Sony's PS3 Price Drop Wasn't Necessary

Posted by jgaudiosi :: Industry Trends

Ps3_12Sony, which surprised many insiders with its early announcement at E3 that PlayStation 3 would sell for $500 and $600 in the U.S., has used the Tokyo Game Show to reveal that Japanese gamers would get a discount of 20 percent. The basic PS3 will sell for $430 instead of $500, while the $600 console will remain the same price. Both versions of the PS3 will now support HDMI, which means the next generation Blu-Ray disc technology will work with HD TVs for movies or games.

PS3 will be in short supply in both Japan and the U.S., which are the only territories that will receive the next generation console this year. The European launch was delayed until March 2007 when Sony halved its initial hardware shipments because of problems with the Blu-Ray Disc lasers, which are in short supply.

The lower price point is not expected to impact the U.S. launch, as early adopters in this country proved last year with Microsoft's botched Xbox 360 launch that they were willing to pay $1,500 or more for the console to get it first. It's interesting that Sony only dropped the price of the lower-end console, since most early adopters will purchase the more expensive PS3. Analysts expect Sony to release only 20 precent of the lower-end PS3s in the U.S. this year. It's likely Japan will also receive more high-end consoles than introductory models.

With Microsoft offering Xbox 360 for $300 or $400 and Nintendo introducing Wii for $250, Sony's new console is the most expensive of the three. Microsoft has failed to gain an audience for Xbox 360 in Japan, where the U.S. company competes with Japanese giants Sony and Nintendo. It's interesting that Sony has decided to offer a price drop before launch, especially since all of the limited supply of consoles will be snapped up quickly come November 11.

Analysts don't expect Nintendo to have any issues with the Wii launch and Microsoft will have plenty of Xbox 360s on store shelves, as well as new Japanese games catering to that market. Sony will launch PS3 with "Gran Turismo HD," which has been an international best-seller. But too date, the killer app that critics have tagged for PS3 has been "Resistance: Fall of Man," a first-person shooter. Traditionaly, that genre does not sell hardware in Japan.

Sony is about to find out how strong its PlayStation brand is in Japan and in the U.S. There are a lot of gamers who are counting down the days to PS3, despite the lack of killer apps for the console--at least at launch. I expect Sony to have no problem selling everything it ships this year. It's next year that the price drop will come into play. The fact that Sony was willing to drop the Japanese price when it didn't have to bodes well for a U.S. drop earlier, rather than later, next year.


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