TGS 06: Analyst: PS3 price drop a sign of 'weakness'

  • By Curt Feldman, GameSpot
  • Posted Sep 23, 2006 5:31 am AEST

US-based analyst reacts to new price for 20GB PlayStation 3 in Japan; calls it "a questionable business decision."

Industry analyst Mike Wallace issued an investor memo today reacting to news that Sony intended to drop the price of the low-end, 20GB PlayStation 3 in Japan.

Wallace, who covers the game industry for UBS Securities, called the move "a questionable business decision and a sign of weakness" on the part of Sony.

Stating that Sony said it made the move "in response to consumer complaints about the console's price," Wallace paints the decision as window dressing at most.

"This price cut is only on the 20GB version of the PS3 in Japan, which in our view is not significant given that the US is the key market for the PS3," Wallace said in the memo.

He emphasized that even at the lower price point, the model remains more expensive than either the Xbox 360 or Wii in Japan, and he goes on to further dilute the impact of the price drop by reiterating his view that the 60GB PS3 model is likely to be the more popular one in Japan, regardless of pricing.

PlayStation boss Ken Kutaragi said yesterday that in Japan, Sony would cut the price of the lower-end PS3 (with the 20GB hard drive) to 49,980 yen (US$429) from 60,000 yen (US$515).

373 Comments

  • Dorian20063

    Posted Oct 16, 2006 6:36 pm PT

    I have one point I'm going to get across right now. PS3: $600. XBOX 360:$400. HD DVD player:$300. I'd say that the 360 is at LEAST $100 more expensive than the PS3, IF you want the same benefits (while using an INFERIOR media storage space such as HD DVDs no less! AND having just one more device to find space for on your already-cluttered entertainment unit! Not to mention just two MORE wires to add to the spaghetti-like mess already in existence!) Have I made my point yet, boys and girls and all you other XBox 360 employees reading this while getting paid to do so? Yes, I think I have ;o)

  • knives0666

    Posted Oct 11, 2006 5:37 pm PT

    i don't think the price their biggest down fall its the built in blue ray... Even though it is better then HD that doesn't mean more people will buy them most people will buy the cheapest most reliable and avalible player... ex.. VHS vs Beta

    If the blue ray fails the ps3 looks goofy

  • Sub-killer

    Posted Oct 9, 2006 6:26 pm PT

    to much money
    I'll just get xbox360
    oh well(bummer!)

  • natemilenko

    Posted Oct 6, 2006 10:48 pm PT

    I don't care what they do from here on out I'm sold I'm getting a PS3 and a Wii.. who cares what it costs.. its what I want and that is what I will get.. hells ya

  • Ninja_RaVeN

    Posted Oct 5, 2006 7:03 pm PT

    I'm still getting it reguardless of what is being said

  • flipstar_Ti

    Posted Oct 5, 2006 12:21 pm PT

    why does everyone care what sony is doing with their money. i mean its their money!!!

  • stikasasn

    Posted Oct 4, 2006 9:19 am PT

    If you ever worked with a large amount of the public you will realize that there is a large percentage of people that are almost like "mindless sheep". All they need is a shepherd, AKA Sony, Microsoft, or Nintendo to lead the way. No matter what you think, there is almost certainately some analyst that already put you into some percentage of the population that he/she predicted that you would say that. Did you know that 80% of people tend to make fake statistics up on the spot. lol jk.

  • christopherneal

    Posted Oct 4, 2006 7:51 am PT

    Analyst's are useless. They get paid money to "spin" things. Humans are capable of making up their own minds unlike sheep. Analyst's basically know nothing until it reaches the market at which point who cares what they say? Not this gamer.

    Peace.

  • Japster19981

    Posted Oct 3, 2006 6:22 pm PT

    You won't be the only one broke.

    That's alright though, Online = Free so you'll be fine.
    At least until you have to eat again.

  • Sasuke253

    Posted Oct 3, 2006 2:57 pm PT

    crap im going to be broke purchasing the ps3 w/o a game i hope they come in packages like the 360..

