It would be tempting to think that Sony (SNE) is cutting its PS3 price in reaction to hardware problems with the Microsoft (MSFT) Xbox. But, the decision is probably due to the fact that the company is not selling many of its flagship game platforms.
Just last week, Sony’s president said the company would not cut PS3 prices. This week its appears that he may have been dazed or confused.
Sony knocked $100 off the cost of the PS3 in the US, bringing the retail cost to $499, more in line with the Xbox 360. Industry analysts say that the component costs for the game platform may have dropped enough to allow for the cut. But, it is a bit hard to believe that underlying hardware costs have dropped 20% in such a short time.
In other words, Sony is probably eating gross margin in a move to get moribund sales back on track.
In May, Sony sold less than 82,000 PS3s in the US. Microsoft sold about 155,000 Xboxs, and Nintendo sold over 338,000 Wiis.
Sony now finds itself in a double bind, and one that it may not be able to get out of. Sales of the PS3 are slow and may not improve, and its is making less money on each unit.
Douglas A. McIntyre can be reached at [email protected].
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