(Price) cut, that's not a wrap

It was a shock to some when Sony cut the price of the PS3; others expected it. It certainly drove up sales...at first. But Sony made two crucial errors and two non-crucial error in the price cut that I predict will keep it from making a long-term impact.

The first crucial error was that they only cut the price to 500 dollars. 500 dollars is still 100 dollars more than the Xbox 360 Premium, and with Blu-ray players becoming cheaper, that angle won't convince people much longer. It's also double the price of Wii, which is still killing the PS3 in sales and gaining on the 360. Also, the 360 and Wii are likely to get price cuts in the near future as well, so this may not make a whole lot of difference for long.

Second, they released the 80 gigabyte version at the original price of 600 bucks. That means the now-500 dollar unit has become the "gimped" version, and that may push it in the direction of the version that originally cost 500. Furthermore, Kaz Hirai said they're going to phase out the 60 GB version. If that's the case, people will once again have to pay 600 bucks for a PS3.

The first non-crucial error was bundling a game with the 80 GB version. The biggest reason why this is a problem is that Nintendo already did it; copying Nintendo the first time around made Sony look really bad. That's one aspect. The other is that looking at game sales in Japan will tell you that bundling Wii Sports with Wii probably didn't make a huge difference; they didn't bundle it in Japan and it's been one of the top selling games over there since launch.

The second non-crucial error was not extending this price cut to Europe. I say it's a non-crucial error because North America and Japan (which got a price cut right at the beginning) are bigger markets (especially combined) than Europe. That said, bundling a game with the system in Europe will not boost sales as much as a price cut would, and that was a mistake.

I say this not to incite a flame war; that's the LAST thing I want to do. I say it because I want to quell the flame wars that the price cut no doubt started; this post doesn't say that the PS3 is doomed, only that I don't believe it's in a significantly better place than it was before.

What value do my predictions hold, you ask? After last year's E3 I predicted that the high price, Sony's PR (see my last post), and focus on Blu-ray over games would hurt the PS3's sales. Now that it's out, it's trailing far behind its competitors. True, that was an obvious prediction, but not so obvious that a lot of people didn't disagree with me.
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