Analysts say 360 price cut should have Sony worried

by Andrew Yoon { Sep 5th 2008 at 9:30AM }

If you haven't heard, the Xbox 360 has received yet another price cut. Effective today, the Xbox 360 Arcade model is available for only $199 -- that's $200 less than the cheapest PS3 model. While the PS3 is arguably a better deal, with the inclusion of a Blu-ray drive, integrated wireless and free online play, penny-pinching casual gamers may not see the value proposition of a system that costs twice as much as its competition. "Given the weaker consumer spending environment, the Xbox 360 should also now be in closer reach of more price-sensitive consumers," analyst Colin Sebastian said.

However, with Sony focused on profitability this year, a competitive price drop does not appear to be on the radar for the PS3. Instead, Sony has opted to create larger hard drives and more attractive bundle options, such as the 160GB Uncharted bundle. "I suspect that the reason why Sony has been so adamant about maintaining its current price point is because it has not reached a more efficient scale in its manufacturing of the PS3," said analyst Jesse Divnich.

Divinich also tells Edge that "Sony should be the most concerned [about the 360's price cut] ... Going into this holiday season, the PS3 will not only have the highest price point, but also the smallest software library, weaker line-up of exclusive titles (compared to Xbox 360's Gears of War 2 and Fable 2), and a less popular online network." Apparantly, he forgot about Resistance 2, SOCOM, LittleBigPlanet and a number of other PS3-exclusive titles for this holiday season. However, will the lure of these titles make up for the increasing price gap between these two rival consoles?

Tags: analyst, colin-sebastian, jesse-divnich, price-cut, ps3, xbox-360

Reader Comments (Page 1 of 3)

Maverick Saturn @ Sep 5th 2008 9:39AM

Dunno what hes going on about, he has a point on the price point claim, but looses me when he gets to less exclusives this year and no software, wtf?

Pete @ Sep 5th 2008 11:20AM

I have been an owner now for both systems and I can say that both systems have a stellar rate for me. I have the elite Xbox and though I have experienced the rrod, it hasn’t hindered my play because Microsoft compensated me well. I think this price cut will be a little dangerous for the Playstation because this does bring in the more fringe gamers to the next generation consoles while allowing them to have a vast gaming library (11 games rated with a 90 or higher on metacritic versus 5 on ps3). I have to say that Metal Gear Solid and SOCOM will give a great base and bright hope with LittleBigPlanet but there needs be some attempt to lower prices to continue to be competitive and relatively even in the console sales.

Ryan @ Sep 5th 2008 1:11PM

most PS2 gamers like myself have jumped onto the 360 bandwagon, despite 2-3 weeks of waiting for RROD fixes, because of the price and software available...much like the PS2.

Jason @ Sep 5th 2008 9:18PM

As someone who recently sold their 360, I just don't see the point of the Arcade package whatsoever.

Wi-Fi? no
HD capable? only with a $40 media cable upgrade
Download content? with a 256MB flash card?!? are you kidding?!?

So, what you're left with is an SDTV system that can will save disc-based games and not much else. That 256MB card will get you about 5 arcade games, you won't be able to download TV shows, movies or demo's.

Hey! Guess what! The PS2 does all that and sells for $100 cheaper.

I just don't understand MS' need to give consumers "choices" that really just amount to handicapping their product.

mahunoy @ Sep 5th 2008 9:43AM

Wow! It will only cost you $199 to see the Red Ring of Death.

Saeth @ Sep 5th 2008 10:08AM

You do realize RROD was mostly abolished? With the falcon models that are coming soon it should be gone completely

Popfrogs @ Sep 5th 2008 10:48AM

It's not abolished in the slightest. The hardware was doomed from birth, no amount of revising can fix it.

adolson @ Sep 5th 2008 10:55AM

At that price, you can't afford not to!

will @ Sep 5th 2008 11:02AM

Saeth:

Current RROD rates are 16.4%. Abolished? I think not.

kentuckyfried @ Sep 5th 2008 4:24PM

I'm going to quote this into perpetuity:

ttp://www.8bitjoystick.com/archives/jake_inside_source_reveal_the_truth_about_xbox_360_red_ring_of_death_failures.php

The design will never be completely fixed. It says it somewhere in this interview.

