Analyst expects PS3 price cut of $100 this October

by Blake Snow { Mar 20th 2007 at 2:00PM }

In a note to investors today, Goldman Sachs analyst Yuji Fujimori predicted that Sony will drop the price of the PS3 by $100 dollars this October. So how will the price cut be justified? Volume! Kidding, Fujimori cites the reduction of good ole fashion parts; the fewer there are, the cheaper it is to manufacture.

For example, PSX was originally manufactured with 700 components, later reduced to 200. The PS2: 2,000 parts reduced to 600. A smaller cell processor should help reduce costs as well. So for those still sitting on the fence, would a $100 PS3 price drop sway you into buying; or would it take more than that?

Tags: ps3 price cuts, Ps3PriceCuts

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Reader Comments (Page 1 of 2)

Grog @ Mar 20th 2007 2:04PM

I'll admit that I'm not sitting on the fence (a Wii is more than enough for me), but I have to imagine not too many people are going to be swayed by this. The main reason is that if PS3 cuts its price the 360 is certain to as well (and maybe the Wii -> $200 as well).

JodyAnthony @ Mar 20th 2007 2:05PM

It would sway me.

BriGuy20 @ Mar 20th 2007 2:34PM

I'm not buying a PS3 'till they put rumble back.

I'd rather spend my money on an updated HDMI XBox 360 or an iPhone.

James @ Mar 20th 2007 2:05PM

I think $400/$500 is a better price range in order to get the masses on board. Price drops are always good. Conidering the built-in Blu-ray, hard drive, and wi-fi (high end model), it's not bad for the money at all.

I'd wish a bunch of people making snarky comments about Xbox pricing (which has nothing to do with this post) was not inevitable, but alas. Cue the immaturity.

2kings @ Mar 20th 2007 2:06PM

sounds good to me!

Liqwid @ Mar 20th 2007 2:06PM

I haven't seen a PSP price cut yet, don't expect a PS3 price cut.

Shagittarius @ Mar 20th 2007 2:06PM

A price cut is only going to hurt the Wii. Even if they drop the Wii by 50 bucks is there anyone who couldn't afford it already?

Microsoft and Sony have ground to gain by dropping the price, Nintendo doesn't really gain much by dropping the price.

JodyAnthony @ Mar 20th 2007 2:06PM

actually no, it would sway me if the 20gb one was $100 cheaper, and available. no 60gig for me, please

Flit @ Mar 20th 2007 2:07PM

$500 for a console? No, still too expensive. I'll see you at the end of the lifecycle, when i can get it for under $250. Until then, i'll play with my Wee.

I mean Wii.

Hiroken @ Mar 20th 2007 2:09PM

Hiroken @ Mar 20th 2007 2:10PM

Are you kidding? This is great news!

A 20GB PS3 (HDD is cheaply upgradeable) for $399 makes it the best value system on the market. $499 for the 60GB model is great, too.

Let's hope this is true!

People on these boards have been clamoring for a price drop since launch, saying they'd adopt if the price were competitive. Well, here you go.

~

Hiroken @ Mar 20th 2007 2:11PM

Augh, sorry for the double post.

~

Jason B @ Mar 20th 2007 2:12PM

Hmmm, lets see, the PS3 currently loses Sony around $280 per console sold. 80nm to 65nm reduction = 20% cost reduction (maybe). So the new loss is $224 per console (after process reduction). Now lets drop the price another $100 and we're at a new loss per console of $324???

Granted, my numbers may be off a little, but I think I may be close, and if so there is no way that they reduce the cost of this thing yet.

Saneless @ Mar 20th 2007 2:12PM

I won't buy one till it's about 250, so it's going to take more than $100 to get me to bite.

Even at 500 it's not going to give me anything I can't get on the 360. By the time it's around 250 THEN it will have the games I need to play like Shadow of the Colossus team's project and so on.

