Last night, during Sony's Tokyo Game Show press conference, the console manufacturer announced a new, slimmer, and lighter PlayStation 3 console with larger HDD options. That's great and all, but two things really struck me as strange, one of which I would consider downright confusing.
The most apparent thing missing from this announcement was an accompanying price cut. PlayStation 3 hardware started out notoriously expensive, but has reached a reasonable price for the value. However, this far along in the console cycle, Sony—being in last place in total consoles sold and with the Wii U on the horizon—needs to do something to increase the value of the PlayStation 3 even more in order to get it into the hands of more consumers. And that's by reducing the price so its value is higher. Not making this new hardware cheaper at retail, despite packing in more value with a larger HDD, is a huge mistake.
Reducing Cost for Both Sony and the Consumer
The point in releasing this new hardware revision is most likely to reduce the cost of the PlayStation 3 manufacturing process. That was the reason for the first hardware revision, for the slimmer, lighter PS3, which coincided with a price drop.
While I can't claim to know all of the technical details and costs associated with PS3 components, I surmise that not having a slot-loading disc drive would reduce costs. I'm sure there are also other components within the new PS3 model that are designed to cut costs. But Sony is keeping the difference in their pockets, padding their profit margings, instead of passing the savings onto the consumer.
Profit is the entire reason why Sony or any corporation is in business. They're not in this to lose money. I get that. But increasing the install base and loyalty among consumers is more important than the measly pocket change they're saving per console sold. Again, with me not knowing all of the costs or technical details, it's hard to say that without any doubt, but Sony was originally willing to take several hundred dollars in loss when they first started selling the PS3, and this late in the lifecycle, it's more important than ever to squeeze out as many consoles sold as possible out of a market that's quickly losing ground to mobile, Facebook, and other emerging platforms.
Competition and Competitive Pricing
The Xbox 360 has been dominating the PS3 in North America for the past year and longer. With the Wii out of the way and completely fizzled, it hasn't exactly given the PS3 time to spread its wings. And now with the Wii U less than two months away, priced only $50 more than the PS3 for unexplored, possibly greener pastures, the PS3 has even more competition.
Now would be the time to undercut both the 360 and the Wii U significantly in order to push the PS3 as the best value on the market, and with a lower price, it would be a statement difficult to refute. They are offering a value-priced hardware bundle that packs in a game and more, but most consumers would rather get the hardware itself for cheaper.
Which leads me to the confusing part. The new PS3 model offers a 12GB version at a low cost… but only in Europe. Granted, Europeans have been grossly overpaying for the PS3 all along, and they do indeed deserve a price break, but why not anywhere else?
Especially if Sony already has the 12GB model in production to begin with, I cannot fathom why they wouldn't try and bring it to North America (or even Japan, for that matter), and sell it at a mass market price for consumers who are skeptical to invest in the PS3. This would allow the PS3 to get into the homes of more consumers, plus drive sales of separate HDD add-ons, which they're selling to give consumers who buy this 12GB version and eventually want more space, the ability to upgrade.
PS2 History Not Repeating with PS3
The days of the PS3 and Xbox 360 generation are numbered. The Wii U, while not as big of a leap as we're used to per video game generation, is still something fresh and it's only months away. Sony needs to act now, by bringing the PS3 to mass market pricing and getting the console in the hands of the rest of the consumers who are holding out for better prices, and they need to do it before it's too late.
Granted, the PS3 is already 50% less in price than when it first launched, but the PS2, by comparison, reached the mass market pricing of $199 just two years into its lifecyce, and reached $129 by the time the PS2 was the same age as the PS3 is now. The economic landscape is very different, and I understand that a company in financial turmoil like Sony must tighten their belts, but so must consumers. And in the end, getting your console into homes is what it is all about.
It's make it or break it time for the PS3, and all that's missing is a better price.
Tell GR: Do you agree? For those of you without a PS3, would a cheaper price get you to bite the bullet and buy one? Or is it already too late and the pricing doesn't matter. Let us know in the comments below.