Christopher @ Sep 6th 2008 10:44PM

All RROD happening now are still OLD HARDWARE. New models are pretty much fixed. Don't be such a fanboy and do some research before spouting BS.

@Popfrogs--like PS 1 and 2 didn't have hardware heat death issues?

I like PS2 and PSP, and although the hardware in PS3 is good, the only reason PS3 is doing any decent console sales is because they have one of the cheapest, best playing Blu-ray players on the market.

Christopher @ Sep 6th 2008 10:58PM

Christopher @ Sep 6th 2008 11:01PM

@ Kentuckyfried

I call BS. At the end of your linked article, he stated that he didn't play games because of motor control issues then goes on to state that he proposed motion control to the Xbox team before Nintendo thought of it. What a crock.

shawn @ Sep 5th 2008 12:26PM

He forgot to mention that 360's are STILL braking down. RROD ftw. Who wants to be a cheap defective piece of crap?

Syn @ Sep 7th 2008 7:38PM

Oh no! Not Analysts!

$199. Sweet. Give me my 256mb and pac-man!

Ok so now... I must upgrade to 40gb(120gb in my case), add wifi(I've never used wired connection... lagfree), Install Linux for some classic fun with emulators, remote play to stream all my media, internet browser, Games... not graphic teasers like Gears of War... but moving on from that... PS3 is a Media Center for me. It supplies me with more than just gaming and is why I purchased it, and since I'm not spending $80/year on 10year console = $800 extra during its life time not including the original xbox... oh lord... $800???

ZeRo @ Sep 5th 2008 9:46AM

He obviously ignored all the Sony exclusives coming out this year.

What's kind of disappointing on Sony's standpoint is the fact that they're expected to severely drop their console's price to compete with the 360 when they released a year (2006) after Microsoft did (2005). And in terms of sales, the PS3 has sold more consoles than the 360 did at the near-two year mark.

$350, $450 wouldn't be bad though ($50 price drop).

Roto13 @ Sep 6th 2008 10:27PM

I think the cheapest PS3 should at least be as cheap as the most expensive Xbox 360.

Eggy @ Sep 5th 2008 9:50AM

Yawn. Dropping your prices so often is a sign of weakness.

Saeth @ Sep 5th 2008 10:08AM

and completely cutting out key features of your only SKU and giving you a bigger harddrive to try and make up for it isn't desperate?

HAAS599 @ Sep 5th 2008 12:14PM

no, it isnt actually.

I'm assuming your talking about backwards compatibility and Sony knows that 99.99999% of the people with a PS3 will already have a PS2 so its not that big of a deal.

Tez (PSN: Tezasaurus) @ Sep 5th 2008 12:14PM

I'm assuming you're talking about backwards compatibility. It's not a key feature. It might be for a few people (you, apparently, since you seem bitter about the decision), but Sony has said their research finds that not only is it not a major selling point of the PS3 but not that many people even use the BC.

It was a big deal for me when I got mine, but I barely ever take advantage of the BC, I find. If it was such a huge incentive for people, do you really think they'd cut it? They are still making PS2's so it's not like it's costing them a fortune to produce the chips.

Popfrogs @ Sep 5th 2008 10:49AM

Hey, be nice to the Arcade model, it can't help it if it's poor.

cronos12 @ Sep 5th 2008 12:33PM

Yeah, No one wants backwards compatibility... Nor do they want rumble in their controllers... wait... they do? Oh... Well, we can just change that later.

If you think Sony dropped BC because people didn't want it, you're a blind fanboy. They dropped it because it added to the cost of the machine.

Doesn't bother me much because I do still have my PS2, but don't kid yourselves on the reasoning behind it

Atomu @ Sep 5th 2008 3:48PM

Don't get your panties in a bunch.

