Analysts criticize Japanese PS3 price drop
by Blake Snow 
{ Sep 22nd 2006 at 7:25PM }
While consumers shouted a collective "woot!" this morning when Sony dropped the Japanese PS3 price to $425, some analysts have called the move "ridiculous" and preemptive. One Japanese securities agent stated: "It's ridiculous to decide to cut the price before they start selling the PlayStation 3. They may cut the price again if sales don't go well.'' By all means, bring on subsequent price reductions.Another investment banker continued the scrutiny: "[The price reduction] is negative for the short term because the company may not be able to sell enough consoles to cover an instant loss caused by the price cut." Whether or not the price cut is a good thing for business, it's sure to help Sony's PR juice with the Japanese public.
All in favor of global price reductions, say "I."
[via Next-Gen]
Reader Comments (Page 1 of 2)
renaldo @ Sep 22nd 2006 7:28PM
On behalf of the world,
I.
Novacharged @ Sep 22nd 2006 7:33PM
IIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIi for the 60gb
se @ Sep 22nd 2006 7:33PM
I
It is the only way I will get at launch
Shaun @ Sep 22nd 2006 7:33PM
Unfortunately Europe will not see any price reduction, so we get the PS3 6 months later than the important places in the world and then they get a price cut. What really hurts is that the new price works out to be half the UK price with a straight google conversion rate.
Stay strong and resist, Sony will have to drop the price if we band together. You're with me... Right?
Amos @ Sep 22nd 2006 7:34PM
Specify to SKU you are referreing to please? And thank you.
Sieth @ Sep 22nd 2006 7:34PM
Ha, I only planned to get the japanese version anyway. So sweet deal for me at least! Goodluck to the rest of you.
Miniboss @ Sep 22nd 2006 7:35PM
I.
I'll buy one for $400.
Ritz @ Sep 22nd 2006 7:37PM
Wi..I?
I think the system could be a lot of fun. I will greatly miss force feedback, but I could get used to it. However, my wallet will stay closed till the price is someone I can manage (read: not ~$700 Canadian).
Manman @ Sep 22nd 2006 7:40PM
1. Sell consoles for cheap
2. Wait for the blu-ray to tank
3. ???
4. Debt!
Ritz @ Sep 22nd 2006 7:39PM
Er, rather I meant to type "something"
Typos, ftl
nalgae @ Sep 22nd 2006 7:41PM
FYI, it's "All in favor, say 'Aye'" and not "I."
"Aye" means yes, while "Nay" means no.
And now, you know, and knowing is half the battle.
vaylen @ Sep 22nd 2006 7:41PM
All that matters is whether Sony cuts the price of the PS3 after the early adopters all buy theirs, since they will pay ridiculously high prices judging by what happened with the xbox 360 launch.
If Sony doesn't reduce the price after those early adopters have all gotten theirs, they could find themselves in the embarrassing situation Microsoft finds itself in over in Japan with scores of unsold product on the shelves.
Price cut to $450 for the premium system by holidays 2007 FTW.
vaylen @ Sep 22nd 2006 7:55PM
@Ritz
I don't remember any consoles having force feedback...
There was that really lame "rumble" nonsense that killed the batteries in wireless controllers without really helping a game any more than some good bass in the sound effects, but FORCE FEEDBACK? I think not.
Comtar @ Sep 22nd 2006 7:50PM
Someone complained previously that the Wii was too much money and only a company that has confidence in their product would sell a system at a loss.
So... if Sony is feeling confident, perhaps they should sell it everywhere cheaper. That's a sign of true confidence! ...right?
Why not just sell it for $129.99? Sony knows they will rule the Gaming Market! So why wait for the price drop? They are confident that they will win the next gen console war, and only confident people sell systems at a loss!
PIpe @ Sep 22nd 2006 7:47PM
Um the man said I so.... I
MusashiX2 @ Sep 22nd 2006 7:48PM
@12
GI JOOOOOOOOE!!!!!!
i say "Aye" to lowering the price on the 20gb in the US and EUR. with all the stuff ive been seeing at TGS and ive been getting excited over, if they cut the 20gb to $450 then i may crack during the second shipment of systems.
Pac Man @ Sep 22nd 2006 7:48PM
Hmm, the way I see it is that there are going to be more 20GB versions at launch, so they try to make it look more appealing. But hey, no need to listen to me, aye!
Greg @ Sep 22nd 2006 7:51PM
probably because of the announced price reduction of the 360 in Japan.
