10-18-2007, 03:51 AM
Sony Slashes Price of PlayStation 3
Cut Is Latest Move To Increase Sales During Holidays
By Nick Windfield
October 18, 2007; Page B4
Sony Corp. is slashing the starting price for PlayStation 3 consoles in the U.S. by $100, its latest attempt to boost slow sales of the machine in time for the holiday season.
The move, widely expected after similar actions in Japan and Europe, introduces a new PlayStation 3 model with a 40-gigabyte hard drive for $399. That compares with an earlier entry-level price of $499 on a model with 60 gigabytes of storage capacity. Sony in July lowered the price on the 60-gigabyte model from $599.
After the new pricing move, the PlayStation 3 is only $50 more than its closest competitor, Microsoft Corp.'s $349 entry-level Xbox 360 with a hard drive, though it is still more costly than Nintendo Co.'s $250 Wii.
Billy Pidgeon, game-industry analyst at IDC, predicted the price drop would invigorate PlayStation 3 sales this holiday season, though a bigger impact is likely to occur next year when a stronger lineup of titles will be available for the Sony system, including a new version of a popular game called Metal Gear Solid. "At that price, it comes down to a more justifiable present or gift to yourself," Mr. Pidgeon said.
Sony could use a big boost if it is to catch up to its competitors. U.S. retailers sold 131,000 PlayStation 3 consoles in August, or about 1.75 million total since it went on sale last November, according to NPD Group Inc. In contrast, there were 404,000 Nintendo Wii's sold in August in the U.S., or four million total since it was launched last holiday season, and 277,000 Xbox 360s in August, or 8.3 million since it went on sale two years ago, according to NPD.
The reduction reflects Sony's determination to spur more sales of the PlayStation 3, the Japanese electronics company's most important new product in years. Jack Tretton, president and chief executive officer of Sony's U.S. games division, acknowledged that the relatively high price of the PS3, which Sony has justified by including advanced technology such as a high-definition Blu-ray disc movie player, has been an impediment for many gamers.
"While we were incredibly excited about the technology in PS3 and while it was future-proofed to some degree, it was a bit ahead of its time," Mr. Tretton said in an interview. "The downside of all that technology was the price we had to offer it to consumer at retail. We knew $599 was going to be a challenge for some people based on traditional videogame pricing."
There's a catch to the lower price: The new $399 PlayStation model will not play games designed for the PlayStation 2, Sony's popular older game console. Mr. Tretton conceded that removing that capability, along with a few other features, isn't dramatically reducing Sony's cost of manufacturing the console but will instead encourage buyers of the entry-level PlayStation 3 to purchase more games designed specifically for the new system.
Mr. Tretton said the company's research showed that compatibility with PlayStation 2 games isn't likely to be missed by customers, who most likely already own the older system.
Sony has said it plans to sell 11 million PS3s world-wide this fiscal year, which ends in March.
Cut Is Latest Move To Increase Sales During Holidays
By Nick Windfield
October 18, 2007; Page B4
Sony Corp. is slashing the starting price for PlayStation 3 consoles in the U.S. by $100, its latest attempt to boost slow sales of the machine in time for the holiday season.
The move, widely expected after similar actions in Japan and Europe, introduces a new PlayStation 3 model with a 40-gigabyte hard drive for $399. That compares with an earlier entry-level price of $499 on a model with 60 gigabytes of storage capacity. Sony in July lowered the price on the 60-gigabyte model from $599.
After the new pricing move, the PlayStation 3 is only $50 more than its closest competitor, Microsoft Corp.'s $349 entry-level Xbox 360 with a hard drive, though it is still more costly than Nintendo Co.'s $250 Wii.
Billy Pidgeon, game-industry analyst at IDC, predicted the price drop would invigorate PlayStation 3 sales this holiday season, though a bigger impact is likely to occur next year when a stronger lineup of titles will be available for the Sony system, including a new version of a popular game called Metal Gear Solid. "At that price, it comes down to a more justifiable present or gift to yourself," Mr. Pidgeon said.
Sony could use a big boost if it is to catch up to its competitors. U.S. retailers sold 131,000 PlayStation 3 consoles in August, or about 1.75 million total since it went on sale last November, according to NPD Group Inc. In contrast, there were 404,000 Nintendo Wii's sold in August in the U.S., or four million total since it was launched last holiday season, and 277,000 Xbox 360s in August, or 8.3 million since it went on sale two years ago, according to NPD.
The reduction reflects Sony's determination to spur more sales of the PlayStation 3, the Japanese electronics company's most important new product in years. Jack Tretton, president and chief executive officer of Sony's U.S. games division, acknowledged that the relatively high price of the PS3, which Sony has justified by including advanced technology such as a high-definition Blu-ray disc movie player, has been an impediment for many gamers.
"While we were incredibly excited about the technology in PS3 and while it was future-proofed to some degree, it was a bit ahead of its time," Mr. Tretton said in an interview. "The downside of all that technology was the price we had to offer it to consumer at retail. We knew $599 was going to be a challenge for some people based on traditional videogame pricing."
There's a catch to the lower price: The new $399 PlayStation model will not play games designed for the PlayStation 2, Sony's popular older game console. Mr. Tretton conceded that removing that capability, along with a few other features, isn't dramatically reducing Sony's cost of manufacturing the console but will instead encourage buyers of the entry-level PlayStation 3 to purchase more games designed specifically for the new system.
Mr. Tretton said the company's research showed that compatibility with PlayStation 2 games isn't likely to be missed by customers, who most likely already own the older system.
Sony has said it plans to sell 11 million PS3s world-wide this fiscal year, which ends in March.