PlayStation 3 to Sell For $399, Going Underground

Merrill Lynch Japan has conducted research that indicates that the PlayStation 3 will retail for $399. According to Gamespot's coverage of the paper, the unit will cost $494 to manufacture. Sony will thus be taking an almost $1 Billion loss in the first year of the PS3's lifespan. From the article: "It is normal for game companies to take a loss on hardware whenever a new console launches, since they typically focus on acquiring market share rather than generating a profit during the first year. During the second year and afterward, they can recover the losses with the savings that come from mass production and with licensing fees from publishers." Meanwhile, Press the Buttons is reporting on a Pro-G article in which SCEE Chief David Reeves states that "I feel proud that E3 went well from the presentations that they did...I feel very happy about that, but I told the troops: OK now we go underground. The PS3 goes underground until it comes out next year."

Comments

Re:PS3 for $399

[VoiceOfRaisin]

your example doesnt work at all. say systems come out every 4 years. 2000 2004 2008. the early adopter buys them the same years they come out. the waiting guy buys them a year after. so in 2001, 2005, 2009. notice anything? theres the same 4 years of play in each case, not 3. your argument assumes the waiter no longer becomes a waiter and is an early adopter the next round making his 4 years into 3. bzzzt, try again.

Re:PS3 for $399

[syousef]

. In that case, the early-adopter and the wait-for-the-price-to-drop users have gotten equal value out of the consoles.

No, because the early adopter will dump the console at the end of the 4 year period and move on to the next thing. The wait-for-the-price-to-drop users will keep their consoles LONGER. So while the early adopter pays $400 and gets 3-4 years use, the late adopter pays $300 and gets at least the same time out of it, if not more (perhaps 5-6 years before games start drying up or parts die).

The early adopter is paying for the latest and greatest. That's fine and good, but don't pretend he's getting better value out of it just to justify the behaviour of continually buying the next big thing. It's actually a very costly and dangerous habbit and if not kept in check a gadget addiction can be just as harmful as a gambling addiction.

Furthermore if you do have the disposable income but you're not constantly upgrading your gadgets you can afford to play with more different types of gadgets. This is the category I fall into. I like to keep my gadget buying in check so that it doesn't destroy my life, and I like to play with lots of different types of gadgets. Bought a mapping GPS this year for AUD297. If I'd done that a few years ago I'd be looking at much more.

I've never ever been happy after buying the latest and greatest because I know the value I've gotten for my money is awful, so I just plain don't do it anymore. If you wait you get the benefit of early adopter's experience, and reduced costs.