So why not $1,500?

[AV_Integrated]

This is a question that has been bugging me. I mean, I know that $500 and $600 is a good bit to spend on the PS3 to start off with, but why wouldn't Sony go ahead and charge a good deal more?

It seems that about 75%+ of people in line may have JUST been there to resell them. I spoke with a lady today (about 50 years old) who said that she camped out for 3 days at Wal-Mart to get a PS3. She sold it for $1,300 (kind of low) and was excited for a great Christmas. The first guy in line at Wal-Mart sold it for over two grand!

But, why doesn't Sony just say F'-it! Go ahead and charge $1,500 for the first few hundred thousand units. Make some serious profit that can be channelled back into the company and allow for rapid price decreases on the next consoles that are released. It isn't like there aren't enough buyers out there willing to pay that much and it isn't like they have some major surplus of units sitting around in warehouses.

So, why not?

I understand that this would have meant that I would not have been able to get one at EB/GS early on, but I really would understand that. But, call it 500,000 units sold while making a PROFIT of $500 a console instead of selling them at a loss of $300+ a console would equate to a 400 million dollar revenue swing with 250 million of that being profit that can be applied to future sales.

Would it cause a certain amount of turmoil? Yes! Absolutely! But, when rapid price drops followed within a few months bringing pricing down by over 50% seems like it would get a lot of continued press and would continue to spark more and more interest in the console.

I'm not sure I get why Sony would not follow supply and demand tactics for an initial release with a near 100% guarantee of sell-out regardless of price.

[iceman]

I had this idea too
But it would probably be bad for Sony in the long run.. Sony would look bad and greedy...

[BTBuck1]

Sony catches enough hell from all the haters out there...adding fuel to the fire is probably not a good idea.

[Dave]

I dont think this will be OK
After all SONY must take the charge this time to calm down the people because of the delays.

[theknub]

what about all the companies that do price matching? what prevents someone from buying it, returning it in a few weeks, and purchasing another for cheaper?

i understand the reasoning here. but short term, this is a blip on the radar. the ps3 is here for the long haul, what's 400k units when they hope to sell say 20 million+? doing that now, especially at a launch when they want the public to uptake some of their new technology is a bad idea IMO.

[JTK]

Originally Posted by AV_Integrated

This is a question that has been bugging me. I mean, I know that $500 and $600 is a good bit to spend on the PS3 to start off with, but why wouldn't Sony go ahead and charge a good deal more?

It seems that about 75%+ of people in line may have JUST been there to resell them. I spoke with a lady today (about 50 years old) who said that she camped out for 3 days at Wal-Mart to get a PS3. She sold it for $1,300 (kind of low) and was excited for a great Christmas. The first guy in line at Wal-Mart sold it for over two grand!

But, why doesn't Sony just say F'-it! Go ahead and charge $1,500 for the first few hundred thousand units. Make some serious profit that can be channelled back into the company and allow for rapid price decreases on the next consoles that are released. It isn't like there aren't enough buyers out there willing to pay that much and it isn't like they have some major surplus of units sitting around in warehouses.

So, why not?

I understand that this would have meant that I would not have been able to get one at EB/GS early on, but I really would understand that. But, call it 500,000 units sold while making a PROFIT of $500 a console instead of selling them at a loss of $300+ a console would equate to a 400 million dollar revenue swing with 250 million of that being profit that can be applied to future sales.

Would it cause a certain amount of turmoil? Yes! Absolutely! But, when rapid price drops followed within a few months bringing pricing down by over 50% seems like it would get a lot of continued press and would continue to spark more and more interest in the console.

I'm not sure I get why Sony would not follow supply and demand tactics for an initial release with a near 100% guarantee of sell-out regardless of price.

It absolutely would not work.


It's one thing for crazy hyped up people to get into bidding wars on Ebay and screw themselves, but if Sony had come out and charged that much for the PS3 upfront, it would have been a disaster for them.

[dialog_gvf]

Sony has to do a fine balancing act between pricing for the early adopters and not subsidizing them too heavily against the perceptions in the ultimate mass target audience and keeping them interested for when the prices do come down to their level.

If Sony had charged what the market will bear, the masses may have felt the price would NEVER get to their price point, and they might start looking elsewhere for their next-gen fix.

I wonder if announced pricing step-downs might have worked? Say, $999 until the end of the year, then $799 for next two months, and then settle to regular $599 pricing. That would actually send a message that Sony was aggressive in getting the price down. And $599 might appear to be a bargain relative to the early adopter price. Yet, they would actually be charging far more than originally planned.