BklynKid @ Sep 22nd 2006 7:49PM
I wouldn't get one if it was free!
(I'm lying, I totally would)
dan s. @ Sep 22nd 2006 7:49PM
Horse pepsi ok? Nay.
Steve @ Sep 22nd 2006 7:49PM
Aye.
And there's no instant loss to worry about, as Sony will only make token numbers of the low-end model anyway. When you can only make 3.5M units by Xmas, and you get to decide whether to make ones that sell for $600+ or for $429, you make a lot more of the one that sells for $600+.
care @ Sep 22nd 2006 7:51PM
i really dont care. sony / mS proposition has no value to me. they are offering me something i already have 4 FREE. I dont care about teh graphZ! PoWar , and HDVD / bluray LIES - corporations have 2 realise this:
FUTURE ot the entertainment = PC
FORMAT WARs? LOL my HDD is laughing
suffah @ Sep 22nd 2006 7:51PM
@6
Good luck getting one of them from the first shipment of 100k...how many of those do you think will be the tardpack?
sonofnone @ Sep 22nd 2006 7:55PM
Maybe the analysts are forgetting the small Fort Knox that Sony has invested in seeing that Blu-Ray destroys HD-DVD, and by lowing the price they're definately gonna get Blu-Ray capable machines into more consumers' hands. Sony did the best thing they could to get some - no, make that any - positive press.
rjg @ Sep 22nd 2006 8:00PM
looks like panic to me, otherwise why drop the price now before it's even gone on sale? it seems like sony is has lost all its confidence at this point.
Jack @ Sep 22nd 2006 7:57PM
Well, the japanese still might not buy it. I mean, some will, and they'll buy MGS4, but not everyone. One of the reasons why the XBOX didn't sell well is because it is so huge, noisy and obtrusive. THE PS3 CAN CRUSH KYOTO. It's HUGE. Besides, if one person buys it, that guy's friends will go to his house to play. But if there's a price drop to, say, 500 USD for the 60 gig, I'm all for it.
Maci @ Sep 22nd 2006 8:01PM
This was a mistake on Sony's part. The PS3 is going to sell out at launch regardless of a 100 dollar price drop.
wii the people @ Sep 22nd 2006 8:03PM
Remember that really long, incredibly irrelevant post that Vladimir put up the other day? You know, the one that was saying that Nintendo priced the Wii so high because they weren't confident that it would sell? You guys remember, right? Okay, actually what Sony just did is what companies do when they have no confidence in their product. And it worked! A bunch of us are suddenly pro-Sony when we should be pro-What-the-Hell-did-they-do-that-for? It smacks of corporate pre-ejaculation. I understand that it's good for some people individually but let's really think about it. Were they bullshitting us all along with their whole "It's not a lot for what you get" tagline? Or are they scared to death that Nintendo or Microsoft is going to kill them? Regardless, I can't think that this is a move inspired by a good deal of confidence.
Josh @ Sep 22nd 2006 8:04PM
I.
It's absolutely amazing to see Sony's PR department actually get better in public opinion after a piece of Sony news.
If this price drop translates to North America, then by next year (after the shortages and some good games come out), then the Xbox 360 will actually have some real competition.
levi @ Sep 22nd 2006 8:13PM
The price drop sounds great to the consumer, but the long-term effects are pretty stark because Sony has invested so heavily in the PS3, BluRay, and Cell that it needs to start seeing some return. Slashing the PS3 cost does not help the bottom line at all, and not have a healthy financial situation will effect the future of the company -- and, thusly, the platform.
newtypecj @ Sep 22nd 2006 8:07PM
It's bad for Sony's stockholders since it assures that the company will lose more money on PS3 than even originally anticipated, hence the reaction from analysts. But it is very good for consumers. They obviously felt they needed to do it in Japan to combat pressure from Nintendo, but you'll watch their stock really fall if they drop the price in the US. What's clear is that Sony will sell out this year regardless of the price. If they don't have to lose another $100 per system, why should they? (Purely from the point of view of Sony's financial health, that is. This is great for Japanese consumers.)
brock2621 @ Sep 22nd 2006 8:08PM
This is retarted... how much sense does this make?! They critisize Sony for the PS3 being soooooooooooo expensive so as a good gesture Sony reduces the price. AND THEY CRITISIZE THAT TOO!? WTF!?
