The Playstation 3 launched on November 11, 2006 at the premium price of $599.99 ($499.99 if you can find the rare 20 GB unit). As a result of the expensive entry point of their newest system, Sony dropped the price two times during the first year of its lifespan. Thus, the Playstation 3 went from $599.99 to $499.99 and then $499.99 to $399.99 in 2007.
The current price tag of $399.99 is still too expensive for many. As a result, the Playstation 3 is lagging behind the Xbox 360 and Nintendo Wii in terms of hardware sales. Analysts and company heads have been calling for a price drop of the Playstation 3 since last fall. It won’t happen until this fall, however, due to the following reasons.
Sales Expectations
The Playstation 3 sold a little over 10 million units worldwide last fiscal year (from April 2008 to March 2009). Sony is planning to increase that figure to 13 million units. However, the Playstation 3 is actually selling worse in the United States so far when compared to last year. So in order to boost hardware sales to expectations, Sony needs to drop the price tag.
Holiday Season
Timing is everything when it comes to price cuts. Dropping the price of the Playstation 3 in the spring or summer will have little effect as video game sales are usually slower during that time of year. Thus, Sony should wait until the fall when consumers are more willing to open their pockets for the holiday season.
Clear Out Stock
A price drop isn’t as easy as many think. Sony losses money every time a Playstation 3 is sold. Their solution to this problem is the slimmer, cheaper model rumored to launch this fall. The so-called “Playstation 3 Slim” should allow Sony to drop the price without being too financially taxing. However, they must clear out the current models on store shelves. Cutting the price of those units could devastate the Playstation 3 business financially. Sony therefore had to wait until the current stock sells as much as possible before cutting the price in order to save as much as possible.
Lack of Killer Apps
Finally, the Playstation 3 has no killer apps this holiday season that will force many prospective buyers to buy a $399.99 video game system, especially not in the current economic condition. However, the Playstation 3 library is certainly strong enough to tempt many to buy the expensive system at a much lower price tag. Therefore, a price cut is necessary in the fall.