Gary

[JTK]

Originally Posted by dialog_gvf

Sony has to do a fine balancing act between pricing for the early adopters and not subsidizing them too heavily against the perception of the ultimate mass target audience and keeping them interested for when the prices do come down to their level.

If Sony had charged what the market will bear, the masses may have felt the price would NEVER get to their price point, and they might start looking elsewhere for their next-gen fix.

I wonder if announced pricing step-downs might have worked? Say, $999 until the end of the year, then $799 for next two months, and then settle to regular $599 pricing. That would actually send a message that Sony was aggressive in getting the price down. And $599 might appear to be a bargain relative to the early adopter price. Yet, they would actually be charging far more than originally planned.

Gary

Still a mistake. They're in 3DO territory, and then some, with pricing like that.

Look, we all know what this hardware is and that the PS3 is "more than a game console" but you all are arguing from an AV/HT standpoint, not a gamer's standpoint.

Their primary marketplace is still the gamers, and the gamers would not pay those kinds of figures for a game console.

People *****ed and moaned for months about $499 and $599 but ponied about anyways, as we've seen here this past week and in Japan the week before.


Digression:
I'm starting to really believe that these shortages are almost deliberate, to play a game of supply and demand.

I just think there's no excuse for a major manufacterer to launch a major product and not have enough supply to meet demand, or fairly close to it.

MS did it last year and it was inexcuseable and Sony did it now and it's equally inexcuseable.

Look at Nintendo: You've never seen them yet have a crazy "shortage" and they had plenty of Wii's ready to meet the hype and high demand.

People aren't getting robbed and shot over Nintendo Wiis. You aren't seeing crazy scalp jobs on Ebay for Wiis.

Nintendo did it right yet again. This is the way it's supposed to be done.

[Spankey]

So, why not?

Not every person who has bought a PS3 is going to Ebay it. There are only a select number of people willing to be fleeced to have the game right now. Sony knows the overall market. I would buy and use the $499 player. Once the shortage is gone, the price will be where it needs to be.

[Kenshiro]

Originally Posted by JTK

Still a mistake. They're in 3DO territory, and then some, with pricing like that.

Look, we all know what this hardware is and that the PS3 is "more than a game console" but you all are arguing from an AV/HT standpoint, not a gamer's standpoint.

Their primary marketplace is still the gamers, and the gamers would not pay those kinds of figures for a game console.

People *****ed and moaned for months about $499 and $599 but ponied about anyways, as we've seen here this past week and in Japan the week before.


Digression:
I'm starting to really believe that these shortages are almost deliberate, to play a game of supply and demand.

I just think there's no excuse for a major manufacterer to launch a major product and not have enough supply to meet demand, or fairly close to it.

MS did it last year and it was inexcuseable and Sony did it now and it's equally inexcuseable.

Look at Nintendo: You've never seen them yet have a crazy "shortage" and they had plenty of Wii's ready to meet the hype and high demand.

People aren't getting robbed and shot over Nintendo Wiis. You aren't seeing crazy scalp jobs on Ebay for Wiis.

Nintendo did it right yet again. This is the way it's supposed to be done.

Economically speaking, its better to have a large demand and small supply then a large supply and small demand.

[dobyblue]

Originally Posted by sltmag

Not every person who has bought a PS3 is going to Ebay it.

This is so very true. I haven't seen more than 20,000 consoles listed on eBay (I think it's currently under 10,000) which means that you could estimate roughly 5% of people bought the PS3 to resell it.

[AV_Integrated]

I do agree that there have been complaints, etc., about current pricing, but I still don't think it necessarily requires Sony to forfeit millions of dollars in profits for a console that is a guaranteed sell-out.

This isn't 3D0. This is Playstation. The brand name is what will drive initial sales. I am not talking about a number that is going to hurt initial sales. Whether it is $1,500 or $1,000 - the point is to find a number that is in line with initial market demand, not so low that the market gobbles up consoles to resell them at $1,500 each on eBay.

It also leaves more room for more dramatic price drops in a short run time span instead of having to wait years.

Sony does not OWE anyone because they had delays. The only one they are looking out for is their shareholders. Now, part of that is reputation. But, many people already aren't interested in the console because of the price tag. Yet, it sold out. It sold out quickly. It sells online for far more than MSRP. Yet, it is not Sony getting those profits, nor much going to stores. It is second hand dealers...