Cage @ Sep 22nd 2006 8:07PM
"looks like panic to me, otherwise why drop the price now before it's even gone on sale? it seems like sony is has lost all its confidence at this point."
Posted at 7:55PM on Sep 22nd 2006 by rjg
I'm with you on that...so..uh...Aye to that!
Petey @ Sep 22nd 2006 8:12PM
So they are so desesperate that they are already cutting the price before launching!!! They realy must be shaking all over the place hahahahaha!!! All the fanboys in occident happy because 20000 (20% of 100000 PS3 are the 20Gb ones) japanese PS3 buyers are going to pay less for their still way overpriced intercative DVD player, that is called a PR move, since it will only affect a minority of the buyers, cheap misleading publicity... hey, I heard they give you Ferraris for free on Mars, so it has to be the best deal, I mean, FREE CAR!!! What a lol, fanboys these days are so hyped that they find 450$ cheap as said by vaylen in post #11 hahahahahaha, I guess that if the PS3 was sold at launch 5000$, they would find 1000$ a bargain months later, you people are definitly not in touch with planet earth... what I find comforting is that you spoiled brats don't even represent 0,5% of the society... I'll have a few laughs on your account in 2 years, when Matsushita or Samsung will buy a bankrupt Sony... Momma's wallet FTW!!!
Platinum Skeet @ Sep 22nd 2006 8:13PM
Hmmm X06 is next week, I wonder if MS is going to drop their Core to the Wii price and Nintendo drop their Wii price to $200.
In a perfect world this would happen and gamers everywhere would be happy and sad at the same time. Happy because all the money they're saving but sad because they are going to be broke until 2008...
Marino @ Sep 22nd 2006 8:16PM
It is pretty clear that Sony is in full panic mode. The have had one desastrous announcement after another, and they are trying to buy back some good will. From the investor stand point this is real bad: They stand to lose their shirts with this. They are gambling the future of their entire computer entertainment division. Their investors may not stand for this, and ,I agree, they are showing lack of confidence that their product will be as well received as they thought. No amount of discount will help them push Blue ray. The only thing we can hope for is to get a PS3, and that the bottom doesn't fall off the entire company.
killr0y @ Sep 22nd 2006 8:26PM
First of all, these people are stock analysts. They are reporting information for stockholders, not consumers.
Bottom line is, Sony was stupid for doing this. They just dropped the price of something that they would have had no problem selling out of for the rest of the year.
Doesn't anyone remember all the Xbox 360's selling out? Doesn't anyone remember the forced $800-1000 bundles on all the websites that sold out? Or all the $1000+ systems on eBay?
So why on Earth would a company, that answers to its shareholders, lose even MORE money per console, when they were guaranteed to sell out of it for the next 3-6 months?
Simple supply and demand...
Or is it?
Besides the fact that Sony is screwing the shareholders, lets really look at the situation here:
Sony estimates they will only have 2 Million machines made & sold by the end of the year, right? They've stated that the vast majority of those consoles (somewhere around 75%) will go to the USA. So that leaves about 500,000 consoles for Japan.
500,000 Japanese consoles, 80% of which will be premium systems.. That means there are 100,000 systems that will actually see this discount by the end of the year.
100,000 systems? Sony is discounting 100,000 lousy system!?! This doesn't seem like such a grand move for the consumer now, does it? But its DAMNED good for the press, which Sony has been stinking up as of late.
And with the HDMI port added in on all core systems, nobody really has any need for the "premium" version. Sony knows this all too well, which is why you will probably never see a core system on store shelves. The consumer will essentially be FORCED into buying the $600 system, which Sony loses less money on.
LOL, and the Sony fanboys actually thought Sony was throwing them a bone!
stevo @ Sep 22nd 2006 8:40PM
this is amazing, sony has some guts to pull attempt this. after what their putting into the PS3 its not like them to be dropping the price. i mean look at it this way, HD platform with blue ray player built in. if you look at the statistics youd find that a blue ray player alone is worth $1000 and its in the PS3 for only $400. Plus all the new upgrades with the PS3 make it a promising next generation console. id say that the only problem sony faces is the wii which will clearly dominate the motion-cencor-next generation gaming. but dont get me wrong, i am all for sony, if they can pull this thing off i will dip every penny i own into this thing and buy the dam PS3. And even though ppl are complaining that its " only the graphics are better" if you did your homework youd find that the PS3 controllers will have motion cencor on them to increase gameplay function, and it has the most amazing graphics seen so far for by gaming industries. the PS3 becoming the dominant gaming console, most definatley. and for the price dropping matter, i say "I" under one condition, everyone must understand that sony intends to give gamers the best quality gaming platform to be seen. If a company can risk about $1000 for each console (blue ray player, cell processor and other stuff) then that means they must be a pretty guttsy company, unlike microsoft that just threw its console out into the open even though it still had a bunch of bugs with it. good job sony and nintendo, for staying true to gaming power. GAMING POWER!!
vidGuy @ Sep 22nd 2006 8:35PM
Nay until the price of accessories and games is revealed. I'd rather pay $75 more up front than $15 more for every game I buy.
