you're Kaz Hirai, head of SCEA what do you do?

[Anthony1]

Ken Kutaragi and Kaz Hirai, have some huge decisions to make between now and about late August. Why late August you say? Because late August is the last time that Sony could announce a delay in America, without causing severe damage to their relationships with retailers. Obviously, Sony would blame it on unexpected, severe component shortages, probably some key component that unfortunately isn't easy to manufacture, or some other bogus nonsense like that.



Now, before we get into the scenarios that Kaz Hirai and Ken Kutaragi are going to be looking at, we have to understand a few things. No. 1, is the fact that if the PS3 is really going to have a Blu Ray drive, and if it's going to have a Hdd pre-installed, then the cost to bring a PS3 to market will be at the bare minimum, I said, MINIMUM, $800. There is no way it could possibly be manufactured for less than $800. So, we know that the cost to market is $800 per. So we have to take that into consideration. The other thing we take into consideration is the fact that they are likely to only have about 1.8 million systems to distribute worldwide prior to Xmas.


Now understanding those key factors, let's proceed with the scenarios facing Ken Kutaragi and Kaz Hirai:


Scenario 1 - Stay the course. Release the system worldwide, in very limited numbers. 1 million going to Japan, 800,000 to the U.S and Canada, and maybe a couple 100,000 to Europe. Sell this system for $499.99 in the U.S. and absorb a huge $300 hit per system, this of course would be a record loss for any electronics company to absorb per system. For every million Sony sells in the U.S. at $499 each, they loose 300 million. But you have no choice. You have to launch in the U.S. in 2006, and you can't come above $499.99. In Japan and Europe you price it alot higher, but in the U.S., you have to come in at $499.99


Scenario 2 - Release it worldwide, but sell it for $599.99, taking a $200 hit per system, still almost a record loss per unit in consumer electronics, if not a record. Again, the key factor is that you cannot let the 360 have two Xmas seasons to themselves in America, and your going to role the dice on the price. Even though $599.99 is a price that most Americans will have a hard time rationalizing, you know that you only have 800,000 anyways, and that those 800,000 will sell out even if they were 1 grand each.

Scenario 3 - In late August, you shock the gaming world with the announcement that 'due to unforseen circumstances in the production process of the PS3, we simply aren't going to have enough units to launch worldwide, and will only have enough units to launch in Japan, and with a very limited supply. The idea behind this scenario, is that you simply can't afford to lose $200 to $300 per system, and you are going to try to negotiate better terms with your part suppliers to get the cost per unit delivered down, and plan to launch in the U.S. in April 2007

Scenario 4 - The PS3 will arrive in America, for the miracle price of $499.99, but there are two catches. The first catch, is that there is only going to be 800,000 for the U.S. Yep, another 360 debacle. The other catch, is that they are being sold to retailers as bundles, and the retailers are forced to pass the bundle along to the consumer. The bundle works like this. $499.99 for the PS3 with the Hdd and Blue Ray, you also have to buy 3 PS3 games at $64.99 each. oh yeah, welcome to Blue Ray with the nice $64.99 price tag, by the way. ( you thought the 360 was bad) And you are also are forced to purchase a Dual Shock 3 with bluetooth wireless for $49.99 and pick one of several different required accessories for $39.99.



$499.99 PS3
$64.99
$64.99 3 first party PS3 games from a choice of 6
$64.99
$49.99 1 Dual Shock 3 with bluetooth wireless
$39.99 Off brand HDMI cable or whatever

Grand Total = $784



Gee, 784, that's interesting. Pretty damn close to the $800 cost to market price for the PS3. Retailers are forced to buy these bundles and pass them along to the consumer. Everyone that buys a PS3 has to walk away with 3 SCE internal games, from a list of 6, and 1 extra controller and one accessory

[nik]

wrong forum, you're assleeping!

[Kitsune Sniper]

Scenario 6: Point and laugh at you posting this in the wrong place!

[InsaneDavid]

I'd wait for this to be moved before bumping my Buying & Selling thread. Then I'd pick number 5.

[MegaDrive20XX]

Scenario 6: Point and laugh at you posting this in the wrong place!

Ditto! Dear god, he's Sleep-Threading!

[Oobgarm]

I swear, if I see another Anthony1 PS3 specualtion thread, I'm going to start hitting puppies with a baseball bat.

Dude, get a freaking life.

[Sylentwulf]

I swear, if I see another Anthony1 PS3 specualtion thread, I'm going to start hitting puppies with a baseball bat.