Kizzle @ Mar 20th 2007 2:18PM

No, but giving me a reason to buy one when I already have a 360 might. I don't see anything coming down the pipe that will change that. No, not even the glorified interactive dashboard known as "Home."

Jackson Pritt @ Mar 20th 2007 4:19PM

It'd get me more interested, sure, but I'm more concerned with the PS3's staying power. There's been so much negative press, and so little GOOD about the PS3's debut that I'm worried that no matter how cheap it gets it's eventually going to get abandoned for something else.

I don't think it's going to pull a Saturn, but I'm not going to make a bet on a Sony console right now. They've just done too many things wrong (PSP, Xmas Flog, shitty PS3 ads)for me to trust them.

Randy @ Mar 20th 2007 2:25PM

Ugh. No. A $200.00 price cut would sway me and not a cent less.

Kazi @ Mar 20th 2007 2:26PM

Analyst knows shit is what I say. Though I would enjoy the price cut since there's some current exclusives coming up that I'd love to play.

Corey B @ Mar 20th 2007 4:17PM

it would definitely make it worth it to me....especially compared to the similarly priced fugly black 360.

BPM @ Mar 20th 2007 2:27PM

I don't expect the price to drop by the end of this year, or even the next. Unless Sony can severely drop the amount of components in the box and make it a lot cheaper for them to produce.

Still too much money for my cheap pockets.

Christopher7xii @ Mar 20th 2007 2:29PM

"12. Hmmm, lets see, the PS3 currently loses Sony around $280 per console sold. 80nm to 65nm reduction = 20% cost reduction (maybe). So the new loss is $224 per console (after process reduction). Now lets drop the price another $100 and we're at a new loss per console of $324???

Granted, my numbers may be off a little, but I think I may be close, and if so there is no way that they reduce the cost of this thing yet."

Actually, I think you may be way off. They'll probably be removing the PS2 board in there like the Euro PS3s, go for Software Emulation for PS2/PS1 games. That'll reduce a pretty penny too. Not to mention blu-ray's success rate now will probably drop production costs of that... And I don't remember if it was the Blu-Ray or the CPU, but they mentioned about a month back that something was getting manufactured out of house, that Sony wouldn't be making them anymore... Which in turn reduced the price of that.

I'm not saying Sony isn't taking a loss. They'll always be taking a loss, but thinking that no other costs have been cut is absurd.

And on topic, no, $500 price point won't sway me. $500 price point, two Final Fantasy games, a better Hack & Slash (plthhht to Dark Kingdom), and a Dynasty Warriors game and I'm on board though.

Matthew @ Mar 20th 2007 2:32PM

I bought Wii at launch.

I won't get 360 until it is 249 (I *might* give in on this one).

I won't get PS3 until it is 299 (was going to say 249, but I can't wait that long)

Zach @ Mar 20th 2007 2:37PM

Hmm...it's been 2 years now and they've still not dropped the price of PSP....what makes anyone think they'll be any quicker with PS3? The price will stay as it is until next year, mark my words.

LaughingTarget @ Mar 20th 2007 2:38PM

$200 will do it for me. $400 for the 60 GB model.

Kevin @ Mar 20th 2007 2:41PM

Expecting is one thing, but it actually happening? Ha..

Dolla Dolla @ Mar 20th 2007 2:41PM

@Christopher7xii

You're right in that they are reducing costs by removal of the EE chip (soon to be Worldwide), reducing the size of the Cell chip (90nm to 65nm), and reducing the price of blu-ray drives. But I would definitely like to know what the cost benefits of these are. Best guesses are that they lose about 240 per console produced. Would this reduce it to maybe losing only 100 bucks? Maybe even only 50 bucks?

In either case, they need to get out of the hole (close to 2 billion worth) before they can offer a substantial price cut (and yes, 100 cut is still not enough, yet). I wouldn't be surprised if they never released the 20gb in Europe, simply because that SKU is more costly.

arrrgh @ Mar 20th 2007 2:41PM

I guess I'll wait until they stop releasing "broken" next gen games people buy and expect to be patched...wouldn't it be nice to play a finished game right out of the box like the old days?

