Let the Video Game Price Wars Begin!

Posted by: Kenji Hall on March 29, 2007

Anyone interested in buying a PlayStation 3 might think consider waiting until October. That’s when Goldman Sachs thinks Sony will have to start slashing prices of its video game console to keep sales frothy. You might find it odd that analysts are already talking about a price cut at a time when European gamers are falling all over themselves to get a PS3. Within two days of the PS3’s European debut, Sony sold 600,000 machines. (Contrast that with 600,000 Xbox 360 units sold by Microsoft in its first month in Europe and 700,000 for Nintendo’s Wii.)

But as Goldman’s analyst Yuji Fujimori points out, there’s a new wrinkle in the gaming sector: Microsoft’s announcement this week that it will release the Xbox 360 Elite, a high-end version of the gaming machine, in the U.S. on April 29. The kicker is that the Elite comes with a 120-gigabyte hard drive, wireless controller and a cable to hook up to a high-definition digital TV AND will be priced at $479.99. Though the PS3 has the Blu-ray next-generation DVD player, Microsoft’s Elite is a comparable machine but for $100 less (a PS3 with a 60GB hard disk drive goes for $599). “Sony is acutely aware that the relatively high price of the PS3 is a problem, and it has large scope for cost reductions,” writes Fujimori.

The potential savings for anyone with a little patience? $100 (or 100 euros, for those of you in Europe). By then, the thinking goes, Sony will have ramped up to high enough volumes that it won’t be losing $250 or more per machine, as it was on the initial shipments. Besides that, Sony should have enough online gaming goodies to be making handsome sums off software. Perhaps it’s true that things come to those who wait.

Reader Comments

Vlad

March 30, 2007 11:07 AM

I'm not Sony fan but I think for anyone who is intelligent enough, I don't see how Xbox elite make more sense. You still have to buy HD-DVD addition separately which will run you $200 more plus you have to pay for their xbox live so overall I think ps3 makes more sense.

Larry A

March 30, 2007 2:42 PM

Sony augments its ability to cut costs by excluding the Emotion chip in European PS3s. This chip allows PS3 users to play games from Sony's Playstation 1 and 2 on the PS3. In lieu of the Emotion chip, one of the Core's 7 chips via a firmware upgrade enables backward compatibility through software emulation.
The introduction of Microsoft's Elite Xbox 360 only makes the PS3 more attractive to many consumers with higher disposable income than the casual gamer. If you factor in a $100 price drop, Xbox loses market share in a hurry. I know I would purchase one.

Nintendo Wii

April 7, 2007 5:39 AM

I agree with the first post. The PS3 would make more sense. Xbox is trying to competite during the release of the PS3 and The Nintendo Wii

gapzi11a

April 11, 2007 12:34 PM

Most people I know don't care much about the next-gen DVD formats at this point. Gamers just want great next-gen game titles and a full featured online gaming community to play them with. At this point in time, Xbox 360 has an advantage in these 2 areas and it is cheaper. Unless someone is deadset on a Blu-Ray player or has their sights on a PS3 exclusive game, I don't see much incentive to spend the extra money on PS3 yet.

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