Games By Matthew Humphries Jun. 9, 2014 8:30 am
Today is the first day of E3, and with it will come a number of announcements by the big hardware companies in gaming including Sony, Microsoft, and Nintendo.
In terms of who’s winning in the next-generation hardware battle, Sony clearly has the lead. After launching the PS4 last November Sony has grown a lead over Microsoft’s Xbox One that is in the multi-millions due in no small part to a $100 price advantage. But today Microsoft removed that price disparity from the equation by launching a new, Kinect-less Xbox One for $399. Will Sony respond with its own price cut?
We know that the PS4 hardware already sells at a profit, meaning there’s room to maneuver on price for Sony. It’s also the number one selling console right now, so there’s a healthy profit being generated from the sale of games and peripherals. Again, that meane the price of the hardware could change without Sony losing any money for the PlayStation business as a whole. In fact, it may even help generate more from increased sales of hardware.
If Sony has considered a PS4 price cut this week, I think they had to ask three questions:
As for how a price cut would be perceived, I can’t see it being taken as a negative. Microsoft cut their price first and Sony is reacting. Gamers will view it as even better value rather than Sony being worried about an Xbox One priced the same. Remember, the PS4 is the more powerful machine so Sony still has the upper hand even at the same price point. A price cut would just be icing on the cake.
So how much of a price cut could Sony stomach? $100 is out of the question as that would certainly incur a major loss on every PS4 sold. $50 is probably feasible, but would certainly wipe out any hardware profit Sony currently enjoys. $20, so the PS4 drops to $379.99 would mean Sony retains its cost advantage over Microsoft and possibly still keeps some profit on the console sale. Therefore I view that as the most likely new price point if it happens at all.
Of course, Sony doesn’t have to cut the price. It already holds a large installed user base lead, PlayStation Now is on the horizon offering backwards compatibility through streaming, and there’s sure to be a few surprise games announced later today exclusively for the PS4. There’s also talk of a PS4-PS Vita bundle. But I can’t help but think Sony will want to push their advantage home, not allowing Microsoft to achieve parity on price, and having PS4 remain the cheaper of the two consoles.
What do you think? Will we see a $379.99 or even a $349.99 PS4 announced at E3 today?
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In terms of who’s winning in the next-generation hardware battle, Sony clearly has the lead. After launching the PS4 last November Sony has grown a lead over Microsoft’s Xbox One that is in the multi-millions due in no small part to a $100 price advantage. But today Microsoft removed that price disparity from the equation by launching a new, Kinect-less Xbox One for $399. Will Sony respond with its own price cut?
We know that the PS4 hardware already sells at a profit, meaning there’s room to maneuver on price for Sony. It’s also the number one selling console right now, so there’s a healthy profit being generated from the sale of games and peripherals. Again, that meane the price of the hardware could change without Sony losing any money for the PlayStation business as a whole. In fact, it may even help generate more from increased sales of hardware.
If Sony has considered a PS4 price cut this week, I think they had to ask three questions:
- Is the price advantage worth retaining from a marketing perspective?
- How will gamers perceive a price cut?
- How much can we realistically cut the price by?
As for how a price cut would be perceived, I can’t see it being taken as a negative. Microsoft cut their price first and Sony is reacting. Gamers will view it as even better value rather than Sony being worried about an Xbox One priced the same. Remember, the PS4 is the more powerful machine so Sony still has the upper hand even at the same price point. A price cut would just be icing on the cake.
So how much of a price cut could Sony stomach? $100 is out of the question as that would certainly incur a major loss on every PS4 sold. $50 is probably feasible, but would certainly wipe out any hardware profit Sony currently enjoys. $20, so the PS4 drops to $379.99 would mean Sony retains its cost advantage over Microsoft and possibly still keeps some profit on the console sale. Therefore I view that as the most likely new price point if it happens at all.
Of course, Sony doesn’t have to cut the price. It already holds a large installed user base lead, PlayStation Now is on the horizon offering backwards compatibility through streaming, and there’s sure to be a few surprise games announced later today exclusively for the PS4. There’s also talk of a PS4-PS Vita bundle. But I can’t help but think Sony will want to push their advantage home, not allowing Microsoft to achieve parity on price, and having PS4 remain the cheaper of the two consoles.
What do you think? Will we see a $379.99 or even a $349.99 PS4 announced at E3 today?
More...
