Another analyst, another demand for price cuts
by Nick Doerr 
{ Mar 16th 2007 at 4:15PM }
Price cut, this... price cut, that. Everything deserves a price cut eventually, but the PS3 in no way, shape, or form can afford to cut its price yet -- it's selling at a loss. Selling at more of a loss would be a step into the Silly Realm, where only the off-balance survive. Anyway, this is what Deutsche Bank analyst Jeetil Patel had to say about the PlayStation 3's market performance thus far:"Next-gen hardware sell-through of 700K units in Feb-07 brought its total HW installed base to 8.0mn in the US, still 30% less than the prior cycle at 11.2mn units at equivalent stages. Xbox 360 (230K) and PS3 (130K) unit sales were below expectations of 250K-300K and 200K respectively. Retail checks reveal that ample supply exists, suggesting a demand problem for next-gen consoles...PS3 consoles are available at retail but sales are lackluster. Its 130K units sold in February was less than Xbox 360 sales last year (160K) and even less than the original Xbox sales of 140K in Feb-2002."
We suspect a price cut by the end of this year, especially if manufacturing costs decrease greatly due to smaller Cell chips, reliance on software emulation, and the employment of sentient robotic beings who only know how to obey their human creators... for now. Also, performance in Europe will probably be a big factor, since they will be the first to get the "new" version of the PS3 with less junk on the insides.
[Thanks, Jonah!]
Reader Comments (Page 1 of 1)
Devils Advocate @ Mar 16th 2007 4:34PM
Sony had better be thinking about doing something. Feb was the first month that people couldn't state the PS3 was out of stock, unfortunately, it did not sell well.
Here's the NPD numbers for Feb 07:
http://biz.gamedaily.com/industry/feature/?id=15503
Wii: 335k
Xbox360: 228k
PS3: 127k
Not looking good. The fanbois are going to have a heyday with these numbers.
Aex @ Mar 16th 2007 5:11PM
The feburary numbers aren't great, but they are acceptable. Sony knows there is only so much demand for a $600, and they are going to squeeze that rock until it is dry, after that, you'll see a price drop.
haywood jablomey @ Mar 16th 2007 5:11PM
Hmm...Nintendo has been making a profit w/each Wii sold since launch.
scott @ Mar 16th 2007 5:55PM
Good joke Aex, like the article says, they wont see a price drop until at least the system is making a profit. They aren't "holding out until the 600 demand rock is squeezed dry". 360 has slowly been out longer and longer and is inches towards it's own price drop. And as more and more 360's are out there, people will want to continue playing with their friends, hence they'll go out and buy one themselves.
Andir3.0 @ Mar 16th 2007 7:40PM
Not me, I said screw my friends and Microsoft and bought a PS3. Actually, it was more like: "screw Microsoft" and "[friends], why the hell would you support Microsoft?" ...
Knight Marquise @ Mar 16th 2007 8:04PM
@ Andir3.0
For Gawd sake, it's no different then asking "why the hell would you support Sony?" Both are International Corporations, and both look to the bottom line. If you're going to go all fanboi, at least put some thought into it.
This is what happens when you don't put any thought into your reply: your comment, unfortunately, underlies the bigger problem facing Sony: Obviously your friends all have 360's because evidently when you "bucked" Microsoft, you also bucked your friends, according to your comment.
Knight Marquise @ Mar 16th 2007 8:05PM
Nick~
This is off topic, but do you plan on doing any podcasts for PS3fanboy? I hope so, it would be a nice addition to the blog.
/end.off.topic
bootsielon @ Mar 16th 2007 8:34PM
I have a 360 and a PS3, but I play my PS3 more; I say screw some of my friends with 360s not because I want microsoft screwed... well, I do, but the primary reason is that I go for what I like, and I like PS3 more.
If some people just wanna keep buying the inferior pieces of shit out there, especially ones that give you less value for the money you spend, there are other people that want quality. Those that want Blu-ray, and PS3 to win, not a half-next-gen disc, or a console that breaks constantly, or a console that isn't even next-gen and isn't offering things that are too different from its predecessor.
I'm on my third Xbox by the way, and my non-gaming or casual gaming friends aren't buying an Xbox because of my horror stories with it. Hell, everyone I know with an Xbox has had a problem or two with it. I know fewer with PS3, but none of them has had a problem with it.