  • disfalling

    Posted Oct 3, 2006 2:08 pm PT

    i guess, really, there are people willing to buy a ds for $150 then buy almost the same system again with a brighter screen... people will still buy the ps3 if they want one. i've spent $600 on worse things. it's avaliability that could possibly hurt them, especially with nintendo at $250 two days later.

  • KOSMOSEngineer

    Posted Oct 3, 2006 12:51 pm PT

    "but even if they don't lower the price I still plan on getting it."

    haha, which is precisely why they won't drop it.

    But really, with the hardware they're putting into it. Sony's already losing money by pricing it at $600, they're just hoping it will pay off in the long run.

  • edub272

    Posted Oct 2, 2006 7:10 pm PT

    they should reduce the price of the low end ps3..
    the low end ps3 is a piece of crap neway thats way overpriced

  • dragoonxx

    Posted Oct 1, 2006 3:11 pm PT

    I understand that the PS3 is a pretty amped up piece of technology, if they could at least lower the price by about $100 than it'll be an understandible price and there will be a lot less complaints about the systems cost,but even if they don't lower the price I still plan on getting it.

  • happynoodleboy7

    Posted Oct 1, 2006 12:21 pm PT

    Analysts are just professional fanboys. Never forget that.

  • CaribouLou5

    Posted Sep 30, 2006 8:52 pm PT

    I wish the price would drop here in the US. I don't have enough yen to buy one yet.

  • maddog123

    Posted Sep 30, 2006 3:26 pm PT

    RE: Kane04 - Ditto and i'm getting a ps3

  • Kane04

    Posted Sep 30, 2006 12:06 pm PT

    1º "price is too high, no chance"
    2º "drop price is a sign of weakness"

    i bet the 3º is going to be "not fair console war, PS3 is much better than 360, MS just can't compete, Sony made is console too good"

    i think the price is going to drop in US and EU sonner or later.

  • Kruegmeister

    Posted Sep 30, 2006 10:00 am PT

    I can't believe anybody would complain about a price drop.
    Headline should read.
    TGS 06: Analyst: Found to be taking bribes from Microsoft.
    What kind of idiot sees a price drop as anything but good.

  • noxian

    Posted Sep 30, 2006 2:14 am PT

    ADollins = but remember losing money initially is a gray area anyway. traditionally, they've ALWAYS lost money. the only reason Nintendo isn't is because they're basically selling you a GC with an improved GPU (which by modern standards is still several years old in tech level). in a certain respect, Nintendo is shafting people in cost cause no doubt the unit probably doesn't cost that much to make. Seeing as SOny always started the most expensive, losing money, and still came out ahead in teh past; thats ahrdly a defining factor. as for the price, i've always been unsure about that. you say that but then do you know seriously how many kids i know who right now have saved up to buy the ps3?? you say $600 is too much and people won't pay for it and parents won't spend that and yet people were averaging more than that last xmas when the 360 was released. everytime there's an expensive piece or hardware you hear the same thing. the PSP is overpriced, and yet do you know how many KIDS i see with the 30-60 gig video ipods that're what....$200-300??? you say people don't have the money...and that they won't spend it...yet the more i've stopped and actually look around....people send a lot of money....

  • blancobo

    Posted Sep 29, 2006 7:59 pm PT

    dont think there is any weakness in the ambience. to me, it is all goign as Sony plans it... I believe there is a very strong market for the PS3, there are 2 PS machines who have continiously exceeded the customers expectations, and the PS3 will not be the exception PERIOD!

  • gamenerd99

    Posted Sep 29, 2006 2:13 pm PT

    i'm sick about hearing about it. i am ready to buy it now. for better or for worse, sony has traditionally provided me with what i want most... more games. i am privileged, i can afford it at launch. xbox 720 may take the prize in a couple of years, but for now sony knows best.