Ben @ Mar 21st 2007 4:24AM

It doesn't matter if they drop the price. Both MS and Nintendo are waiting for it. The reason why MS hasn't dropped the price is because they don't want any price cut by the Sony to go unanswered. If they dropped the price now (say, by $100) they would have no room to answer a Sony price drop. Is this good buisiness? I don't think so. They have too many systems on the shelves right now, and that stagnant investment can't be good for the bottom line.

With regards to the addition of rumble to the PS3, don't count on it being adopted by the games for the sole fact that, if half the people don't have it, they won't build it into the game.

Ben

MrKniceGuy @ Mar 20th 2007 2:43PM

If there were some good games MAYBE! And don't give me that "It's more than a game console" crap. I'm not buying to FOLD@home.. I can do that with my PC. I'm not buying it to play Blew-Ray, I just got my DVD collection just the way I like it! I'm not buying to put Linux on it, that' just stupid. I already have two linux systems and they cost me less than $100 a piece. So, will I buy at a $100 less? Not on you life.

Soul @ Mar 20th 2007 2:43PM

$479 for a redesigned 360 vs a $499 PS3 would make for an interesting development. At that point I start to think that Sony's decision to include a Blu-Ray player is smart, as it's probably the factor that would make me choose the PS3 at that point. That, and the minimal exclusives the PS3 sees are still more appealing to me than those of the 360.

samfish @ Mar 20th 2007 2:43PM

It won't happen, if only because the parts are still to pricey and Sony is losing too much to make a price drop.

And even then, $100 isn't going to make a difference. The PS3 isn't going to truly start moving until they can get it down to at least $300.

Brett Paci @ Mar 20th 2007 2:44PM

I would definitely buy one for $100 less, if it came with a $300 mail-in rebate. You hear that Sony? I represent the masses! Sorry, please lower the price by $100.

Scuba Owl,
ScubaOwl.com

machrc @ Mar 20th 2007 3:48PM

Instead of a ps3 I just went ahead and got another 360 for my youngr bro. Now you can find us both in a room killing our friends @ calypso casino. ps3 right now really doesn't have aything going for it for me to plunder all my cash. We got tired of the wii, its boring after awhile. The true gamers are getting their fix on the 360, and thats just the truth.

nepos13 @ Mar 20th 2007 4:59PM

Well after the announcements of the new Ace Combat going to the 360 and the annoncement that Devil May Cry 4 going multiplatform. I don't know if it's going to matter. I am not a fanboy of just one system, but if PS3 keeps losing ground to the 360, what's the point? If you didn't see the Devil May Cry 4 announcement I got it from here.
http://www.g4tv.com/thefeed/blog/date/03202007/index.html

Emperor Samoth @ Mar 20th 2007 2:56PM

PSX? you mean PS1 or PS One. PSX was a souped-up PS2, remember?

REUYL @ Mar 20th 2007 2:54PM

It's just more analyst BS.

vidGuy @ Mar 20th 2007 2:56PM

Let's see: Sony can

A) drop the price of the console in order to sell more units and gain more market, but lose more per console. More sold * more loss per console = a much greater loss on hardware sales. Sony will hope to counter this with game sales, accessories sales, etc.

B) refuse to drop the price when costs decline and take less of a loss per console.

The 360 is in the same boat when it comes to loss-per-console since they also take a hit, but at least Microsoft has a healthy, established market. Sony is going to have to chose between a horrible gamble(A) and a stupid mistake(B). A's the only real choice when it comes to the livelihood of the PS3, since its sales need jump-started if Sony hopes to maintain anything regarding exclusive titles.

funkonaut @ Mar 20th 2007 2:58PM

I'm still sitting on the fence, and there are two things that will sway me into buying a PS3: 1) a price drop, 2) GAMES.

