Howard Stringer


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Rumors have been floating about that Sony intends to cut the pricetag of the PS3 some time this year. That would certainly be an unprecendented move, esp. when one considers the PS2 didn’t see a price change until several years into its lifespan. The revelation by CEO Howard Stringer last Friday that Sony is indeed investigating a potential price cut before the holiday season is a sure sign that we’ll see the PS3 lower than $599. The question now is not “if” but “when”, and there is reason to believe the cut might be coming a lot sooner than some analysts are predicting.

The most likely timeframe is probably early-mid Sept. Sony might announce the price cut then to slow down whatever momentum Microsoft has with its juggarnaut, Halo 3. On the other hand, the halo of popularity (sorry!) that floats above anything Master Chief might be too much for anything — even a PS3 price adjustment — to counter. Sony is probably well aware of this fact and rather than looking like a defeatist by lowering the price tag around MS’ release, it might just go ahead and blitz the 360 several months prior, potentially as early as the end of July. Packaging a price cut with the soon-to-be-released Heavenly Sword might be a surefire bet to win over a lot of people on the fence. That game, being handled by Ninja Theory, is probably one of if not the only killer-app Sony has this holiday season for North America.

Besides, odds are if Sony waited til after Halo 3 they could be in a far worse position. Think about what might happen. If Halo 3 does take off like the original Halo and its successor, the 360’s install base may take an extraordinary leap forward. Given the PS3’s poor sales thus far, that PR nightmare might lead even more gamers to change their minds during the busy shopping season. A poor 2007 holiday showing has the potential to knock out the PS3; if 360 and the Wii dominate, the plethora of exclusive 3rd party software on Sony (something that’s already shrinking on an almost weekly basis) is probably going to fallout entirelu. And even if Halo 3 doesn’t sell like hotcakes, Sony will probably look even more defeatist if they drop the price after than they do much sooner. Face it, a price drop in July/August in much easier to justify as an adjustment than one in Sept. or later — which will no doubt be seen as terribly defensive.

Whether such perception ultimately matters is up for debate but there’s no question the PS3’s lackluster sales numbers – in contrast to the Wii’s amazing figures – are starting to get some Sony execs nervous. Will we see a price cut soon? I think so.

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No Sony PR person will admit it, but the PS3 is continuing to face major hurdles (high component costs, emulation troubles, been there-done that games, dwindling exclusive support), and while it’s unclear whether any of these will derail Sony’s dominance, it seems assured that this next-gen race will stay tight for some time. Today, Sony quietly announced that it was launching a $599.99 standalone Blu-Ray. Quietly because the implications of such a release might say something about how Sony feels about the PS3 and its prospects.

This could be silent admittance by CEO Howard Stringer that when it comes to future revenue potential, Blu-Ray matters most to the bottomline, and not the company’s gaming division. Whether the PS3 bellies up or down, Blu-Ray HAS to win. The momentum is certainly there, with Blu-Ray sales outpacing HD-DVD 3:1. This move might be to maintain the momentum and keep Blu-Ray charging ahead. At this rate, it’s hard to see how HD-DVD can win, though I still contend that virtual consoles (like the one on Wii and LIVE) and downloading will eventually make this format war relatively pointless and not much of a revenue stream by the time someone actually wins.

But at what cost is Sony willing to keep it going? One has to believe the stand-alone player will eventually drop below the PS3 price point, and when that happens, the huge “value” argument Sony used to put forth is gone. The PS3 will need to stand on its own two feet. And judging by this annoucement, higher-ups at Sony don’t seem interested in giving the PS3 that much more time.

I’m actually quite surprised the Co. made the standalone price drop so fast; I figured it’d wait at least until one more holiday season to drive PS3 penetration.

But the continuing negativity clouding the new console might be finally breaking even Japan’s iron will. Let’s face the facts, demand is all but gone, and exlusives are disappearing fast (the most recent losses include Sega’s Virtua Fighter 5 and Virtua Tennis). Even remaining exclusives aren’t causing much of a stir (1Up’s recent discussion of DMC4 was hardly one of glowing enthusiasm), and mounting rumors that Kojima’s MGS4 is secretly 360-bound aren’t helping matter.

If anything, this move solidifies that for Sony, PlayStation or no PlayStation, this race is ultimately about besting Toshiba’s HD-DVD. The CELL processor will live on through its Vaio line, and will be profitable. But relying on the PS3 alone to sell Blu-Ray appears now to be too great a risk, and given the current situation, you can’t blame them.