  • adrian1369

    Posted Sep 29, 2006 5:19 am PT

    Its clear sony loosed from nintendo and microsoft

  • ADollins

    Posted Sep 28, 2006 8:45 pm PT

    Silvestrim, Remeber nintendo is the only company standing on a solid price model. I think Sony and M$ are loosing money on each console they sell. Some will argue the amount, but that is really not important. I wonder who will actually win this round. I was very intrested in the price cut but I didn't know it only applied to the japanese market. Well Sony just ticked me off again, man this is the third time, I think I'm gonna take my PS3 fund and buy me a kool 6.5" DVD player for my car, becuse this is just rediculous. What has sony lost it's marbles?? I'm now waiting untill they have 10 must have exclusives, and I can walk into any store and buy a PS3.Another slam was I was in a best buy, and looked at how many more HD-DVD movies there are than Blu-Ray?? I was really excited about the PS3, now I'm just sick and tired of it. I could care less, and I cannot stand to have any more upsets. staley6565 I don't care what you say, 600.00 is alot for a family game console. I just don't see many johny's getting the device for christmas, unless their parents are ravid gamers also. Yeah alot will ask but unless the price comes down to a more palpable $300 bones, it will not make much traction in the market, for the masses which are kids, and teens. Don't get me wrong staley6565 the PS3 is a variatable bargain for what it is, and it is a swiss army knife of entertainment. However I'm sure most parents won't see the bargain of a jack of all trades hi-definition entertainment device. Especially when there are cheaper alternatives, that do the same thing.

  • BoobyUnger

    Posted Sep 28, 2006 5:01 pm PT

    it doesnt cost them to much to make that stuff they just want to turn a huge @$$ profit like all the rest of the greedy B@$T@RD$

  • Silvestrim

    Posted Sep 28, 2006 3:40 pm PT

    80$ cheaper in japan may seem unfair to US. but....

    Sonys most likely losing tons of cash for each system it sells, just for the cell processor and blu-ray reader. there going to sell less units in japan (100k), so they will lose less money than, say, if they sold 400k units at that price. they may be lowering the price for fear of wii taking over japan..? maby, but we must remeber japan doesn't celbrate Christmas( well, not like US) so they will probebly need a little extra encouragement to get one

    no one seems to complain that the wii is over priced becase its so much lower than other consoles, even thoe Nintendo is selling it at no loss, in fact they're banking of the hardware, and 60$ for every remote+nunchuck.....

  • staley6565

    Posted Sep 28, 2006 2:42 pm PT

    CasSpy: "they are making about a 300% profit on sales for systems."

    Except that before the price point was anounced, analysts suspected the PS3 was gonna be 900 dollars judging how much it cost them to make the system.

    Sony is lowering it's price for the smaller version in Japan, because it knows Japan is it's biggest fan base, and wants its consumers to feel good about the company. If you want the full uber package it's still very expensive, but Sony is at least giving more options to the strictly gamer portion of its fanbase.

    This may be incorrect, but I think when you compare the economic conditions of America and Japan, frankly, Japan knows that American PS3 fans have the money to spend, since we are statistically a wealthier consumer base. Also, with so many people switching from Sony to Microsoft in the last console war, Sony knows it can't give ground in the US. Sony has the popularity over Xbox in Japan to allow some pricing wiggle room, since it knows that people there are gonna buy Sony software, over Xbox software, thus making up the profit gap.

    Lastly, Nintendo has a solid showing no matter where it's going. I honestly think that Nintendo and Sony coming out on top would be the best situation, then you have the publishers devoting the work towards the most innovative (Wii), and most technically capable (PS3) systems.