Ritz @ Sep 22nd 2006 8:36PM
@23, vaylen
Sorry if I messed up with semantics. I meant some sort of haptics. And if you don't like the feature, thats fine. I don't know of many games that don't offer the ability to turn it off. However, to not be given the choice is something I dislike, because I personaly enjoy the technology.
FSK405K @ Sep 22nd 2006 8:41PM
do these analysts honestly believe that PS3s won't be sold out, at any price? ..."the company may not be able to sell enough consoles to cover an instant loss caused by the price cut..." What are they smoking?
The ZeroCorpse @ Sep 22nd 2006 8:44PM
vidguy has a valid point. Sony might just be "shifting" the price. Instead of paying full price for the console, we'll get it at a discounted price and then have to pay MORE for the accessories and games. This could be bad.
Of course, I'm not getting one until 2008 anyway. I don't need it. The 360 is firmly entrenched in my home.
vidGuy @ Sep 22nd 2006 8:49PM
@ FSK405K,
The PS3 would sell out at any price below $1000 (and possibly over that) for this holiday season. After that, I don't think a price over $500 would be acceptable for the market, but it'll still sell.
But, "the company may not be able to sell enough consoles to cover an instant loss caused by the price cut..." has got to be correct: every PS3 sold puts Sony farther in the hole. It's just up to the game and accessories sales (and prices) to make that up. So in regards to console sold, there's no way the company could sell enough to recover losses - each adds to the loses.
Jason W @ Sep 22nd 2006 8:50PM
Everything i thought was wrong with the PS3 could be taken care by a price drop. I already have a HDDVD player but it would be nice to have both formats as well as Virtual Fighter and Ninja Guiden.
Spiza @ Sep 22nd 2006 8:54PM
I think its stupid to have a price cut before you can meet demand. MS should have priced the core and premium packages at $350 and $450 at least, maybe tack on another $50 for last season's holidays. They then could have lowered the price in the spring when they could finally meet demand. The console would also look more attractive at that time because people think, "oooh, a price cut, I'm getting a deal."
Nintendo is playing it smart with the high wii price tag (unless MS drops their price this fall). Wii will get atleast a $50 price cut next year for sure. I'll get one when its black and $50 cheaper.
LaughingTarget @ Sep 22nd 2006 9:20PM
My uninformed consumer side gives a whole-hearted "AYE" to a price drop. However, my more informed consumer side has a different story.
Sony's financial health is already poor. Not Ebola level, but fairly solidly stuck in the middle of Influenza. Sony can survive, assuming they chose to sit in bed and suck up on chicken soup. Yes, they'll lose a bit of muscle mass, but it is better than trying to go out to the gym while fighting off a nasty virus and dying for it.
Remember, these quotes are not people who are fanboys of ANY camp. They probably don't even play video games. These are financiers who are trying to create a picture for the public on whether or not a particular company's moves translate into future economic strength. Sony is already up to it's neck in debt. Sony is barely able to pay off its debt. Sony's debt to equity ratio is pathetic. A huge chunk of their assets are phantom assets tied up in patents and other goodwill accounts. That doesn't bode well to investors who see that the real assets are nowhere near as much as the debt the company has on file, meaning of something does go wrong, shareholders won't even get a piece of the pie if parts of the company have to be liquidated because Sony is too deep in debt to get any more extensions on loans. They may not even have enough money to pay off obligations, meaning even banks and bondholders will be out in the cold. The BluRay patent won't be worth much to them since none of them won't be in the business of manufacturing consumer electronics and anyone who may have been interested in buying is likely already invested in HD-DVD, therefore, a worthless patent.
Even if it is only a $75 drop on 100,000 consoles, that is $7.5 million that Sony cannot afford to lose on top of what they're already losing.