I'm just not sure how bad it would have been for Sony overall. Plasmas started at $10,000 for 42" models. Blu-ray is at a grand for early models as well. This is far more overall technology and it still isn't at a price point which may make sense to J6P, but it is in huge demand with people willing to happily dish out $600 and then go buy some games. A few hundred more and they prevent millions in losses.

Short term?

Sure! But, it then helps them to fund assembly lines, product support, quality assurance, etc. There are hundreds of thousands of people willing to wait out an initial release (first year) for bugs to be ironed out and more software to become available. I personally feel that Sony and consumers would have benefitted from a move like this in the long term.

Didn't happen of course.

[dialog_gvf]

Originally Posted by JTK

Nintendo did it right yet again. This is the way it's supposed to be done.

So, start with a design cheap and easy to make in mass quantity? For the PS/3, quite simply, that would defintely meant no Blu-ray drive.

We wouldn't be debating the PS/3 (or Blu-ray probably) now if Sony had done it "right".

Gary

[dialog_gvf]

Originally Posted by dobyblue

This is so very true. I haven't seen more than 20,000 consoles listed on eBay (I think it's currently under 10,000) which means that you could estimate roughly 5% of people bought the PS3 to resell it.

Or people are waiting for the supply on eBay to dry up a bit before dumping. 10000 is a heck of a supply at one time, even if the product is in demand.

Gary

[JTK]

Originally Posted by dialog_gvf

So, start with a design cheap and easy to make in mass quantity? For the PS/3, quite simply, that would defintely meant no Blu-ray drive.

We wouldn't be debating the PS/3 (or Blu-ray probably) now if Sony had done it "right".

Gary

Heh, that's true.

I was referring to supply/demand and Nintendo simply being in a position to a launch and have enough units ready to field a lot of the demand upfront.

Now we'll see what the follow through is like.

Black Friday is critical. I hope Sony can close the gap this week signifigantly. The lead up to Christmas, as a whole, needs to be signifigant.

I think it will be, simply because Sony knows it HAS to be.

[dobyblue]

Originally Posted by dialog_gvf

Or people are waiting for the supply on eBay to dry up a bit before dumping. 10000 is a heck of a supply at one time, even if the product is in demand.

Gary

They better not wait too long with another 600,000 units coming in time for the holiday season.

[dialog_gvf]

Originally Posted by JTK

I was referring to supply/demand and Nintendo simply being in a position to a launch and have enough units ready to field a lot of the demand upfront.

Actually, so was I. Nintendo did it by going with a far cheaper and easier to produce and deliver design. That allowed them to logistically and financially to be able to produce a massive number of units for launch. I bet Nintendo actually breaks even on the console (at least).

But, for the PS/3 at $800 cost a pop, to have 4 million through launch would have meant Sony would be in the hole $3.2 billion and faced with up to a $1 billion loss after selling those units!

I'm sure Sony had a significantly lower cost and smaller subsidy in mind when it set the design. But, the 65nm process Cell didn't happen, and the laser diodes are still expensive and hard to produce.

At least the delay allowed them to time to ramp up 50GB disc replication capability.

Originally Posted by JTK

Black Friday is critical. I hope Sony can close the gap this week signifigantly. The lead up to Christmas, as a whole, needs to be signifigant.

I think it will be, simply because Sony knows it HAS to be.

The gap with the Wii?

I wonder if allowing the Wii to have the stage is actually beneficial. Those are sales not going to Xbox 360 too, and there is a big quantity of those left unsold. If the PS/3 can't have the sale, Sony should want it to go to the Wii.

I can't see how Sony could possibly managed to compete in terms of numbers with either the Wii or Xbox this year. As such, it would be much smarter to make sure those people that do get it are VERY happy. Put a ton of effort through Q3-2007 into building up the capabilities, and fixing issues. Drop the price in Q4. And flood the market next holiday season.

Now, I'm not saying they should turn off the tap. But, they shouldn't be in panic mode now. I can't see how it would help.

Gary

[JTK]

Originally Posted by dialog_gvf

Actually, so was I. Nintendo did it by going with a far cheaper and easier to produce and deliver design.

You are right and then some:

What they really did was they halted GameCube production a while back. That hardware was still lying all over the place.

All the Wii is, if you opened it up, is an overclocked GameCube. Seriously. They buffed up a couple of things in it, but it is essentially an overclocked GameCube.

You can get a new GameCube for $99 right now.


