Sony is reducing the price of its PlayStation 3, triggering a pre-Christmas price war in the games console market.
A redesigned PS3 will sell at £249.99 from next month, a reduction of £50.
The price cut will be welcomed by retailers such as Game Group and HMV before the key Christmas selling season, after a difficult summer of poor demand for consoles and software.
Sony is hoping that the price cut will entice potential holiday-season buyers away from the two rival consoles, the Microsoft Xbox 360 and the Nintendo Wii, both of which sell for less than £200.
The high price of the existing PlayStation 3 has been such a deterrent to buyers that the Xbox 360 has comfortably outstripped it, selling close to 30 million units compared with the PS3’s 22 million. “We do not comment on our competitors’ business,” a spokesman for Microsoft told The Times today, when asked about the price cut.
He did not, however, rule out some form of retaliatory action. Microsoft is rumoured already to be preparing a revamp and pre-Christmas price cut of its Xbox 360 once existing stocks of consoles have been exhausted.
Nintendo, on the other hand, issued a categorical denial that it would cut the price of its Wii console from the current £169. The Wii, though technically inferior to its competitors, is the best-selling home games machine of the current generation, with sales of more than 50 million units. “We definitely have no plans to cut our prices,” a Nintendo spokesman told The Times. “We think the Wii combined with Wii Sports package is very good value.”
Kazuo Hirai, president and group chief executive of Sony Computer Entertainment, told The Times at the inaugural Gamescom convention in Cologne: “We felt it was the right time to pass on the benefits of the fact that we’ve been able to reduce the number of components and their sizes. We wanted to pass the cost savings on to our consumers in the new price point.”
Mr Hirai admitted that Sony already loses money on each console it sells. “If you’re just talking about the hardware alone, the quick answer is yes, we do lose money on every one. That makes good headlines, but I don’t actually know that that’s the true nature of the business that we’re all in, whether it’s PlayStation, Xbox or the Wii.
“I think the better indicator is to look at the business as a whole platform, to say are you profitable in terms of the hardware, software and peripherals. And the answer to that question is yes.”
Games console manufacturers have often cut prices in an attempt to win market share. In the early 1990s, when Sega and Nintendo were fighting for the British public’s affections, prices of the Megadrive and Super Nintendo consoles were slashed almost monthly.
Then, in the late 1990s, with Sony and Microsoft leading the hardware pack, Sony would drop the price of its PlayStation 2 console, only for Microsoft to respond with a similar cut on its Xbox.
The two Japanese companies face particular problems in cutting prices since the Japanese yen has appreciated by over 20 per cent against the pound in the past two years, which has had a huge impact on their profits.
Sony to reduce price of PlayStation 3 in bid to boost Christmas sales - Times Online
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Sony to reduce price of PlayStation 3 in bid to boost Christmas sales
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