UPDATE FROM DIGITAL JOURNAL USER NEWS:
According to a tip from our user Allan the people who've had a chance to see the PS3 at a Tokyo gaming convention are not impressed. Check out his post: http://www.digitaljournal.com/article/37489/PlayStation_3_is_Unimpressive_and_Lacks_Innovation_Says_Game_Testers
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The price reduction comes on the heels of complaints launched by, well, the whole world. Up to now, the PS3 would cost twice as much as Microsoft’s Xbox 360 and Nintendo’s upcoming Wii.
Nintendo’s Wii has won the adoration of the whole world for its innovation and gameplay, and Microsoft gets big kudos for yesterday announcing it will roll out an external HD-DVD player (due out later this year) for Xbox 360 in an effort to compete head-to-head with Sony’s Blu-ray player in PS3.
Sony says it will drop the price of its basic PlayStation 3 model in Japan to 47,600 yen ($410 US), from an originally planned 59,800 yen ($515 US). That puts the PlayStation 3 in the same range as the combined basic Xbox 360 and HD DVD player in Japan, where the duo will sell for 49,600 yen ($427 US). No price cut announcements have been made for Europe or North American markets as of yet.
“It is negative for the short term because the company may not be able to sell enough consoles to cover an instant loss caused by the price cut,” Naoki Fujiwara, who oversees $720 million in assets at Shinkin Asset Management Co. in Tokyo, told
Bloomberg News.
Sony CEO, Howard Stringer, is relying on the PlayStation 3 to revive the company that has lost half its market value in the last six years.
But the development is peppered with problems, making a total revival easier said than done. Sony is forecasting that development costs for the PS3 will widen the game division’s losses this quarter, potentially taking the company up to five years to recoup — the last words investors want to hear.
Missing launch deadlines and cutting the 2006 global shipment target by half have also taken a huge toll on the reputation of a company that was once celebrated as a premium brand whose products were reliable and superior in many ways.
Furthermore, more than five million Microsoft Xbox 360 players have been sold worldwide since its introduction 10 months ago, giving Microsoft a big head start. Microsoft has also announced it will start selling a cheaper Xbox 360 in Japan for 29,800 yen on Nov. 2 — a brilliant PR move.
While Sony
does have a chance to save face
andthe company with its PS3, the console is still the most expensive player on the market — even after the price cut. I really don’t think Sony can afford to attempt to pass off its R&D and manufacturing costs to the consumer without it coming back to burn the company even more than it already has.
Perhaps a silly comparison — but one that illustrates this case well — which Sony could learn something is in the game of flipping houses: One cannot move into a neighbourhood, put huge improvements into an area where the market will not bear the cost of upgrades, and try and sell at double the amount. You have to watch your market and develop based on what is financially responsible, and realize you cannot pass off development costs just because you over-invested.
Sony has already been given clear signs and warning, but the company either isn’t listening closely enough, or it’s so neck-deep in crap there’s no way to pull itself out.
“The Japanese users and media would not stop saying a price tag of over 60,000 yen, including tax, was too expensive,'' Sony PlayStation boss Ken Kutaragi told reporters.
The PlayStation 3 will make its debut in Japan on Nov. 11 and in the U.S. on Nov. 17. Nintendo's Wii console will go on sale on Nov. 19 in the U.S. and Dec. 2 in Japan.
“It’s ridiculous to decide to cut the price before they start selling the PlayStation 3,” Yoku Ihara, head of equity research at Retela Crea Securities Co. in Tokyo told
Bloomberg News “They may cut the price again if sales don't go well.”
