Sony
The PlayStation 3s price will be $299 in the U.S. starting today, with comparable reductions in Europe and Japan, the Tokyo-based company said at a games conference in Germany yesterday. Nintendo offers the Wii for $250 and Microsoft Corp. sells its Xbox 360 machine for as little as $200.
Sony Chairman Howard Stringer, who rebuffed calls for cheaper prices as recently as last month, reversed course after PS3 sales tumbled to a two-year low. Sales of Nintendos market- leading Wii dropped for the first time last quarter as the global recession drove down consumer spending.
“The price cut may push Nintendo to lower the Wii price sooner rather than later,” said Naoki Fujiwara, chief fund manager at Tokyo-based Shinkin Asset Management Co., which oversees $3.7 billion in investments. “There seems to be an increasing number of people who arent satisfied with the Wii, so the price cut will likely help Sony entice those users.”
Sony fell 1.4 percent to 2,565 yen at the midday break on the Tokyo Stock Exchange, while Nintendo gained 0.8 percent in Osaka trading.
Microsoft will probably cut the price of its $399 Elite Xbox 360 model by $100 within days or weeks, while Nintendo may reduce the Wiis price by $50 by early November, according to Arvind Bhatia, an analyst at Sterne Agee & Leach Inc.
Much Needed Cuts
“We feel these hardware price cuts were much needed and are hopeful it will provide a boost to hardware and software sales this Christmas,” Bhatia wrote in a report yesterday.
Sony also introduced a slimmer version of the PS3 that will begin replacing current models in the first week of September. The $299 system, equipped with a 120-gigabyte storage drive and a Blu-ray player, is 32 percent smaller, 36 percent lighter and consumes 34 percent less power, the company said.
The price cut is necessary to meet sales projections of 13 million consoles worldwide in the year ending March 2010, Jack Tretton, head of Sony Computer Entertainment America, said in an interview yesterday.
“The new PlayStation 3 pricing finally makes the Sony console a much more competitive product,” Jesse Divnich, a game analyst with researcher Electronic Entertainment Design & Outreach, said in an e-mail.
Kotick Victory
Stringer, whos also Sonys chief executive officer, last month at an Idaho conference referred to Kotick as a person who “likes to make a lot of noise” and spurned calls for price cuts because PlayStation consoles are unprofitable.
“We believe this is a great price,” Tom Aiello, a spokesman for Sears Holding Corp., which is taking orders for the new PS3 at Kmart and Sears outlets, said in an e-mail.
U.S. sales of video-game hardware, software and accessories tumbled for a fifth-straight month in July, led by declines in sales of Sonys PlayStation 3 and Nintendos Wii, according to Port Washington, New York-based researcher NPD Group Inc.
Game Losses
Sony has sold about 24 million PS3s worldwide since the products introduction, according to the company. Kyoto-based Nintendo leads with sales of 52.6 million Wii consoles through June, according to company reports, while Redmond, Washington- based Microsoft has sold more than 30 million Xbox 360s, according to filings.
The unit that makes the PlayStation machines posted a 39.7 billion yen loss ($420 million) last quarter after sales fell 37 percent. The Networked Products & Services Group, led by Kazuo Hirai, 48, recorded the biggest loss among the companys divisions.
Sony also announced that it will start a movie store in November for the PlayStation and mobile devices. The download service will compete against Microsofts Xbox Live, which offers movies through a partnership with NetFlix Inc.