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RUMOR: $100 PS3 price cut by October?

We're not even going to bother filing this in the rumor section. This one gets crumpled up and thrown directly into the "outbox"... the trashcan. Why? Because of the PS3Fanboy Rumor Rules of Thumb (PS3FBRRoT): anonymous sources, little known news source, and really-out-there claim preceded by an actual recent announcement. This NetMunch blog stinks of all three of these rumor debunking prerequisites.

First up, they claim that following the drop of the PSP's price (an actual recent announcement), sources say (anonymous sources) that the PS3 will get a price drop in October of $100 (really-out-there claim). While that would pit them directly agains the 360 Elite which has been taking a bit of a media beating in lieu of Sony for a little bit, that's a pretty large price cut for so soon into a console's life. Unless manufacturing costs have decreased dramatically and Sony starts pulling in a profit per console, we don't see this happening yet. At least, not $100. Maybe $50. What do you guys think?

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1. In the past consoles that lauched with a $300 price tag, could only hit the mass market when the price had dropped to $200. To get to that sweet spot Nintendo has to cut the price of the Wii with $50, Microsoft can get there with a $100 price cut for the Xbox 360 Core version, but Sony has to cut the price with $400 since they have taken the 20GB SKU off the market. If Sony were to make the PS3 $100 cheaper each year, the PS3 would only begin to be affordable to most consumers in 2010/2011 which would be far too late to make the PS3 a household commodity like the PS1 and PS2. To get to $300/200 and keep sales momentum up, Sony has to cut prices a lot faster than the competition. I definitely expect to see a $100 price drop in October.

Posted at 2:33PM on Apr 6th 2007 by ymmv

2. What happened to when they used to throw pack in games first, the do a price drop? ahhh the good old days.

Posted at 2:35PM on Apr 6th 2007 by Jon

3. Sony can't afford to throw in a few freebies to make the price acceptable, since the PS3 is prohibitively expensive for most folks. If you can't afford to spend $600 for a games console in the first place, a free game won't change your mind. Sony has to sell, sell, sell the PS3 and the first thing they have to do is get the price down.

Also keep in mind that the Xbox 360 will get a price cut just before the holiday season. Sony has to keep up with MS. They can afford to be more expensive because of the perceived added value of the Cell processor and Blu-Ray drive, but they don't want the price gap to widen. So if MS finally cuts the price, expect Sony to follow ASAP.

Posted at 2:44PM on Apr 6th 2007 by ymmv

4. @ymmv

What are you talking about? A console doesn't need to have a $200 price tag to be succesful. PS3 will never, and could never be even $300 with the exception of it's last year of life. Even then, I highly doubt it.

Sony is losing around $150 per 60g PS3 sold, theres no real savings to pass on to the consumer just yet. The prices of these systems are a reflection of the costs to the manufacturers, no retailer makes a profit off of any of the systems so the price you see is the price it takes to manufacture assuming they're not taking a loss.

Any price cuts or bundled games seen now are mostly due to retailers who are deciding to offer a temporary sale in order to bring customers in. (AKA. Lead Loss) Most retailers recoup the loss through attachments or other items. So things like the UK price cut are not indicative of any changes.

That being said, the chances of a $100 price drop is unlikely unless Sony has been able to reduce the costs to manufacture. If Sony can shave off a possible 80-100 dollars off manufacture costs by removing the emotion chip, strengthing ties with their suppliers I could see a $100 price drop before Christmas in order to be amazingly competitive with the Elite. However, keep in mind, they may be trying hard just to stop losing money on what they manufacture.

Posted at 2:58PM on Apr 6th 2007 by Taylor B

5. A drop like this is hardly unprecedented. XBox1 and PS2's first price drops were both $100, and their launch price was $300 - making it a full 1/3 drop. For XBox, that drop happened only 6 months into its launch, while with PS2 it was about 1.5 years in. Oct 2007 for PS3 would be right in the middle of those dates, and it's in a hell of a lot more need for a price drop than the PS2 ever was.

I don't know why people are so convinced Sony won't drop the price because it would make them lose money. They were committed enough to lose money at launch - why not now? Maybe there's a limit to how much they want to lose with each sale, but at some point they've got to suck it up and focus on the long-term success of this thing.

