L3thal Veteran]

they did, all 20GB PS3 will include HDMI.

Good thing because I was looking at SCEA's forums and there were many people claiming that it wasn't made official for the US market, just for the Japanese market.

[Ambience]

^ Maybe it's that HDMI is on all 20GB PS3s, but the price drop is only for Japan.

[magik]

That's strange, I can't believe Sony is that worried about losing the Japanese market... hmm...

[giga Veteran]

That's strange, I can't believe Sony is that worried about losing the Japanese market... hmm...

I think wii all know what they are worried about.

[magik]

I think wii all know what they are worried about.

Yea, wii definitely do. :D

[Xerxes]

The price cut probably won't come to any of the other territories...not yet anyway, Sony simply can't afford it. If they did drop the price world-wide they would dig themselves into such a deep hole they would never get out of it. Also Sony have no reason to drop the price in North America, I've heard the demand is exceeding the supply there! (with 1 million pre-orders so far (apparently) and only 400,000 units available on launch, so to the guys planning to just wait all day and night to just walk in and get one, good luck cause you probably won't get one!) and even if that pre-order number is also including Japan, that is still 500,000+ people (roughly) that won't be getting PS3s on launch and will have to wait till the next shipment (whenever that will be). Not to mention the price drop will cause an increase in pre-orders for the PS3 (in Japan that is), I hope Sony plan to ship a lot more units soon! I also won't be surprised if the European (including Australia/New Zealand) launch is further delayed cause Sony is struggling to meet the demand in North America/Japan...

I'm pretty confident the PS3 will be a huge success and won't die like many people are proclaiming, Sony have too much riding on it to just let it go the way of the Dodo, however, the PS3 will hurt Sony big time financially and it might take them quite a while before they start seeing positive numbers in relation to PS3. That is my take anyway, take with a grain of salt.

Edited September 23, 2006 by Xerxes

[Laughing-Man]

Japanese Most Wanted Games according to Famitsu:

1. FFXIII

.

.

8. Blue Dragon

Of course FF and DQ will still be the most attractive RPGs in Japan, but don't think that BD is off the radar and nobody will spend the dough to play the game in Japan. There's no telling how many systems it'll sell, but it's clear that people want it.

[ Source ]

The most wanted chart doesn't indicate what they are going to buy. Mother 3 for GBA was always floating around in the top 10 in that chart for years and it barely sold when it finally came out. Edited September 23, 2006 by Flux Capacitor