E3 2006 - Will Sony pull a fast one?

[Anthony1]

Many people feel that at the upcoming e3 show in May, Sony will be forced to lay their cards on the table regarding the PS3 and whether or not it will actually be available for sale in the U.S. in 2006. Typically, if a system is going to be released in the U.S. in that calender year, then it is a known fact at the e3 show. Companies like Wal-Mart and Target and Best Buy need to know what products they are going to have on their shelves for the all important 4th quarter season. They need to know what Point of Purchase advertising displays they are going to need. They need to know what kind of marketing they will have to do later in the year, to best promote and take advantage of any launch.


The thing is, with the current situation that is going on with the Playstation 3, and it's cost to manufacture, and the issues of it's blue ray drive, etc, etc, I'm not so sure that Sony is committed to releasing this system in the U.S. in 2006. We have all heard the various reports of the actual cost of getting a PS3 to retail as being $800 or $900. We all know that Hardware manufacturers take losses on their hardware for the first several years. Typically, the most a company like Sony or Microsoft is willing to loose on a product is about $150. So if you believe the $800 or $900 senarios that have been thrown around, then it's pretty obvious that the PS3 would HAVE to cost more than $499.99. It would HAVE to cost more than $599.99.

While consumers are willing to pay more for must have electronic devices, (just look at the number of 360's sold on Ebay for ridiculous amounts) there is a limit to how much consumers are willing to spend, and there are long term ramifactions to any launch price structure that is used. There is also the matter of perception. The Xbox 360 price of $399.99, while higher than what most people were thinking ($299.99), it's still reasonable. It's palatable. A PS3 price of $499.99 is probably more than what most people would be willing to pay, but it is relatively reasonable, all things considered, and relatively palatable. You go beyond that $499.99 threshold, and things change. Perceptions change. The way the retailers position the product, changes, the kind of retailers that will carry the product change. Alot of things change when you get into the high dollar amounts similar to what the Neo-Geo and 3DO system launched with.


Don't get it twisted, Sony is still Sony. They will get tons of retailer support regardless, but a PS3 retailing for more than the magical price point of $499.99, does change the game. Of course, everybody at Sony is extremely well aware of this fact, and there isn't any question that they are caught in a pickle with this situation. The clock is ticking. e3 2006 isn't that far away. Decisions need to be made. Decisions that could affect the future profitability of Sony for a very long time.


So the question is..... Will Sony pull a fast one? Will they go into this e3 with a strategy of "PRETENDING" that everything is A-ok, and that the PS3 will launch sometime prior to Thanksgiving, in the neighborhood of $500, knowing damn well that they have absolutely no intention of releasing the system in 2006 with that great a loss per system sold. Now, you might be thinking that such talk is Oliver Stone like, and that I'm dreaming up some kind of conspiracy theory. That Sony has too strong of relations with companies like Best Buy and Target and Wal-Mart, to basically flat out lie to these companies and pretend that their product is right on schedule for a November 2006 launch for $499.99, knowing damn well they simply can't afford to take that great a loss on each system sold, and that as they get towards late August, they will have to come out with a major announcement, that the PS3 will unfortunately be delayed till Summer 2007.


BANK ON IT.

[heybtbm]

I think this post wins the award for "most conclusions jumped to".




I guess we'll all find out in May what the evil Sony is up to.

[Leo_A]

He's taking the award from himself then.

[DonMarco]

While consumers are willing to pay more for must have electronic devices, (just look at the number of 360's sold on Ebay for ridiculous amounts) there is a limit to how much consumers are willing to spend, and there are long term ramifactions to any launch price structure that is used.

Also factor in that it was the "it" thing for the Christmas season. That and HD TVs and whatever Best Buy liked alot. iPods. Who cares? Are you saying that the launch price should be higher? That if people were willing to spend $1200 on eBay that the MSRP should have been $999 for a xbox 360?

