Sony's Gaming chief, Kaz Hirai told the Financial Times recently that his company has no plans to drop the Playstation 3's price leading up to the holidays because he believes the company's console provides the greatest value proposition out of any device on the market.
"The answer is yes, if you're asking, 'Are these the prices we're going with this Christmas?'" Hirai told the Financial Times. "When you really compare apples to apples, then I think we have a very good value proposition."
Hirai is obviously referring to the Playstation 3's Blu-ray player in his case for "value proposition," but I think he unfairly ties the price of the PS3 to that single component.
Sure, the Blu-ray player is arguably one of the most expensive parts in the Playstation 3 and you can't argue that it adds value, but the real consideration isn't "value proposition." Instead, Hirai needs to realize that most consumers are deciding on their next console purchase based off a cost-benefit analysis.
Do I get enough out of my Playstation 3 to justify spending that much cash on it? And more importantly, is it worth the additional $100-$150 it'll cost to have a PS3 instead of an Xbox 360.
Sorry, Sony, but I just don't think it is.
Now that the Xbox 360 can be purchased for as little as $199 and the Wii is still selling out at the affordable price of $249, Sony needs to do something to take the lead in at least one category. It thinks that it's leading in its third-party library, but it's tied (at best) with Microsoft in that category and it's losing miserably in innovative gameplay and online gaming. The only thing Sony has going for it is the Playstation 3's Blu-ray player. And even that may not be the kind of an advantage Sony thinks it is.
Recently, Nielsen VideoScan released figures that must have made Sony worry (to say the least). According to its figures from a couple weeks ago, DVD commanded 92 percent of the market and Blu-ray trailed far behind with a measly 8 percent market share. That isn't the kind of performance that will sell too many units.
Worse, Blu-ray suffers from a slew of issues, including expensive media, no mobility, and a population of people that either don't know or don't care about it.
Realizing that, how can Sony expect to compete on Blu-ray alone? Sure, it's trying to get into the online market and its third-party library is getting better, but with a general lack of exclusives, even that's pushing it.
As I've pointed out on these pages before, companies need to differentiate on product or on price if they want to be successful. Sony is differentiating on product, but it's abundantly clear that it's just not working. And considering it's unwilling to differentiate on price, how can it honestly say that it will be the victor this holiday season?
And although he may never admit, I think Kaz Hirai knows that his claim that Sony provides the best bang for your buck is ludicrous. His comments strike me as nothing more than marketing-speak that try to justify a strategy because no other alternatives are possible. In this case, Sony simply won't drop the price of the Playstation 3 for fear of lost revenue or something we don't know about.
Meanwhile, as economic tumult rocks the world, consumers will flock to stores in just a few weeks and look for game consoles for themselves or loved ones. And as they feel the strain on their wallets, they'll need to consider that before they make a decision. Once they compare the prices of each console, doesn't it stand to reason that the Playstation 3 will sink to the bottom of their lists once they see how much more expensive it is than its competitors?
There's no excuse for Sony deciding to not drop the price of the Playstation 3. Although Sony zealots will claim it doesn't, price matters to the average person who wants to play a couple games every now and then. And if Sony's product is a whopping $100 more than its competitors, why would anyone choose that over competing products?
Yeah, I know, I know: Blu-ray.
Uh huh. Keep dreaming, Sony.