PlayStation 3 price - $500?

PlayStation 3 price - $500?
Analysts, developers say they expect Sony's new console to break new price barriers.
Game Over is a weekly column by Chris Morris
January 11, 2006: 10:17 AM EST


NEW YORK (CNNMoney.com) – While there was little doubt the Xbox 360 was going to be a hit in the just completed holiday season, no one was real sure how consumers would react to the $399 price tag.

Despite the $100 bump over the launch price of the original Xbox, few seemed to mind. Now, with Sony's PlayStation 3 looming, it appears another price threshold may be crossed before the year is out.


Sony's PlayStation 3 is expected to release later this year.


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Sony hasn't commented on specific pricing figures, though Ken Kutaragi, president of Sony Consumer Entertainment, reportedly told attendees of a 2005 corporate meeting "it'll be expensive." Analysts and many video game developers, though, suspect the system may debut with a price tag reaching nearly $500.

"[Sony] could now consider launching its PlayStation 3 at a price range of $399 to $499, with the $499 price point more likely," said American Technology Research's P.J. McNealy in a note to clients Monday.

Sony, as you might guess, didn't have much to say about McNealy's theory.

"We haven't made an official announcement about pricing yet," said Ryan Bowling, PR manager for Sony. "At this point, that's all speculation."

The strongest argument behind the $499 price point is the PS3's inclusion of a Blu-Ray drive. This bleeding edge technology will give Sony (Research) significant bragging rights, but it comes at a cost. Pioneer last week at the Consumer Electronics Show unveiled a standalone Blu-Ray player for $1,800.

Obviously, Pioneer's earning some profit there – and Sony will almost certainly subsidize the cost of the drives, but you're still looking at an expensive bit of hardware. The PS3 will also feature other pricey items, such as a hard drive, the Cell processor and a new graphics chip from nVidia (Research).

Developers, for the most part, say they, too, are expecting the PS3 to be more expensive than the Xbox 360's highest price package. Sony, they said, has been sending mixed messages to the gaming world, but several developers I spoke with (under the condition of anonymity) said their studios were expecting the system to launch at $499.

There wasn't universal consensus, though. Some predicted the price would be closer to $450, others said they wouldn't be surprised if it was as high as $600. $700 was mentioned by a couple of developers, though even they said the number seemed unreasonable. And one game maker felt Sony would try to stay in line with Microsoft, offering the PS3 for just $399.

None of the developers, by the way, echoed my hypothetical theory that Sony might be pulling a head-fake on Microsoft with the high price warnings, though a couple did bring up the months of speculation leading up to the PSP's launch. Analysts, journalists and even publishers were wildly grasping for a solid clue about the launch price of the handheld device. (Atari's CEO even publicly proclaimed he expected the PSP to sell for $500.)

Sony, while this went on, smiled enigmatically and did nothing to dissuade anyone that the device would be $300 or more. It launched at $249, still incredibly expensive by handheld standards, but lower than some consumers were expecting.

We're seeing much the same thing with the PS3. After an onslaught of information last May, the company hasn't released any information of substance. Even at CES, the device was an essential no-show. (A hardware design was there to be gawked at and a video loop of potential gameplay footage, but no new information was announced.)

There's one other possibility about the PS3 that few people have discussed: Dual-pricing strategies. It's frustrating from a consumer standpoint, but Microsoft proved it can work – at least in the U.S. Whether Sony's willing to risk fragmenting the market by offering both "bare bones" and "bells and whistles" versions of the PS3 is another matter.

For one thing, it would look as if Sony were following Microsoft's (Research) lead – a vision the market leader does not want to convey. Offering a PS3 with reduced features would also chip away at the company's stance that the system is much more than a video game machine.

Whatever Sony decides, we should start to get some sort of clarification in the next few months – almost certainly by E3 in May. One thing's for sure, though: For saying a whole lot of nothing, Sony has somehow managed to keep everybody talking about its product.

Credit: CNN.com