How much should a new video game system cost? It's certainly not to be determined by manufacturing costs or market value. How much would the PSP have cost if, IF, Microsoft had put it out?

[Anthony1]

He's taking the award from himself then.

Say what you will, but I predicted the Xbox 360 was going to release the week of thanksgiving before just about anybody on the planet. (normally consoles aren't released on the actual same week that Thanksgiving falls on)

[gepeto]

Back 10 years ago when the ps1 debut I paid high prices for import games to see the next big wow factor in the video game world but that was 10 years ago.

Now short of seeing and controlling real people on the screen I am not easily wowed.

I find it harder to shell out alot of money for a system. The 400 dollars that the 360 charged included perks and that soften the blow. It was a masterful marketing effort by microsoft. So for sony to release something at a high price point no perks would be a bad move. but hey the psp had perks.

I think sony thought it would lead the world in the switch to blue ray technology in a similar fashion that it had in the dvd era.

Now they can't lose face and back off of blueray. I bet if they could change the drive format without losing face they would. If it is released for 499.00 or more. I see shades of the Japan Psx fiasco.

[Sothy]

I hear the games will be on a new format called bio gelatin.

You have to ingest a package of pudding that comes in the game case then the ps3 takes a blood sample and plays the game based on Dna double helix information in your bloodstream. This is true though I have an inside source.

My dad built a cool system that plays every cd-dvd game from sega cd to xbox 360 but I cant show it to you because youll want one too much.

[Anthony1]

Now they can't lose face and back off of blueray. I bet if they could change the drive format without losing face they would. If it is released for 499.00 or more. I see shades of the Japan Psx fiasco.

I agree with Sony having backed themselves into a corner with the idea that the PS3 absolutely, positively, must have a blue ray drive. Because of all their boasting, and all their arrogance, and the smack they talked about the 360 having a regular DVD drive, they are pretty much forced to stick with blu ray, or look silly in admiting that Blue Ray simply costs too much to include it with the PS3.


Now regarding $499.99 or more, I have to really disagree with you on that. I agree on the "or more" part, but $499.99 for the PS3 wouldn't be a bad thing at all. In fact, I think most people expect the PS3 to cost $499.99. If it cost less than $499.99 it would be a suprise. If it costs more than $499.99, then yes that will be somewhat of a problem. There is a psychological barrior that exists beyond $499.99. $499.99 is a magic number when it comes to certain products. There are alot of high end electronics items that don't sell very well when they get beyond that $499.99 mark. If the PS3 were to retail at $599.99, I don't think that it would necessarily mean that Sony would be unable to win the No.1 spot, but any higher than $599.99 would pretty much eliminate their opportunity to be No.1 in the US for 3 generations in a row. At $599.99, it makes things very hard for them, but it's still conceivable that at some point they could have the No.1 market share even if they launch at $599.99. But one penny higher and you can forget it. Their Reign will end.

[dbiersdorf]

Anyone thinking Sony will release the PS3 over $700 is a moron. That's complete suicude, and history shows that gamers are not willing to shell out that much cash based on brand alone. The Saturn, Neo Geo, and Atari Jaguar all come to mind in over priced machines that have failed. And even those were moderately priced compared to the PS3 ramblings.

Regardless of Sony's belied that they are number 1 and will always be number 1 they aren't about to strip their core market from the perspective (the teens-college students). No one in their right mind would second guess their purchase on such a move.

Do I think Sony will suprise us? No. They will make the 2006 launch without a doubt, whether the hardware is ready to make that date is another question all together.

[Bojay1997]

Sure, the gouging on Xbox 360 showed that some portion of the population has more disposable income than they used to and are willing to pay outrageous amounts for a console, but you need to keep in mind that only something like 500k-600k 360s actually shipped prior to Christmas. It's not like millions of people were willing to pay the inflated prices. In reality, a very small portion of the population was willing to do it.