So no, a $100 price drop this year wouldn't surprise me, even though it doesn't sound like this rumour has any real basis in fact. $100 is pretty much the bare minimum they can drop it to make an impact. A -$300- drop would surprise me a little more, but... God knows they need it.

Posted at 3:01PM on Apr 6th 2007 by Chris Putnam

6. I don't see MS dropping the price of their system at this point. They've already introduced the Elite fairly recently at 479.99. To reduce the price of their premium package would create a discrepancy in value of the Elite (Which is already an issue I might add). If MS does anything they'll probably wait through Christmas, and cut prices a few months after, possibly in Spring.

If they do manage a price cut they'll have to apply it to the Elite as well, and well, I imagine thousands of early adopter complaints if MS drops the price a few months later after introduction.

Posted at 3:04PM on Apr 6th 2007 by Taylor B

7. I just don't see how Sony cannot lower the price. I mean even at $500 I don't see it selling any better then it is now. They may need to just start taking a even bigger lose in production cost or they could have even bigger problems.

Posted at 3:05PM on Apr 6th 2007 by coyurtney

8. It isn't unsubtantiated...its just PISS POOR blogging by sites like netmunch...give your sources bloggers!

I would imagine that this blog re picked up the CNN Money analyst story from March (if you track google news by PS3 you'll see that a couple of blogs including PCN put that out again yesterday where they quote a CNN article (but don't link to it!)

http://www.ps3center.net/story-363.html?PHPSESSID=f986dbe872a07d71b5faf91c99d10864

I dug around CNN and this here is the basis of the rumour:

http://money.cnn.com/2007/03/20/technology/personaltech/playstation/index.htm

Here is the text:

PlayStation 3 price cut may be ahead
Sony game console's hefty price tag has drawn criticism; Goldman Sachs analyst expects worldwide price reduction of $100 later this year.
March 20 2007: 9:20 AM EDT

NEW YORK (CNNMoney.com) -- Japanese electronics giant Sony may cut the price of its PlayStation 3 by $100 worldwide in October, according to an analyst with Goldman Sachs.

Yuji Fujimori wrote in a note Tuesday that lowering the cost of the game console, which competes with Microsoft's (Charts) XBox 360 and Nintendo's (Charts) Wii, will not undermine the unit's long-term profitability.

The PS3, criticized by consumers and industry watchers for its high price, can cost up to $700, although the basic model retails for $499.

"The PS3 price has long been cited as high," Fujimori wrote, noting that cutting the price of game consoles has historically quadrupled volumes.

Fujimori sees simplification of design aiding PS3's profitability as well, noting Sony's (Charts) original PS began with 700 components and concluded with 200, while the PS2 started with 2,000 parts and finished with 600. The PS3 prototype had 4,000 components but now a shift to around 2,000 is in the pipeline.

Earlier in March, press reports in Japan said Sony is planning to introduce cheaper microprocessor chips for its PS3 to help bring down the price.


Posted at 3:09PM on Apr 6th 2007 by Colin

9. WOW, even if it was true, how would people spin this? would they say that, this is what they've been waiting for? (because we all know how people feel about the price) or will people say that, it's doing so bad that they are trying to give them away?
oh well, lets just hope for the best.

Posted at 3:43PM on Apr 6th 2007 by JayD-1K

10. If they wait until November and time it as a 1 year anniversary drop in price I can't imagine that would get negative spin.

Posted at 3:52PM on Apr 6th 2007 by Colin

11. I think a drop of $100 with the additon of MGS4 and FF13 to the library would make the holidays a lot merrier for Sony's PS3 sales. If they can get the 60gb within $20 of the elite, it will definitely cause people to look a little more closely at the PS3 if they were in the market for a 360.

Posted at 4:51PM on Apr 6th 2007 by mccomber

12. I recon this will be the minimum, as Sony need to start increasing the sales fast. By this time, all of the consoles will probably have the smaller cell processor, which will have brought the cost down. The emotion engine will also been removed, which will mean that Sony's loss will probably not increase with this large price drop, maybe even decrease. This price drop will probably co-incide with Killzone 2, and Uncharted and maybe some other big hits. This could potentially be an attempt to take away the thunder from Halo 3, which will probably release around that time. In truth, I think that this will come before GTA IV, as if the 360 is so much cheaper, then many people will turn to the 360 for their GTA goodness.

