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Sony Exec Says Luxury Could Be PS3's Downfall
Via Next Generation, an interview with CEO of Sony Corporation Sir Howard Stringer on the site CEO Exchange. In the piece they report that Stringer has gone on record as saying the PS3's price may be its downfall. This is the first indication we've had from Sony's upper management that the console's price may just be too high. "Wii is a wonderful device, but has a different target audience. If we fail, it is because we positioned PS3 as the Mercedes of the videogame field. PS3 is after a different audience and it can be whatever it wants -- a home server, game device, even a computer." Relatedly, a Goldmann Sachs analyst has opined that a PS3 price cut could come this year. Assuming they drop the price by $100 or more, this might blunt the objections many have to the console's lofty pricetag.
Like it or not, the PS3 is always going to compete in the same exact market as the Wii and Xbox360. No matter what features they include with the system, how powerful they make it, what claims they make consumers will always consider it first and foremost a game console.
Anyone who wants a system that does more will buy a PC. The PS3 is built around a gaming console so it will never function adequately as a PC. Not to mention it wouldn't be compatible with anything on a PC. Those interested in a home theater want dedicated hardware. They don't want audio/visual performance compromised. So ultimately, while for what the PS3 offers it might not be a bad price, it's perceived by everyone as a game console. And in that regard it is overpriced.
Nintendo has clearly learned from their attempts to turn the NES into a home computer. They've focused on the entertainment aspect and are emphasizing gameplay. Microsoft is in a far better position to bridge the gap between PCs and consoles given their extensive experience with operating systems. Even then, Microsoft hasn't forced an overpowered system on the consumer. They're a lot more subtle.
Eventually, PCs and consoles might unite as a home entertainment appliance but that day is still a ways away. Sony tried to do too much too soon and now have put themselves in a very difficult position.
Believe it or not, the PS3 is not even close to as expensive as the Neo Geo once you adjust for inflation. The Neo Geo came out for $650 in 1990. That's about $1020 in modern dollars. The $100 games would cost about $150 dollars today, if I remember right there were some that were even more expensive.