SONY WILL launch a slimmer, cheaper version of its PlayStation 3 (PS3) game console next month, hoping to jumpstart sales and win back market share from rivals Microsoft and Nintendo.
Starting in September, the less bulky version of the PS3 will be rolled out at $299 (€210) in the US, €299 in Europe and 29,980 yen (€224) in Japan, the company said yesterday. This represents a major price cut from the existing PS3 models, which cost between $399 and $499 and have proven less popular than Microsoft’s Xbox 360 and Nintendo’s Wii.
Sony’s game consoles have endured a spectacular fall from grace. In the previous round of the console wars, Sony’s PlayStation2 stormed the market, selling 138 million units to date, compared with about 24 million Microsoft Xboxes and 22 million Nintendo GameCubes.
But the high-spec – and high-price – PS3 has struggled against competitors. It has sold 24 million units, compared with about 30 million Microsoft Xbox 360s and 50 million-plus Nintendo Wiis.
Analysts expressed scepticism over whether the new “Slim” version of the PS3, unveiled on Tuesday, would be able to put Sony back on top. The charcoal-coloured “Slim” will be a third smaller and, more importantly, 25 per cent cheaper than the original version of the PS3.
Ultimately, the move is believed to have been taken at the behest of major US electronics retailers as they look ahead to the Christmas sales season.
Andrew House, head of Sony Computer Entertainment Europe, denied that the cut-price PS3 was a reaction to slow sales.
“We are aware that consumers are watching their euros and pounds more carefully than before and it may make a price reduction have potentially even more impact. But it would not be fair to say this is a reaction to current market conditions,” he said.
The price cut and new design received a broadly warm response from gamers on the Kotaku blog.
“Looking at what you now get in a PS3, it’s the best value out of all the systems,” said one blogger, citing the console’s WiFi and Blu-ray disc player.
Sony is understood to have held off cutting the price of the PS3 because the cost of producing the machines was prohibitively high.
Sony loses money on hardware at the beginning of every console cycle, but later recoups this as the manufacturing costs decline and it is able to sell higher-margin software to customers. Pushing the price down early would have made this trade-off more difficult.
The price cut came as Sony recently said its games business was achieving profitability on a gross margin basis. But analysts are unsure how much of a lift the “Slim” can give Sony. “I don’t think it’s the killer move for Sony because all the others will react with price cuts as well. But it will help,” said Seymour Pierce analyst Freddie George. – (Copyright The Financial Times Limited 2009)
