View Full Version : Sony Impresses Again

08-03-2005, 03:04 AM
Sorry for another topic on Sony making a possibly bad move but news is news....

Sony strategists may see a priced-down PS2 as all the company needs in '06; would ride $99 sticker--and profits--all the way to 2007.

Buried in an analyst's memo, written shortly after last week's Electronic Arts earnings call, was a hidden gem. According to the widely read team at Wedbush Morgan Securities, Sony may delay the release of the PlayStation 3 until 2007--if exactly the right conditions prevail.

Currently, the console is slated to appear in Japan before the end of that company's fiscal year--March 31, 2006--and in North America before the end of 2006.

Given the right set of circumstances, however, that release window (at least in North America) could intentionally lag until after the 2006 holiday buying season.

In a research memo sent to investors, Wedbush senior analyst Michael Pachter set up the following scene for a delayed PS3 launch. It starts with the current-generation Xbox being priced down to $99 post-Xbox 360 launch, but no lower. Concurrent with that situation--an Xbox 360 at an unspecified price and the Xbox at $99--Sony would drop the price of the PlayStation 2 to $99.

There are two components to that pricing strategy: the first is that a $99 PS2 would offer a significant distraction as the 360 launches. As Pachter states: "We believe that the company will attempt to disrupt the Xbox 360 launch with a price cut, and as a result may succeed in diverting attention away from the higher-priced next-generation console."

In addition to the "diversion rationale" is the supporting fact that "the redesigned PS2 carries a manufacturing cost of less than $99," according to Pachter. New consoles are noteworthy for the fact that at the beginning of their manufacturing cycle, the units are sold at a loss. Given that the PS2, according to Pachter, would cost less to make than to sell, it behooves Sony to extend demand for that product for as long as possible. And if Microsoft takes the Xbox price no lower than $99 (still a loss for Microsoft, according to Pachter), Sony will find itself in a win-win situation.

Another cornerstone in Pachter's theory is Sony not wanting to disappoint consumers and retailers by having too few units in the channel over the high-demand weeks of this coming December. Pachter says, "we believe that Sony suffered the ignominy of being unable to satisfy holiday ['04] demand in order to increase its gross profits over the short term."

If the PS3 launches in late '06 and suffers the same fate, Sony would be embarrassed for a second straight year. Without any PS3's in the channel, there's no chance of a shortage of stock. A backward theory perhaps, but a theory based in fact nonetheless.

The key point in Pachter's argument weighs heavily on what sort of showing the 360 has at launch. If the 360 tallies significant sales early, Sony would need to fire on all cylinders and get the PS3 into the channel ASAP. However: "Should Microsoft fail to garner sufficient software support to gain an insurmountable lead, we think that there is a possibility that the PS3 launch will slip into early 2007."

Following the distribution of the memo last week, GameSpot spoke with Pachter who emphasized that he "posited the thought as option value for Sony." Continuing, he said, "I think the 360 will do quite well."

But if the 360 does an about-face at launch and tanks, the above Plan B could be an option the cash-strapped Sony might just consider. Gamespot (http://www.gamespot.com/news/2005/08/02/news_6129862.html)

I don't know what to say really but if the PS2 goes down to $99, I just might have to get one, if not only for the RPGs.

Generic Wheaties
08-03-2005, 03:24 AM
The 2007 thing doesn't bother me. There are a crapload of people who want the PS3. They'll get mad that they have to wait but I think they'll get one nonetheless. The PS2 price drop is a good move, all I think of this is meh. I'm getting an X360 near launch now if it really is $300.00. I'll have enough money by the time PS3 is realeased.

08-03-2005, 03:25 AM
That's the only good thing I can see coming out of it. Me having money for it that is.

08-03-2005, 03:36 AM
Well it would space out the launch periods. X360 2005, revolution 2006, ps3 2007. But I doubt sony will wait until 2007 and let microsoft get all that sell time in, especially seeing how so many people already own the ps2. Although during that time they could add more to the ps3 and kind of do what they did to the dreamcast.

08-03-2005, 04:34 AM
Yeah, Sony could also steal and modify tons of innovations from both Nintendo and Microsoft in that time. I like the PSP, I like the PS2, but I've never been a Sony fanboy.

08-03-2005, 11:15 PM
Sony letting Microsoft have two whole Christmas seasons to themselves before the PS3? I don't think that's wise, considering how aggressive Microsoft will be next generation, and how many Japanese developers they've secured for the X360.

Well, the SNES was released two whole years after the Genesis and both consoles enjoyed success (although the Genny didn't do so well in Japan). I could see the same thing happening here, with the X360 being in the Genesis' shoes obviously.

08-04-2005, 03:37 AM
Them staying two years behind Xbox is just admitting that they're running out of ideas to be new and innovative. If they wait till 2007, then they'll be be killed, if there ever is another next gen system launch.

That twos years gives people who buy xbox more time to fall in love with it, and get comfortable.

Not only that, it gives game companies less systems to make games for, and that will kill the ps3 as well.

Plus, you know the longer it takes for them to put it out, the more it's going to cost for the public for the first year, before a price drop, and that's not a smart move. Sadly, the longer it takes to come out, the quicker it will die.