Dude, get a freaking life.

Anyways, although it would mean I don't get one anywhere near launch. They could EASILY release it at $600 and sell out of all of them. All the launch fanboys would pick them up REGARDLESS of the price. Then, when stock starts to actually accumulate on the shelves, lower it to $500 and let me get one

[THATinkjar]

I'm betting they just release the console whenever it is ready, in whatever quantity they can, at the lowest price they can afford.

I'm betting that the games available for launch will be whatever games are ready for launch, and I'm betting the price will be dictated by the price of the Xbox 360 games.

Case closed?

[Anthony1]

I swear, if I see another Anthony1 PS3 specualtion thread, I'm going to start hitting puppies with a baseball bat.

Dude, get a freaking life.

Look, the reasons why I do posts like this, is because this is actually a very interesting predicament that Sony is in right now. They are really between a rock and a hard place. There is a cascading number of factors that is working against them right now. They are going to have to make some very tough decisions. It's very much a damned if you do, damned if you don't scenario for Sony.


Here are just a few issues that they have to be struggling with:


1. Supply - Making a next-gen console with all those bells and whistles that they are going to have with the kind of production that is required, is going to make it a virtual lock that the number of units they are going to have available is going to be extremely limited. Obviously, they don't want to repeat the same thing that Microsoft did, but in all likelyhood, they aren't going to have any choice.


2. Price - When I'm talking about price, of course I'm talking about the price in the United States. More than any other country on the planet, Americans are obsessed with the prices of things. That's why we always price things with the 9.99 on the end of it. Because $9.99 "seems" cheaper than saying $10. It's all psychological with us. Sony could sell 2 million PS3's in the U.S., even if they priced them at $800 each to the diehards. But diehards don't win the console war for you. It's the casual gamers that win the console war for you. It's the sheep that win the war for you. You price the PS3 above $499.99 and you will do irreparable damage to the psychology of the "CASUAL" american game consumer, who will now equate the PS3 with being "just too damned expensive". These customers will purchase a 360 instead, and that could cost Sony the war in the U.S. It's not about what price you sell it to the early adopters, and it's not about selling it to the early adopters for a huge markup and then lowering it for the masses, when a price is set, the word spreads, and when people hear the price for the first time, there is an immediate reaction. That immediate reaction could mean everything.


3. Playing catch-up - Sony simply can't afford to miss the 2006 holiday season in the United States, even if it's only a launch in name and nothing more. (only 800,000 systems sold isn't going to really help them catch up that fast in the U.S.) But they have to enter the market. Again, it's a psychological thing. They have to enter the fray, even if they aren't going to have 5 million PS3's available to sell. They have to let the gamers, and more importantly the "casuals" that they have launched and that more systems will be hitting stores soon. If they miss Holiday 2006, it will cause a very large number of people to say "F it", and they will just get a 360 instead.


4. Helping the other guy - Another thing that has to be driving SCEA crazy is the fact that when they do launch with their paltry 800,000 units for November and December in the U.S., those units will sell out super fast, there won't be any available, but guess what's going to be sitting on store shelves, waiting for a potential PS3 owner to purchase it? The 360 and Revolution. That has to just kill Sony. Tons of extra PS2 and Xbox 1 systems were sold last Xmas, because customers were in stores with cash in hand wanting to buy a 360, but instead settled for a Xbox 1 or PS2. The same thing will happen this year, except they will be settling for a 360, instead of the PS3 which will be completely sold out.

[Push Upstairs]

#5.

Why?

I don't give a rats ass how Sony handles thier PS3.

Hit? Meh Miss? Meh

[Sylentwulf]

I swear, if I see another Anthony1 PS3 specualtion thread, I'm going to start hitting puppies with a baseball bat.

Dude, get a freaking life.

Look, the reasons why I do posts like this, is because this is actually a very interesting predicament that Sony is in right now. They are really between a rock and a hard place. There is a cascading number of factors that is working against them right now. They are going to have to make some very tough decisions. It's very much a damned if you do, damned if you don't scenario for Sony.

Which, amazingly enough, is almost the EXACT SAME predicament every other console launch has been faced with. This isn't exactly the first time that more than one console was on the market ya know

[slip81]

I swear, if I see another Anthony1 PS3 specualtion thread, I'm going to start hitting puppies with a baseball bat.

Dude, get a freaking life.

Look, the reasons why I do posts like this, is because this is actually a very interesting predicament that Sony is in right now. They are really between a rock and a hard place. There is a cascading number of factors that is working against them right now. They are going to have to make some very tough decisions. It's very much a damned if you do, damned if you don't scenario for Sony.