This thread is pure speculation. If the PS3 is $500, I believe it will not appeal to mass market buyers. Why you ask? Because to really get up and running, most people want a second controller and a couple of games. That puts the package price at around $650 which is above what most families will spend on a child at Christmas.

Sure, all the articles make it sound like Sony is screwed by the alleged high component costs, but the cost estimates for Cell and even the Blu Ray drives are high in my opinion. Sony developed or co-developed these technologies. They will be able to roll out production using economies of scale that Microsoft couldn't because it is not a hardware company. Sony has become price competitive with Panasonic and Samsung and other lower price manufacturers in recent years out of necessity and now does a lot of manufacturing in areas of the world with very low overhead and production costs. The PS3 will probably still cost more to make than the Xbox 360, but that will not be the factor that will push back a release if the release is in fact pushed into 2007. Frankly, Cell and Blu Ray will not be much cheaper in 2007 since it will still be Sony which will be the major user and vendor of both technologies.

Personally, I'm in no rush for the PS3 as my 360 still sits mostly unused as mediocre game after game is released. The first year or two of the PS2 was the same for me. I wish Sony or Nintendo or someone would finally get it right and actually develop some killer apps early in this generation, but I guess I'll just have to wait and see.

[InsaneDavid]

The other thing you also have to take into account is that this next hardware cycle SHOULD have a longer lifespan than the previous two. Companies have embraced online play and emulation. For example, the greatest excitement concerning the Revolution is playing 20 year old games - that many of us will play for ANOTHER 20 years.

A longer lifespan and more out of the box capabilities mean that a $500 - $600 spend in this case should last years longer than the $300 spend of years ago. Also if the lifespan is longer that means the installed base will be larger, the amount of units sold in games will be greater. So as time goes on the hardware manufacturer will make, say, three times as much game sales by taking a larger hit on the console price (and keeping it affordable for the consumer) than they would taking a smaller hit on the console price (making it closer to 1 to 1 cost to the consumer) - but never making those increased game sales. So eating that larger development gap on the hardware will pay off in the long run.

While consumers are willing to pay more for must have electronic devices, (just look at the number of 360's sold on Ebay for ridiculous amounts) there is a limit to how much consumers are willing to spend, and there are long term ramifactions to any launch price structure that is used.

That doesn't prove anything, when the PS2 launched we were clearing them at $2000 a pop on eBay the day after launch. All those over inflated eBay prices are is a reflection of Billy's mom not telling her spoiled six year old no, but she's not exactly a prize winner herself so she'll spend four times retail.

[Mayhem]

Say what you will, but I predicted the Xbox 360 was going to release the week of thanksgiving before just about anybody on the planet. (normally consoles aren't released on the actual same week that Thanksgiving falls on)

Maybe Microsoft took a left out of Nintendo's book and saw how successful it could be (the DS launched the week of Thanksgiving as well).

[jdc]

There are still many people who will sell their souls to own the latest gaming system and I think that it's safe to say that there are more people willing to go into debt over a new PS3 than there were for the 360......and the 360 didn't exactly sit idly on store shelves. Sony will try it's best to make Christmas. If it doesn't, then I don't think that it's the end of the world and they know it. Whenever it launches, and for whatever retail....it's going to sell well.

[gepeto]

I think that there is a barrier at a 499.99 price point.
I have a Very Very hard time shelling out 499.99 for a system with no games.

I believe americans in general have a problem with that price point. The industry consensus was that the 299.99 barrier was the magic spot. The only reason the 360 came off at 400.00 was due to the extras. Take away the hardcore gamers like us that have to have it during the launch and you get a bunch of people raising an eyebrow waiting for the price to drop and others that just can't afford it.

As far as companies that manufacturing it's own parts at a lower cost. I believe (and correct me if i'm wrong) that in the electronic world the price drops on technology when the masses are buying it or it is discontinued. Just because they manufacture their own parts doesn't mean it is all that cheaper. You save some but not as much until the masses buy it.