  • massvideogames

    Posted Sep 28, 2006 1:33 pm PT

    Is everyone forgetting that the price drop is ONLY IN JAPAN?? That should tell you a lot right there. If this had been a worldwide drop in price, then it MIGHT have been a good descision. But as it is, Sony is just "sticking it to the chumps". It would have made more sense to, if anything, lower the price in America, and RAISE the price in Japan, because Sony knows damn well the japanese will gobble the PS3 up no matter what the price. Perhaps they feel as though they've alreadly lost to the 360, and what fans they still do have in america (and elsewhere) will pay the price no matter what it is. Sony will always have Japan, so they are just showing them royalty. It would be the same if Microsoft knew another company would win, but said "well at least we still have OUR fanbase" and lowers the price for only americans. All I have to say is, I feel sorry for those of you that do buy a PS3 and not a Wii or 360, because you're just wasting your money my friend. But don't listen to me, find out for yourselves

  • CasSpy

    Posted Sep 28, 2006 1:08 pm PT

    Its not a computer and doesn't carry the software a computer has, so no reason should it be so much. yes it as a HDD but thats been done since 2001. Mass product shouldn't cost so much to own a product that millions in the world will be owning. they are making about a 300% profit on sales for systems. And besides first 1-3 models of every sony systems has bugs and mostly breaks within the first year. They want to fight with the other 2 major companies in gaming right now, they need to understand people can't spend 2-3 weeks of their pay checks (average age of gamers) on just the system alone. plus controllers, games, maybe a memory card for going to a friends house. All I know is everyone better add in the 2 year no questions asked return get a new one if it breaks cause it will, cause sony makes a great system but they make it cheap. So if you going to be one of the few that buys it on the rush if you can get one cause they will sell, make sure you get the warranty for it for your safety atleast

  • tdsgrl

    Posted Sep 28, 2006 8:09 am PT

    How about they just send less units to Japan and more to the USA market

  • jamsiecolst

    Posted Sep 28, 2006 5:50 am PT

    In my book, this saying applies to all products ever:

    "If you want it done right, buy Sony"

  • shawnomac

    Posted Sep 27, 2006 11:34 pm PT

    Man Mike Wallece knows his shiet when it comes to gaming. he definitely doesnt look the part. Id like the hear the him talk about the wii and playstation 3 in his own voice. that would be awsome

  • GameDesigner21

    Posted Sep 27, 2006 6:29 pm PT

    I think Everyone needs to get off Sony's back. they are an awsome company, im not going to touch the wii,or the 360....Sony gets my money.

  • gilv3r

    Posted Sep 27, 2006 4:58 pm PT

    Wow, just wow. First the analyst complain about the price being to high. Now they complain about price drops.

  • loverboy1988

    Posted Sep 27, 2006 1:27 pm PT

    if sony wants to reach there goals by the end of this year they have to at least put the price range were the consumer's will buy it but the price that they said now its good enough i suppose.

  • turja52

    Posted Sep 27, 2006 12:26 pm PT

    yes yes, one more negative analysis for sony. No matter what they do, even if they drop the price, its a bad move. sony is a punching bag for critics. Dont hate sony, they are giving away a blue ray player for free with a system far superior than microsoft system. Yes, MS machine looks convenient now, but wait one more year when game developers starts to use all the machine power. The rest of the systems will be a joke to PS3. General people knows that, unlike the super genius 'do nothing' analysts. And when PS3 becomes number one in the world, Gamespot, please request the same analyst for an article then.

  • effizi04

    Posted Sep 27, 2006 11:16 am PT

    I think the price cut is a good step. Unfortunately, it seems like it will be implemented only in Japan.

    By the way..Does the PS3 have memory slots too...Just in case one runs outta space on the 20GB hard drive?

  • Ibacai

    Posted Sep 27, 2006 10:11 am PT

    The price is to high and Sony is greedy. The price is dropped and Sony is showing a sign of weakness. They just can't win, leave them alone for goodness sake.