The demand doesn't need price drops, and it doesn't need killer games, it needs killer catalogues, which can't come soon enough. Xbox 360 is not going to have a killer catalogue, their variety in game genres is severely lacking. Both Wii and PS3 seem to be gearing towards expanding the game market in terms of genres and functionality, while Microsoft is getting titles that are too hardcore for the crowd (except Halo, but again, not everyone likes Halo or FPS).
Price cuts are nice, but it's Killer Catalogues and non-gaming functionality and services are the best thing to raise demand, not price drops and not killer games of the same genres (First Person Shooters, Third Person Shooters, Third Person RPG shooters, First Person Western RPGs, Firt Person RPG shooters, and shooters too).
Knight Marquise @ Mar 16th 2007 9:19PM
bootsielon~
Fair enough, but competition is better for the gamers, irregardless of the fact that fanboys like to think of Sony or Microsoft as their best friend next door. Had Sony dominated this gen like last time, it would not have been good, imho, for us, as gamers.
Likewise, while I'm surprised, Nintendo is really kicking ass. I am curious as to how much legs this Wii has, but so far, it's surpassed my estimates.
You knew this was coming: I am going to have to take exception to this comment of yours:
"Price cuts are nice, but it's Killer Catalogues and non-gaming functionality and services are the best thing to raise demand, not price drops and not killer games of the same genres"
The sales numbers, so far, don't agree with that. If Sony keeps posting the lackluster numbers with the PS3 as they have to date, you're not going to get that Killer Catalog, and you won't have to worry about too many killer exclusive apps, either. Personally, I do think a price cut, right now, is the only thing that's going to get those sales numbers above the other two.
Again, I want to see all three do well, no blow outs, because in my estimation, that will strengthen the gamers experience and choice.
At this point, it appears Nintendo has the Land of the Rising Sun firmly under control, and Microsoft has N.A....lets see what the European Launch can do for Sony.
Chris @ Mar 17th 2007 12:06AM
"[T]he PS3 in no way, shape, or form can afford to cut its price yet -- it's selling at a loss."
Wrong. Sony absolutely needs bit the bullet and cut PS3's price right now, regardless of the fact that it is already posting a loss. The systems need to be at the very least $399 and $499, respectively, or Sony's brand will continue its downward spiral.
Here's the sad truth: The PS3 is a four month old system, with the biggest brand name in gaming and hundreds of millions of dollars in advertising muscle behind it. And yet, the PS3 is selling worse than fake dog shit. It is selling less than a 6-year-old portable that's just about dead in terms of game releases. If the PS3 continues to be the "New Coke" of video gaming, developers are going to jump ship and cancel projects (or go multiplatform) that cost a lot of cash to develop, when compared to Wii dev costs (and to a lesser extent 360).
If third parties abandon the console, then by the time price cuts are affordable to Sony, the system will have no games worth purchasing it for. Also, the drumbeat of negative press will have completely destroyed the "Playstation" brand. It will be too little too late.
In conclusion, the "annoyed" tone in which you write posts referring to these analysts and the negative media the PS3 is getting is wholly misdirected. The PS3 price is way to friggin high, it's just the god honest truth. The NPD numbers prove that beyond any doubt.
n2 @ Mar 17th 2007 11:23AM
I agree, the longer Sony holds out on a price cut, the longer they'll be behind this generation.
It's too expensive. And the funny thing is, I can afford one, but $599 is just too much for a game console. At $399 it's a no brainer-- I'd buy one in a second.
Regarding the NPD numbers, even though 'estimates' were higher, it's worth noting that the 360 numbers are the highest numbers Microsoft has ever posted for February since entering the console business. They're doing something right.
Sony needs to do something they've never done before. They need to react quicker. Their inability to do so already cost them the digital music (MP3) market.
Matt B @ Mar 19th 2007 11:50AM
I remember a quote from the old lady in the Drew Carrie show that went "We spent millions in research to find out that $600 is alot of money to most people."
That seams very true. Yet the 360 has stayed the same price for almost 2 years now. Add and HD-DVD drive, wireless add on and poof!!! You've just spent $600 too!!