Cheaper Blu-ray Player Sparks Speculation of PS3 Price Cuts

[Dark Star]

These days, literally the smallest whisper about falling costs of blue-violet laser diodes will set off speculation about a PlayStation 3 price drop. Yesterday, Sony announced that it would be shipping its second-generation Blu-ray Disc movie player for $100 less than initially announced, fuelling talk of possibly the same cut being applied to the PS3.

Analysts sure seem to think that the lowered price of BDP-S300 is a sign of PS3 things to come. Arvind Bhatia, an analyst with Sterne Agee & Leach Inc., says in a Dow Jones story, "If the cost of Blu-ray is coming down, you can drop the price of anything with Blu-ray in it. "

What some analysts may be overlooking is that falling costs for Blu-ray components do not mean a higher profit margin on the PlayStation 3. While standalone Blu-ray movie players are sold at prices above costs, the PlayStation 3 is sold at a considerable loss – a common penetration tactic in the video game console business.

The PlayStation 3, compared to its competition, is performing below expectations, leading to a conclusion that the video game market is highly price sensitive. Regardless of Sony Computer Entertainment Inc.’s bottom line, analysts have repeatedly called for a lower price in order to stir PS3 sales. "Feedback from retailers continues to indicate that a price cut on PS3 will be important," Bhatia astutely pointed out.

Wedbush Morgan Securities analyst Michael Pachter said in a previous story, "The right question to ask is whether the full bill of materials is below $499, allowing them to cut price and still avoid losing money... The point is that if they're ramping capacity to [5 million diodes], they probably are coming down the cost curve for MPEG chips, dedicated disc drive processors, and every other component. Hard to say for sure, but I'd guess that Sony could squeeze a hundred dollars out of its cost by mid-year, maybe more."

"My guess is that you will see a price cut this year," he continued. "I think that the introduction of the Xbox 360 Elite gives Sony an opportunity to cut price and claim that they offer Blu-ray for only $20 more."

Source: Dailytech

 

[xXx]

The speculations high...but they wont....as the PS3 not only is BLU RAY PLAYER but a gaming system. ALSO IMO they might have reduced the price of first generation of BLURAY player which had around 2x reading speed. Also SONY have clearly mentioned that they gamers wont see a drop in the PS3's price till 08-09...dunno why they are doin that..but they seems to be confident on their software lineup this christmas....though they dont have system sellers lined up they have huge list of exclusive games...compared to only HALO3 & GTA4 on 360(SYSTEM SELLERS)...lets see this JUNE NINJA GAIDEN SIGMA coming out for PS3...hope the software starts pouring over otherwise they would have to again justify why they are not Dropping their price!!!!

 

[Ck Nish]

Is Blu-ray alone responsible for the high cost of the PS3? How much does the Cell cost in comparison. Wouldn't that also be a deciding factor in the price?

 

[xXx]

YES that would also be considered....but as of now SONY is not making any PS3 with 65nm cell chip....therefore if they are reducing Blu Ray players price..it means THE BLUE DIODE which was costlier earlier might be available at lower price due to High Production of Blue Diodes!!!

But wats the use SONY aint gonna budge on their price for the PS3...they will achieve the breakeven point & then they'll reap profits from the console then they'll lower their price....

 

[viralbug]

i think they want to sell the remaining ps2's in the market. after that they'll reduce the ps3 price.

 

[Ck Nish]

But wats the use SONY aint gonna budge on their price for the PS3...they will achieve the breakeven point & then they'll reap profits from the console then they'll lower their price....

Yeah, that certainly seems like what might happen. It certainly is the sensible thing for any company to do.