Noone said that the reason Sony cut BC because it wasn't wanted. They just said that they can justify cutting it because it is not a major selling point. As you've proven in your own post, pretty much everyone has a PS2 already. Don't be so quick to jump up and bash people for things they didn't say.

Of course it was cut to save money. It was cut, and noone really cares. I enjoy my BC for a few games, but my ps2 is still connected to the TV as well.

dicknjane @ Sep 5th 2008 4:00PM

um, a price cut this big is a sign of a knife being stabbed through sony's heart. sorry guys, sony just lossed the sept - feb NPD's.

DrunkRaba @ Sep 6th 2008 1:39AM

pfft, a price cut like this as well as the statements this year from Microsoft show that they are scared of the PS3. It is more expensive and is outselling the 360 in Every Major Market of the world fairly consistently.

Plake0815 @ Sep 5th 2008 9:50AM

so the BreakBox PleasFixMe has better online gaming??? only to pay for it doesn't makes it better i thought... RRoD FTW ^^

SEND ME MY GODDAMN EMAIL!!! @ Sep 5th 2008 12:25PM

lessthan12parsecs @ Sep 5th 2008 10:00AM

My XBOX360 was a gift, and after the RRoD and XBOX Live customer service screwing me over with my account and MS points...I gave up on it.

Then I bought myself a PS3....WOW. I wish folks would take a chance to try out both systems before they bought 'em...PS3 would win hands down.

lessthan12parsecs

NegativeZero @ Sep 5th 2008 10:16AM

I in fact own both consoles and my 360 gets much more play, i can't stand putting a game in the ps3 then 10 mins to install, then another 5 mins to download the update for the game and then another 5 mins to install the damn update. I just wanna get in to the game but have to sit around watching a damn progress bar. I also hate shaking my controller like a maniac all of a sudden in a game, afraid it might fly out of my hands and smash my LCD like a wiimote.

King JMY @ Sep 5th 2008 10:42AM

Oh yeah, of course, no 360 games have updates. Also all of the games that came with the install (that were cross-platform) loaded 3-4 seconds faster. If you're going to be picky about time, those 3-4 seconds add up.

Devin @ Sep 5th 2008 12:24PM

Negative (ironic),

How many PS3 make you install onto the HDD? Also, for the ones that do, 10 minutes? I think your bias is causing you to say things that aren't true.

As for the loading times, yes there is couple seconds of not having to wait and it does add up, but the main thing is less in-game loading or pop-ins (hints GTAIV/Oblivion on 360). The game runs more fluid.

Bob @ Sep 5th 2008 12:14PM

With the PS3 only like 4million sales behind 360, I don't see how they can be soooo arrogant epically with all these amazing PS3 titles coming out. 360 has..Gears 2...and...Fable 2...yay!!!

This to me says "Shit guys, the PS3 is catching up fast, we have to drop the price in order to TRY and keep 2nd." But its not going to happen. The 360 only has 2 markets; US and Europe. Japan couldn't care less about the 360. In the end, regardless, PS3 will prevail.

Resistance 2, Killzone 2, LittleBigPlanet, and so many other great exclusives. Woo!!!

Arnon @ Sep 5th 2008 5:03PM

Um to me it says "Hello, casual gamers! Welcome to the 360!".. it also says something along the lines of "We're preparing for the Holiday season..

And there's a list of games on the 360 as well coming out this year..

Also, Japan really doesn't care about the PS3 as well.. HD consoles just don't sell in Japan.. s'all about handhelds.

Chris @ Sep 5th 2008 10:01AM

Disappointment is only $199 away. Now you can buy a 360 and a replacement for when you get the RROD. Brilliant! I would hope their console sales would be high when they have that many repeat buyers and system failures.

I'm sticking with the better system, the PS3. See you on the SOCOM beta this weekend.

