Strategic Realignment

11 July 2007



Sony Cuts US Playstation 3 Price by $100

Sony’s Playstation 3 game console is, by any measure, a fine piece of technology. However, Sony just cut the US price for the box by $100, making the retail price for the 60-gigabyte model $499 rather than $599. An 80-gig version will hit the markets soon at $599 and will include the online racing title “MotorStorm.” The company appears to be trying to make the system as big a commercial success as it is a technical one, but it seems like too little too late.

Sony sold 3.6 million PS3s in the fiscal year ended March 31, 2007. It expects to sell another 11 million in the current fiscal year. This is good, but compared to the competition, it is less-than-stellar. In the latest 10-Q filed in April, Microsoft says it shipped 11 million Xbox 360s. Meanwhile, Nintendo’s Wii had sales of 6 million globally as of March 31. Throw in 40 million DS handhelds, and Nintendo’s numbers are impressive. Moreover, it has suggested that it will sell another 14 million Wiis this fiscal year and 22 million DSs.

PS3 lost out to Xbox 360 largely because Microsoft got its console to market so much sooner. Xbox 360 launched in 2005, meaning that it had an inherent advantage with early adopters and with the gaming media. At 20 gig, the Xbox system handles less than the PS3, but Microsoft is introducing a snap-on 120-gig hard drive that renders this difference irrelevant.

Moreover, Ninetendo’s new system focused not on the hard-core gamers but on families. The graphics aren’t as vivid, the games aren’t as slick, but the Wii controller has turned the device into a family-room favorite. At a lower price, Wii was appealing, and since it could play other Nintendo games, it meant a new library of titles was unnecessary. That’s why Nintendo couldn’t make enough of them for Christmas 2006.

So, Sony has cut its price and offered a new high-end model. The company hopes owners will store movies on the hard drive as well as add to their video game collections. Sony is bringing out 100 new titles over the next year; 15 will be exclusive to PS3. Also, Microsoft has had to extend the Xbox 360 warranties due to a high level of hardware failures, known in the field as the “red ring of death.” It’s too soon to write the PS3 off entirely, but Sony has a lot of work ahead of it to make it the success commercially that it could be.

© 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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