What these financial advisors are doing is raining on the fanboy parade that trumpets, "Sony is a huge corporation, they an take the hit!" Guess what - they can't. If this entire venture doesn't completely dominate every industry Sony's trying to get into, then it all goes down the toilet. It cannot just competently compete with the market share and actual numbers the PS2 did, it has to utterly put the Xbox 360 out of business and surpass the PS2's total install base to simply break even.
Just to reference how hard it will be for Sony to dig themselves out of this deep, deep hole they've gotten themselves into, Sony will have to sell AT LEAST 30 games to each PS3 owner who buys over the next year just to break even on the manufacturing cost. That still won't put a dent into the gigantic R&D expenditure they've put toward developing the innards of the unit.
What does this mean to the consumer? That means just because Sony stupidly gave a select few Japanese consumers a price break, they've just stepped closer to the line where the entire investment will be for naught. No one will any software if the company making the hardware has to discontinue it, making that $600 investment a huge waste.
What does this ultimately mean? Sony is blowing $7.5 million just to convince 100,000 Japanese consumers to buy a product they would have already bought anyway, and ensured they will have to sell another 7 games to each one of them on top of the original 30 just to break even. That is why analysts are really irritated at the whole move.
FimShady @ Sep 22nd 2006 9:25PM
Brilliant move by Sony, and here's why...
They were already planning to sell more 60 gig units than the 20 gig one. By adding HDMI to the 20 gig system, and dropping the price, Sony has guaranteed a sizeable showing on the lower end of the "first adopter" scale.
By doing so, they've eliminated that possiblity of people buying a 360/HD DVD bundle because its cheaper. People who here going to buy the 60 gig version weren't put off by the price before, so no need to touch that. Now the 20 gig SKU is value priced enough to make sense (a lot more than the MS core unit). This is the final nail in the Xbox 360's japanese coffin.
Anyone else think that that Sony set the price as high as they did so they could drop it now?
Translation: "AYE"
Anonymouse Rep @ Sep 22nd 2006 9:52PM
Give killrOy a star for his analysis - when I was first reading it, I thought it was epobirs until I got to the name.
However, there MAY be an error in your figures, rOy - the figures we've heard are no more than 1.5 million available by the end of the calendar year. Other than that...
And Laughing Target nailed it in one with his summation - I'll make it even simpler. Sony as a corporation (TV's, entertainment, etc.) has been depending on the gaming section to keep them in business. The gaming section has now pulled a boner - Sony as a corporation may not exist now in 3 - 4 years. (Look at their actual corporate worth, cash reserves, etc. - analysts and stockholders for them are worrying now.)
chudgoo @ Sep 22nd 2006 10:36PM
I totally called this like a year ago!
It's SO simple to manipulate the consumer!
1 : Issue press releases that refer to the nearly-magical powers of your new technology.
Go with the times! Emotion Engine. The Cell Processor. Something fantastic and scientific sounding. Be sure to mention any national research labs (that you've only ever met at a trade show) as possible customers. Supercomputer in a chip! etc!
2 : Announce that this new tech is so marvelous that you might need to work a second job to even afford the *down-payment* on it.
Make sure that the public feels that this tech is -exclusive- and -elite-. Mention that it will be sold at a huge loss. This will convince many to buy purely for the conceived *value*. (The though process goes something like "This Cell processor, valued at well over $250,000 can be MINE! .... for only..... $600!!!)
3 : Announce the "HYPE-STAGE-01" price.
"$600?! A little rich for my blood, but hey, the thing has Metal Gear 4!"
Be sure to mention all of the amazing features that it can bring into your home. Make stuff up! DVR/Tivo-like functionality, dual-HDMI outputs, whatever. They won't remember anyway! (well, the nerds will)
4 : Reduce price to the level you had planned anyway and act as though you really doing the customer a favor. The perceived value will only *feel* that much higher.
5 : LAUNCH!
The launch titles are unimportant as you can always sell them movies on strange new formats that are themselves magical and wonderful. (UMD movies carried the PSP through (on one good leg) until the 2nd round of must-own PSP games were released, right?) People will forgive early mistakes simply as early attempts to wrap a human mind around the infinitely complex, enigmatic and six-axis processing abilities of The Cell.
5 : PROFIT!
(well, maybe... after at LEAST two or three years of eating it though.)
Thomas @ Sep 22nd 2006 11:18PM
I'm definitely for Price drops.. I
analysts don't know anything, they don't sell systmes, games or anything else... if they knew what they were doing they'd have their on coporation.