On the day that Microsoft launched its Xbox 360, Sony it would seem
tried to share the spotlight by addressing the pricing for its
PlayStation 3. Sony CEO Howard Stringer has made it clear that the
next-gen system will be under $400 when it debuts next year. An exact
price and launch date have yet to be announced, however.
The FORTUNE article (as posted on CNN/Money), which we cite below,
apparently contained erroneous information and falsely attributed
statements to Sony CEO Howard Stringer. The FORTUNE article on
CNN/Money by Peter Lewis now has the following correction attached to
it:
"An earlier version of this story appeared with statements erroneously
attributed to Sir Howard Stringer, CEO of Sony Corporation, regarding
pricing and availability of the PS3. Stringer has not commented
publicly on how much the PS3 is expected to cost, or how soon it will
appear in the US after the Japanese launch in spring 2006."
GameDAILY BIZ regrets this error and would like to apologize for
possibly misleading any readers. Our original story is below.
While Microsoft's Xbox 360 went on sale across the country at midnight
at various retailers, it appears that Sony has finally given the
public some idea of what the PlayStation 3 might retail for.
Not as expensive as we thought
Up until this point, all that we knew was Sony's next-gen system would
be "expensive," as suggested by SCE president Ken Kutaragi. In fact,
at one point Kutaragi even said that consumers might feel that they
would have to work more hours to buy the PS3 because they'd want one
so badly. Analysts have pegged the PS3 price point as high as $500,
which is $100 more than the premium (with HDD) SKU for the Xbox 360.
Today, however, Sony CEO Sir Howard Stringer revealed to FORTUNE
magazine that he expects the PS3 to launch with an MSRP somewhere
between $300 and $400 when it hits the market next year. A recent
Merrill Lynch report said that Sony's next-gen system would cost
significantly more to produce than the Xbox 360, giving Microsoft a
serious cost advantage. One of the main culprits for driving up costs
in the PS3 is its hi-def Blu-ray drive—Merrill Lynch estimated that
the Blu-ray drive would cost Sony $75 more per unit than a standard
DVD drive.
[ "When the dust settles in three years or so, Sony will be back up on
top. But it will be a close race," Michael Goodman, Yankee Group ]
To that end, Stringer informed FORTUNE that Sony is serious about
getting its Blu-ray format onto the market, and naturally, including
it in the PS3 is one of the best ways to speed adoption (just as it
helped with DVD in the PS2). Stringer made it clear that Sony will
heavily subsidize the console during the initial stages in order to
ensure that the Blu-ray drive doesn't place the PS3 in another
stratosphere when it comes to price.
Blu-ray is key
Brand recognition and past console dominance aside, Blu-ray is one of
Sony's biggest advantages over Microsoft in the next-gen console war.
The hi-def discs offer far more storage capacity for developers than
the standard DVD-9 format, and the included Blu-ray drive also ushers
in the first hi-def movie player for most consumers.
To stress this, Stringer also confirmed that the PS3 would come
bundled with sample games, demos, TV shows and movies. Like the Xbox
360, however, the PS3 will not come standard with a hard drive. Sony
has said many times before that they intend to make available an
optional HDD for the PS3's 2.5" bay.
While Merrill Lynch proclaimed Microsoft as the "early winner" in the
next-gen battle, others aren't so sure. "This is still Sony's market
to lose. When the dust settles in three years or so, Sony will be back
up on top. But it will be a close race," Michael Goodman, senior
analyst for the Yankee Group, told TheStreet.com. "There's a lot of
people there that have that huge brand loyalty to PlayStation... If
Microsoft can get it close, that's a huge accomplishment for them."
The general consensus among analysts seems to be that the race will be
neck and neck in Western markets (i.e. North America and Europe), but
the difference maker for global victory could be Japan. Microsoft
struggled mightily with the original Xbox in Japan, and even though
recent surveys suggest a slight increase in interest in the 360 among
Japanese consumers, it's undoubtedly going to be an uphill battle
against Sony on its home turf.
"For all the talk about Xbox, if you look at the Japanese sales
charts, you would laugh at Microsoft," said Joe Spiegel, a hedge fund
manager at Dalek Capital. "It would be impossible for them to do a
worse job."
Stringer did not give FORTUNE any definitive timing for the PS3
launch. Apparently the PS3 launch window is still slated for Spring
2006 in Japan, with the U.S. launch to follow months later. Most
expect the PS3 to make its North American debut by the end of 2006. By
that time, though, Microsoft may have sold as many as 10 million Xbox
360 units worldwide and could even cut the 360's price for the
holidays to draw attention awayf from Sony's launch.
Drawing attention away from 360
It doesn't seem like coincidence either that Sony talked up PS3
pricing on the very day that Microsoft launched its system.
If the thought of the PS3 price was scaring consumers who might have
considered the Xbox 360 as another option, those people may now decide
to just wait; and that would certainly be more than a minor victory
for Sony.
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