Pricing Error?

26 February 2007



Sony to Offer Freebies to Aussie PS3 Buyers

The PlayStation 3 hit the US in time for Christmas, but the wait may prove worthwhile for the antipodean gamers who are only now able to get the PS3 in Australia. At five cents under A$1,000 (US$790) for the 60 gigabyte version, the price is off-putting to say the least. To so soften the blow, Sony is offering free stuff with each system sold. It looks like a pricing error.

The PS3 is the most sophisticated of the three new platforms for gamers. The Microsoft Xbox 360, though, has been out longer, and it had the first-in-line advantage. Nintendo’s Wii has proved a surprise megahit because of a new approach to gaming – a remote that acts as a virtual tennis racquet, baseball bat etc. Moreover, its family-friendly price of US$250 means it’s a great buy – if one is to be had at all. Meanwhile, Sony claims the PS3 sales are on target, but it’s been a money loser so far.

According to CNN, “Sony said it shipped 1.84 million PS3 machines worldwide through Dec. 31, and is sticking to its earlier target of shipping 6 million PS3 consoles by March 31. It shipped 2 million PS3 machines worldwide by mid-January, falling about two weeks behind its initial shipment targets in Japan. Nintendo sold 3.19 million Wii machines worldwide by the end of the year, 1.25 million in the Americas, and 1.14 million in Japan.”

Clearly, the problem is price and a limited supply of games that will run on the PS3. The latter is just a matter of software designer time and money. It’s a problem that gets solved repeatedly every time a new system comes out. Price, though, is a tougher matter. Hiroshi Kamide, director of research and game expert at KBC Securities Japan in Tokyo, has said, “The problem with the product so far is that no one has fully understood why it's so expensive.”

A Rolls Royce costs more than a Chrysler, and everyone knows why. A house in Malibu costs more than a house in Compton, and everyone knows why. A PS3 costs more than a Wii or an Xbox 360, and the company is offering free downloads and other content to make it worthwhile to consumers. But that suggests that the device, in and of itself, isn’t worth the initial investment. The technology can be the best, but if the value isn’t seen to be there, it doesn’t much matter. There is likely to be a Wii 2 before there’s a PS4.

© Copyright 2007 by The Kensington Review, Jeff Myhre, PhD, Editor. No part of this publication may be reproduced without written consent. Produced using Fedora Linux.

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