Eric E @ Sep 5th 2008 10:03AM

So for comparable $400 80gb ps3 i can get:
-Elite w/ Headset and 40GB more (but thats the most you can get), Pay monthly, no BluRay or Wireless
-std model 20gb less + $90 wireless,Pay Montly and still no BluRay
-No HDD for half the price, and spend most of that on a 20 or 120 HDD or Wireless or HDDVD add on

Chohnson @ Sep 5th 2008 10:04AM

Bottom line is the average soccer mom is going to go to the store this holiday season and see 2 prices. $199 for the cheapest xbox and $399 for the cheapest ps3. Which do you think they will choose? Sure the arcade is pointless to buy imo but that doesn't mean it won't be bought. You can bring up all you want about the ever falling stats of RROD (that still happening?) But the average mom/dad isn't going to know about it and therefore isn't going to impact the decision when buying. Even IF the salesperson somehow manages to steer them away from the arcade version, the premium xbox is still 100 dollars cheaper. I'm not sure on the stance of the Elite though. I am not sure how a new color and 60 more gigs = 100 dollars to MS. I say this as an owner of both next gen systems.

Eric E @ Sep 5th 2008 11:16AM

this is why sony needs to air a commercial showing the diff. MAC vs PC style maybe.
When people come over and i show them the wireless Media Center capabilities, all the files i throw on my HDD that just play, the PS Eye and games, Folding at home, video store.
They never knew, some people things its just a HD Wii w/ a blu Ray player for twice as much, or just a 360 w/ a Blu Ray player.

Aex @ Sep 5th 2008 12:24PM

The Average Mom or Dad is going to buy a Wii :p

Duh~

Dahk @ Sep 5th 2008 1:16PM

Apparently, the new fad is... HOCKEY mom.

kentuckyfried @ Sep 5th 2008 9:56PM

sony's marketing team for the ps3 is doing an awful job...they should fire the entire department and then steal whoever Apple is using.

Khaled @ Sep 19th 2008 7:50AM

Haha yeah now they are all hokey moms!

Stinkweed @ Sep 5th 2008 10:06AM

Why is it that whenever a post goes up about the the P2/3 and ins like blue ray and wireless, they forget to mention things not included like component cables and a headset. I knew when I opened my MGS edition PS3 i was going to be without a headset, but component cables missing?

Popfrogs @ Sep 5th 2008 10:53AM

Yeah it's a puzzler why they don't include a $10 hdmi cable at least.

Eric E @ Sep 5th 2008 11:16AM

last thing i need is another set of component cables, i still have my ps2 ones that work if i wanted them, Should use a HDMI if you have an HDTV and Composite if you have a CRT.
Who has Enhanced Def TV's? Who wants a 1080p player, but doesn't want to use HDMI to hook it up?
and Extra HDMI would have been nice, but i already have spares and prefer the memory card slot or extra USB ports that came w/ my 60gb instead of wasting money on that.

Devin @ Sep 5th 2008 12:34PM

How about so they can keep the price down and make as much back on it as possible and within reason.

Reason being, I use my Motorola Bluetooth headset (got it online for $10) that I already had for my phone and anyone can purchase a HDMI cable at monoprice.com for ~$10 after shipping.

Vcize @ Sep 5th 2008 2:31PM

Eric, many people have TVs that will do 1080p through component.

Also, as far as that cheap HDMI cable goes, keep in mind that the typical consumer that doesn't see the pitfalls of the Arcade model 360 is the same type of person that doesn't know you can get HDMI cables for sub-$10 online, and instead sees them for $100 at Best Buy. So to them, a PS3 is fairly gimped with what it comes with as well. Sony should've included the cable if for no other reason than to make sure average joes didn't think they had to add another $100 to the price of the PS3 just to hook it up.

stinkweed @ Sep 6th 2008 1:39AM

So again, it is surprising that it assumed that people buying a PS3 arleady own an PS2 AND have purchase a set of component cables that they can use. As for HDMI, when you go to a store to make a 500 purchase, you aren't going to wait to get a 10 dollar cable shipped from somewhere. Ditto for a headset. Consoles should be plug and play.