Should the big 3 game consoles get price cuts?

Rumors are swirling that the big three consoles--the Nintendo Wii, PlayStation 3, and Xbox 360--will soon sell for less. Would the price reductions make sense?

Nintendo Wii
Should the Wii stick with its current price? Nintendo

More rumors have been surfacing about the possibility of Xbox 360 and PlayStation 3 price drops.

According to reports , the Xbox 360 Elite might be reduced to $299 from its current price of $399. The possibility of a PlayStation 3 Slim is also causing a stir. Sony hasn't made any confirmation that it will, in fact, release the PlayStation 3 Slim, but it could help the company appeal to those who have balked at buying its expensive console.

Rumors have even surfaced that Nintendo might be planning a Wii price cut to maintain price leadership in the market.

But are any of those price cuts necessary? We need to consider each console on its own merit to determine if it's time for a price cut.

Sony
I don't think there's any debating that Sony's PlayStation 3 is in desperate need of a price cut. The console has trailed the competition since its launch. According to NPD sales figures, Sony has sold almost 23 million PlayStation 3 units.

PS3 sales are being easily overshadowed by competitor sales. Sony sold just 131,000 PlayStation 3 units in May . Microsoft, meanwhile, sold 175,000 Xbox 360 units. Nintendo led the way, selling 289,500 Wii units. Similar sales results have been haunting Sony since the console was released.

When we consider the PlayStation 3's value to the consumer, Sony is doing well. It has Blu-ray compatibility, a good lineup of first- and third-party titles, and a really nice online platform. The only issue with Sony's platform is its price.

If Wii sales have proven anything, it's that consumers today covet affordability and fun. The PlayStation 3 provides a nice fun factor, but it's too costly. The 80GB PS3 model is the same price as the Xbox 360 Elite and $100 more expensive than the Xbox 360 Pro. It's $150 more expensive than the Wii.

With a price cut, Sony could finally appeal to those who are choosing cheaper consoles over the more powerful alternative. Money matters--especially in this economy--and Sony needs to realize that.

My verdict for Sony: drop the price.

Microsoft
Microsoft is in a far better position than Sony. Its console might not be leading the way, but it's performing well. Since its launch, Microsoft has sold 30.9 million Xbox 360 units. That's more than 7 million more units sold than the PlayStation 3.

That said, it makes sense for Microsoft to reduce the price of the Xbox 360. Strategically, it puts Sony--its main competitor--on notice and makes the PS3 look even less attractive to cost-conscious consumers.

When consumers go to a store looking for a console with more power than the Wii, they decide between the Xbox 360 and the PlayStation 3. As I noted above, the Xbox 360 Elite is priced at $399--the same price as the 80GB PlayStation 3. If Microsoft reduces its price by $100, which most rumors suggest will happen, it's possible that many of those sales will go to the Xbox 360. And isn't that the goal in the first place?

My verdict for Microsoft: drop the price.

Nintendo
A Nintendo Wii price cut is a different story. Unlike the PS3, the Wii is performing well in the market. So far, Nintendo has sold 51 million Wii units. It's easily controlling the space.

And although Wii demand has slipped lately, the console is still in the lead by a wide margin. To drop the price now wouldn't make much sense.

Nintendo, however, has an opportunity to improve Wii sales by offering more value--i.e., bundling the console with the new Wii Sports Resort and a Wii MotionPlus--without reducing its price. Grouping the Wii with such highly coveted products could prove very enticing for consumers.

My verdict for Nintendo: maintain the price but add value.

What do you think? Should these companies reduce the price of their consoles? Let us know in the comments below.

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About the author

Don Reisinger is a technology columnist who has covered everything from HDTVs to computers to Flowbee Haircut Systems. Besides his work with CNET, Don's work has been featured in a variety of other publications including PC World and a host of Ziff-Davis publications.

 

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