  • calducciano

    Posted Sep 27, 2006 9:45 am PT

    Do you really have to be qualitied at anything to become an analyst? It seems like they make some outrageous claim that price will be an issue, then they make another wild claim when sony decides to lower it. These so called analysts are flavour of the month and nothing more than degenerates that make nostradomus look like a god. How can anyone even take them seriously. I remember when analysts would actually make good predictions and you could count on them. Now... bleh. Dime a dozen I guess. I wonder if Sally Struthers is offering correspondence courses for stats&analyst work now too.

    and, if you're going to delve into the world of metaphors:

    "theres nothing wrong with buying your girl flowers,but it could definately be a sign you screwed up."

    at least have it make sense.

    If you want to compare it to flowers. This would be your girlfriend complaining that you never give her any flowers. When you finally do, she gives you the cold shoulder because you did it only after she complained. Her failed logic, much like the hefty sampling of moronic fanboys that frequent this and other sites, doesn't see that he looked at her issue and gave her what she wants. Maybe he would have thought about getting her flowers earlier if he wasn't so busy working hard to buy her a ring. let that metaphor swirl around in your head for a bit.

  • Jackrabbit_slim

    Posted Sep 27, 2006 8:45 am PT

    Listening to your customers and admitting you were wrong is not a sign of weakness. It's a sign of flexibility and strength. I'm really sick of seeing corporations neglecting what it is that customers want. For once they see a mass customer complaint to thier business as a real threat and maybe thats how we get what we want. I honestly think that if more gamers complained to corperations about getting the short end of the stick we would get our way more often For example, when square shut down a 3D Fan version of Crono Trigger that looked AMAZING, they probably got a few complaints, but if the masses had written letters threatening a boycott or less loyalty, they may have reconsidered.

    right now a beef I share with many a gamer is the fonts used in DEAD RISING are illegible on non-HDTVs. So Microsoft and Capcom can use Marketplace to sell stuff, but not to send a reasonable update to my game... So we can actually read whats going on?! Believe it or not.. if enough people complained about this there would be changes.

  • 360guy

    Posted Sep 27, 2006 3:05 am PT

    i think if the price drop catch fails to get many to buy, in order to keep the sony gaming console biz allive i think they may have to rectify their mistake and move it back up to the original

  • CaptainCorndog

    Posted Sep 26, 2006 10:03 pm PT

    "So when MS lowers it's price and adds extras in it's bundles in Japan it isn't a sign of weakness but when Sony does the same it is? Whatever. I'm not going to buy a PS3 from Japan anyways so I'll wait for a price cut (a good $100) in North America before I jump on the Sony bandwagon. By then some great games should also be out ."

    The difference is that the 360 has been out for a whole year. They have profited on things from games, accessories, xbl, the console etc. and can afford the drop. The PS3 on the other hand is yet to be released and it can be dangerous to price cut before you have any feedback or ideas about where your sales are going etc. etc. On top of all that they're dropping prices on expensive hardware. With the 360 making it's move with hyped titles such as gow, f.e.a.r., lost planet and the Wii making the best marketing move in video game history (releasing 2 days after the PS3) the last thing they should be doing is price cutting. They will sell out of PS3 for xmas, there is no point in price cutting! Sony will not have a Merry Christmas this year, mark my words

  • Newager

    Posted Sep 26, 2006 7:51 pm PT

    But will they cut down the price for EU and AU PS3? Hope they will, if not let nature cut the price down as the time goes by...

  • LoweSox

    Posted Sep 26, 2006 7:47 pm PT

    Sony was said to be losing money on the console based on the technology it was using already. If they drop the price even more, that can't be a strong sign.

  • tmacyao111

    Posted Sep 26, 2006 6:26 pm PT

    I don't think that was a sign of weakness at all. I look at it this way, a company has balls when they reduce the price of a product and bite the bullet, when potential consumers complained about the earlier price point. I think this is a sign of strength, good job sony. (finally some good press for the ps3!)

  • _AsasN_

    Posted Sep 26, 2006 4:11 pm PT

    A sign of weakness?? lol

    Dropping the price so close to launch is just a smart idea. It'll keep more people interested and possibly have penny pinchers taking another look.

  • neoand12

    Posted Sep 26, 2006 3:29 pm PT

    Sony will pull thru

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