I can also see a redisgn coming at the end of 2008, as that will be when Sony introduce the even smaller cell, and of course the power supply can be removed, decreasing the overall size. This will probably coincide with FFXIII in the US.

Posted at 5:39PM on Apr 6th 2007 by Adam

13. 100$ yeah right! Even if it happens its more like a 50$ price cut given they boosted the price 50$ in Canada!

Posted at 6:21PM on Apr 6th 2007 by jam_jam

14. jam_jam

The price went from 660 to 700...an increase of $40 not $50.

The Canadian dollar has weakened since the PS3 price was first announced...Sony did us a favour by holding the price to below US prices during launch (lowest price in the world except Japan?).

The current price at 699.99 at today's exchange is $608.58 Well within exchange rate anomalies of the US price.



Posted at 7:58PM on Apr 6th 2007 by Colin

15. I believe it was Hong Kong that had the cheapest one.

Posted at 9:13PM on Apr 6th 2007 by Dahk

16. From a purely objective standpoint. A price cut of $100 is feasible and probably will happen on the one year aniversary of the PS3. Expect the 60gb PS3 at $499 for the next holiday season. Here's a few reasons why:

1) The removal of the 20 GB model foreshadows this move.

2) The BluRay drive is the most costly component of the PS3 at over $300. The price of this component will drop dramatically over the next year. The only thing keeping the price of this part high is the continuing format war. If HDDVD was out of th epicture the price would drop even faster as more companies would start producing BluRay players in greater quantity.

3) 65nm Cell chips will be readily available and further part reductions will reduce cost by a significant ammount.

4) Sony knows the price is too high but because of the component costs the price had to start off where it is. The price reduction strategy and price cuts for th enext 5 years have already been written and planned.

As for the 360. Microsoft can't reduce the production price much more. The 360 usses the cheapest parts MS can find already, there isn't much more room to go. They are already forcing their manufacturing suppliers to say FU and cancel thier contracts. You can't sell something that nobody wants to make. If Microsoft drops the price they will just lose more money. At the rate Microsoft is buring through funds they simply can't afford to continue taking billions in losses from the gaming division for much longer.

Posted at 10:25PM on Apr 6th 2007 by Iridium

17. $100 price drop - makes sense!

1. Lower manufacturing costs by reducing components such as the PS2 emulator chip, lower component costs such as lower hard drive costs as well as blu ray lasers since production is ramped up. If Sony can make slight modifications to the components this early in the production cycle, they sure will have enough "slack" to play with pricing
2. KISS (Keep is Simple Stupid) - reduce costs by "phasing out" the 20GB model to standardize production and ...#3
3. If Sony can balance the lower production costs, take advantage of a simplified SKU (60Gb only) and time the price drop around a plethora of new title releases, then they can surely afford the $100 price drop.

Besides, they are losing more on the 20GB model as it stands now. By significantly reducing production of the 20GB, lowering manufacturing costs and timing a price drop around a wave of new titles and the (strangely early) holiday shopping season, the $100 price drop will end up being rewarding for Sony this year. The Xbox 360 elite is only going to make a better case for Sony...and I am a Xbox fan as well...as a PS3 fan.

Posted at 11:01PM on Apr 6th 2007 by saccorator

18. With a $100 price cut, and Ratchet & Clank FUTURE coming out around the same time, I might...MIGHT begin to consider saving up for a PS3.



Posted at 5:13PM on Apr 7th 2007 by Hirsbrunner

19. I'm not claiming this as truth, just flame to the fire, but I was at Gamestop today in Brooklyn, NY and one of the counter people said that the PS3 was going to get a $100 price drop on April 29th.

Not claming this as truth, just reporting what I heard.

Posted at 8:24PM on Apr 8th 2007 by kuebby

20. Here is my prediction. Sony needs to drop it's price in order to remain among the leaders in console gaming, and the quickest and easiest way to do this is to eliminate the blu ray function. When they finally come to the conclusion that people are buying a console (Wii, 360) for games not movies, it will become a clear choice.

Posted at 5:41PM on Apr 9th 2007 by cameron

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