Prior to the ps2 launch dvd players and movies were expensive. When the ps2 sold millions dvd seem (to me) to go mainsteam. But the format was industry standard.

This time with blue ray sony is in a boat all buy itself.

Now if sony sell 15 million ps3 then we will see alot blue ray movies cheap dvd's. But until then if they release it this years as planned which I doubt heavy loses are expected.

I remember that sony was stating that the life expectancy of the ps2 was 10 years. I believe all the dancing this year by sony is to throw microsoft off. They experts mostly agree. What does sony know that 90 percent of the world experts don't? Talk about pulling a rabbit out the hat.

Number ones get knock off all the time. Sony is not invincible. They thought the psp would take people out of the handheld ghetto. Result = ds sales explosion.

The psx the total package I believe the price in japan was 999.00 Flop. Did anyone here pick one up? It looked sweet but at that price point it had flop written all over it.

[le geek]

Sony knows it has to show at E3 and big time. Playable games with final controllers on the show floor. While a non factor in Japan, the X360 is starting to look tastier and tastier assuming M$ can get the damned thing on the shelves...

HAXXOR Prediction: games will have slightly more polygons than X360 games, but will be missing anti-aliasing and will all play like previous gen titles with prettier graphics that while pretty look nothing like the "demos" shown last year.

BETAMAX Predition: the day after I buy an X360, Silent Hill 5 and Suikoden 6 will be announced as PS3 exclusives

Realistic prediction: Sony will lose marketshare. M$oft and Nintendo will gain marketshare. The playing field will be more even. Noone but videophiles and bachelors with disposable incomes will give a rats ass about High Def for at least two years, when prices will come down and the High Def DVD format will have stabilized.

Cheers,
Ben

[keiblerfan69]

I still think Sony isn't gonna go over 399. But who knows. All I know is that I don't like the prices going up and I am sure most of America doesn't either.

[Half Japanese]

I think this post wins the award for "most conclusions jumped to".




I guess we'll all find out in May what the evil Sony is up to.

+2000 meseta, and I'll throw in an extra 1000 for your title.



I like your style Dude.

[Anthony1]

I think that there is a barrier at a 499.99 price point.
I have a Very Very hard time shelling out 499.99 for a system with no games.

I believe americans in general have a problem with that price point. The industry consensus was that the 299.99 barrier was the magic spot. The only reason the 360 came off at 400.00 was due to the extras.

There are a number of psychological barries when it comes to prices. $99 is a huge barrier. $199 is a huge barrier. $299 is normally the magical barrier that you can't go past. There hasn't been a single successful console that has been priced above $299 that has succeded. Go back and examine gaming history. Every console priced above $299 has failed. Now with the Xbox 360, you also have the core unit at $299, so technically, if the 360 ultimately wins this war, then it technically isn't an exception to that rule, cause the core version did launch at $299.


Having said all of that, we are in a new era, a new economic situation, and prices of devices can be alot higher and still become mass market items. Of course, how much higher? How much higher can one really go beyond the old Magic price point of $299? Myself personally, I would say that $499.99 is the ABSOLUTE max that you can sell a console for, and have a reasonable chance of that console eventually becoming the clear cut market leader.


When I first found out about the 360 with the hard drive costing $399, I was completely shocked by that. I couldn't believe that Microsoft would risk such a sticker shock situation. But it turns out that they picked a relatively decent price to work with, at least at the start. They still have the core at $299 (I know the core makes no logical sense, but tell that to Joe Sixpack), and I think $399 for the premium package is within reason.

[CreamSoda]

He's taking the award from himself then.

Say what you will, but I predicted the Xbox 360 was going to release the week of thanksgiving before just about anybody on the planet. (normally consoles aren't released on the actual same week that Thanksgiving falls on)

Nah, I think you really just enjoy making LONG posts.

[kainemaxwell]

Let's cut the crap Anthony. Sony needs to show off what the PS3 can do by now or they may loose what momentum they're building with pre-sales and the hype machine.