Which, amazingly enough, is almost the EXACT SAME predicament every other console launch has been faced with. This isn't exactly the first time that more than one console was on the market ya know

Man, I was gonna say that, but now I can't cause you did.

But yeah, hasn't pretty much every console lost money at the initial launch, and faced shortages?

The decision will most likely be to release it at $399 and loose money, cause like Microsoft, Sony is too occupied with making a console that can fetch beer in addition to play games.

I think the only company that won't see a major loss per console will be Nintendo, because it won't have all the bells and whistles of the other two.

[chrisbid]

option 19: pray for forgiveness

[Anthony1]

Which, amazingly enough, is almost the EXACT SAME predicament every other console launch has been faced with. This isn't exactly the first time that more than one console was on the market ya know

Uh.... Not Exactly.



First off, there hasn't been ONE single successful console that has been priced above $299.99 in the history of video games. And don't say, "Well the Xbox 360 seems to be doing pretty good", cause there is a core system for the magical $299.99, so the 360 is excluded due to a technicality.



There have basically been 3 consoles that have dared priced themselves above the magical $299, threshold. Neo-Geo, 3DO and Sega Saturn. All of which were commercial failures in the U.S. retail market. So, the fact that Sony is going to be the first company to really, really test this old notion that you can't price an item above $299.99 to be successful, is pretty damn intriguing.


Remember the 360 has a core system available for $299, so if it wins this war, it will continue the streak of every single console that has dominated their generation in the U.S. has not launched above the magical $299. Sure the 360 get's off on a technicality but still.


There are plenty of compelling situations about this Sony launch. And price is just one of them. And to the people that said, Companies always lose money on their consoles, yes that is true, but typically they lose anywhere from about $80 to $185 per console. Sony is going to go into uncharted territories with the PS3. Possibly losing $300 per would be absolutely unprecidented in all of consumer electronics. You sell 1 million of those, and the company loses 300 million dollars. And it isn't like Sony is in the best financial shape right about now. They are actually strugling. The glory days of the late 90's are behind them.

[slip81]

Anthony, there is one thing you seem to be forgetting, all previously successful systems witha pricetag of $299, were just built for basically one thing, gaming.

The PS3 will not be solely a gaming machine, it's going to be a media hub. The thing will feature blu-ray, a HDD preinstalled with Linux, dual HDMI ports, DVI-I out, , 256MB RAM 256MB GDDR3 VRAM, a 3.2Ghz cell processor, SD/MMC, CF and memory stick slots, USB 2.0, Wi-Fi 802.11g, and bluetooth 2.0.

Plus I'm sure it will come packed with a controller and some hook-up cables. In short this system has not only more features, but more advanced features than any other console to date.

So what exactly is it again that makes you think Sony will sell all that for the "magic" $299 price?

Just because $299 is the norm for system launches doesn't mean it law, and it doesn't mean anything over that will be instant death. Other consoles at high price points failed because they were either from small companies, or didn't offer enough to justify the price.

Sony is not only offering a host of different features, but it already has a huge installed fanbase, and the fact that it will play all playstation games past and present will also help people swallow the price better.

Now I'm not ranting because I'm a Sony fanboy or anything, I personally don't plan on buying the thing, I'm just trying to illustrate that $299 is not the law, and this thing will probably retail for more than anyone is thinking.

I honestly wouldn't be suprised if a $499 price tag was slapped on it. And in today's culture where videogaming is about 50% more mainstream than it was even at the PS2 launch it would still fly off the shelves. Today's culture is filled with people who need the lastest and greatest, that's why we pay $1500 for a new computer every two years, $3000 for flat screen HDTV, and Xboxes priced at $399 are still hard to find 3 months after the system debuts.

source for PS3 specs and features:
http://en.wikipedia.org/wiki/PS3

EDIT: I would never survive as a typist, or a proof reader for that matter.

[Joker T]

i'm with Slip81, PS3 is more of a big media box than a game system.

[kainemaxwell]

You forgot #6: Buy a Revolution.

[Canadian Psycho]

Cut the guy some slack, his threads are pretty enjoyable.

[Sylentwulf]

There is also the fact that there IS such a thing as inflation. An Atari 2600 in 1979 probably cost roughly $1500 by now if you adjust for inflation. A $299 price point really doesn't mean crap after 25 years. Otherwise, my house would have only cost $50,000 instead of $185,000

[njiska]

Commit Hari Kiri.