There are absolutely no games out for the PS3 that I want to play right now. Until then, I'm staying on the sidelines.

dsub @ Mar 20th 2007 2:58PM

drop the price by $100 and ship out some more 20GB models so I can get one of those for $399 and I'm sold.

Joe @ Mar 20th 2007 2:59PM

No thanks. You can't polish a turd.

ssuk @ Mar 20th 2007 2:59PM

$100 off... THE JAPANESE PRICE... AGAIN! =DDDDDD

Grog @ Mar 20th 2007 3:02PM

"6. A price cut is only going to hurt the Wii. Even if they drop the Wii by 50 bucks is there anyone who couldn't afford it already?"

I disagree. It definitely won't hurt the Wii (one assumes that Nintendo would make a similar margin thanks to the same cost-cutting as Microsoft and Sony can do), and any time prices are cut demand will increase. While most people can afford a $250 system, not all can by any means. For that matter, the lower the price the greater the chance of an "impulse buy." Even if demand does not increase incredibly, it will certainly increase enough that Nintendo will benefit from the market share gain without worrying about loss opportunities for direct profit off the machine (which would be compensated by licensing and peripheral sales).

Not satisfied? Look at the PS2, which is still outselling the PS3 in many places. Why? Because people love to play games, but they don't like to spend a lot of money.

"12. Hmmm, lets see, the PS3 currently loses Sony around $280 per console sold. 80nm to 65nm reduction = 20% cost reduction (maybe). So the new loss is $224 per console (after process reduction). Now lets drop the price another $100 and we're at a new loss per console of $324???"

You're applying the 20% reduction to the loss, not the actual cost. If your numbers are right (and I don't know that they are) and the 60g PS3 costs 599+280 = 879, a 20% reduction would bring the cost down to $703. If they then take $100 off the 599 price point, they're selling a $703 machine for $499 - a loss of $204. So yes, your numbers are pretty far off. =)

I fully expect the PS3 to be the Cadillac of this generation. I don't think Sony is going to cut costs until they can significantly decrease their losses on the console. Meanwhile, $600 is not a mass-market product. People who have the system will love it, but this will most likely not be a 100 million unit seller likes its previous incarnation.

Yeah...itsJoystiq...sowhat @ Mar 20th 2007 5:12PM

Why not give me a coupon for $100 off a PSP to clear PSP inventory that isn't moving, not lose face on PS3 price drop and make way for PSP2?

Everyone wins!

Evan @ Mar 20th 2007 3:13PM

@Shagittarius "Microsoft and Sony have ground to gain by dropping the price, Nintendo doesn't really gain much by dropping the price."

Nintendo has the most to gain. The Wii's price is still a little too expensive to be an "impulse buy" for many casual gamers and a "toy" for many parents. A price drop would tap into those markets, including the hordes of parents still buying PS2s!

Sony has the least to gain. Even after a price drop, the PS3 would still be priced in hardcore-gamer territory. It might make it more affordable for the people already saving up to buy one, but the PS3 has a long way to drop its price before it will appeal to more mainstream consumers.

Randy @ Mar 20th 2007 3:13PM

I wish they had some kind of program to exchange certain functionalities for a reduced cost. If you could unload blu-ray movie playback, 1080HD, Linux, or a number of the other features for a reduced price, would that interest you? I know this doesn't feasibly work in most aspects and the cost reduction realitically would be minimal, but let's pretend you could knock off $50.00 for each feature you skipped. How much would you take out and would it then be within your interested price limits?

Ninegauger @ Mar 20th 2007 3:14PM

With Devil May Cry gone it's going to take a lot more than $100 to get one of those things in my house.

Joshua @ Mar 20th 2007 3:14PM

Maybe $300 for the system maximum, is a good price, but it needs games, and it's quickly losing all of its exclusives. Of course, most people agree with me that the 360 and PS3 are both way overpriced, looking at the sales of both systems. Neither of these systems will become truly "mainstream" until at least 2009, simply because of their prices. They're simply too expensive.