Watch this: If you had to buy an extra Wii remote controller thingie seperately, it's $50?

So if you take $50 out of the Wii's MSRP, you're paying an extra $100 for an overclocked GameCube.

Pretty clever by Nintendo. They never have taken a loss on hardware sales. In fact, they usually turn an almost immediate profit everytime. This will be no exception.

^^ This is how you do it.

That allowed them to logistically and financially to be able to produce a massive number of units for launch. I bet Nintendo actually breaks even on the console (at least).

At the very least. They'll turn a profit in short order for the reasons I spelled out above.

But, for the PS/3 at $800 cost a pop, to have 4 million through launch would have meant Sony would be in the hole $3.2 billion and faced with up to a $1 billion loss after selling those units!

I'm sure Sony had a significantly lower cost and smaller subsidy in mind when it set the design. But, the 65nm process Cell didn't happen, and the laser diodes are still expensive and hard to produce.

At least the delay allowed them to time to ramp up 50GB disc replication capability.

All true.

The gap with the Wii?

I wonder if allowing the Wii to have the stage is actually beneficial. Those are sales not going to Xbox 360 too, and there is a big quantity of those left unsold. If the PS/3 can't have the sale, Sony should want it to go to the Wii.

Irony: I know you've seen that MS propoganda on AVS and other places for months like "Wii wish you a Merry Christmas" with both the Nintendo and MS fonts and icons in one picture? I think the message there is pretty unmistakeable.

There is some truth to it, though: Disgruntled and impatient people that wanted a PS3 and couldn't get one will have money to burn in their pockets. Buying a Wii at half price as consolation prize is an easy call. Buying a 360 that has a year's worth of games on in it and titles like Gears of War is also an easy call to make.

You can buy both of those systems for the price of one PS3. That's common knowledge.

Short term: Sony is in the position to be hurt the most. They know that and have said they really don't care. They're thinking long term all the way.

Long term I think it's all coming back to them in spades.

I do think this next round in the console wars will be a lot closer and nastier and that's a very good thing, because competition forces quality and if we're really lucky, maybe some price drops and *gasp* real innovation past a gimmicky controller.

I can't see how Sony could possibly managed to compete in terms of numbers with either the Wii or Xbox this year.

They can't and they won't and they've never suggested that they would or could.

If you've seen a PS3 or used it, then you know I'm telling you the truth when I say: The PS3 is higher end product all the way. The 360 can't tie its shoes in terms of hardware.

The PS3 is going to be catering to a more "high end" and "sophisticated" crowd at least in the early goings, although obviously it's not being confined to that bunch.

As such, it would be much smarter to make sure those people that do get it are VERY happy. Put a ton of effort through Q3-2007 into building up the capabilities, and fixing issues. Drop the price in Q4. And flood the market next holiday season.

Not sure about a price drop but I definitely am confident in the rest of that.

The 360 has been out for a year and they haven't dropped their price.

The PS3 will have been out for a year by the timeframe you're talking about and they are more loaded in terms of technology: Why should they slash their price all of a sudden?

Now, I'm not saying they should turn off the tap. But, they shouldn't be in panic mode now. I can't see how it would help.

Gary

Agreed. It's way too early for anything like that.


Footnote:

http://www.hdtvpub.com/productdb/games/index.cfm

^^

If you take a look through there, you're going to be reminded of an "inconvenient truth" that MS has glossed over.

The first Xbox was capable of doing high definition for games and there were a handful of 720p Xbox discs out there. EA's 2006 baseball title being one prominent example.

But here's the real rub: Gran Turismo 4 was 1080i for the PS2. That's right. For 6-7 year old hardware.

That's why so many of us were convinced the 360 is really nothing more than Xbox 1.5. Now that I have the PS3 here, I can confirm that absolutely. The 360 is a nice system, but it really is just Xbox 1.5 whereas the PS3 is the full leap to the next level.

This is where Sony's best strength will come in again: Long term.

If you play PS2 games like God of War or Final Fantasy 12, you are going to be amazed to see how much juice the developers are cranking out of that "ancient" hardware. Those games look as good as anything you'd see at least on Xbox 1 and, in some cases, 360 games.

A year from now, the PS3 will start having some of those big name exclusives coming out, like Metal Gear Solid 4. Once you start seeing titles like that show up, systems will be flying off of shelves and a rushed price drop really won't be necessary.


It's really an overclocked Xbox and an overclocked GameCube vs. something truly next generation and completely new.