When Microsoft announced their price cut in the beginning of August it seem this might have been a tool to keep the Xbox 360 from falling behind in sales to the PS3 and any backlash over the admittance of a hardware problem in the console.  It's been over a month since the price cut and we have some preliminary sales numbers that show not only is the Xbox 360 out selling the PS3 but it is moving at a 75% increase in sales.  This should mean that the Holiday '06 hang over is gone and sales should be at a healthy 250K units per month.

The increase can be linked to two factors: Halo 3 is coming out in a month so people are buying their consoles now and many buyers where holding out for a price drop.  This holiday season we will see a significant drop in sales of PS2 titles because the majority of new games will be coming out on the current gen consoles.  Those PS2 gamers need to make a choice between the PS3 and the 360.  The games they loved on the PS2 are not going to be on the Wii.  The majority of those games will be now available on the Xbox 360 (Ace Combat 6, Resident Evil 5, Devil May Cry 4, Sega Rally Revo and Virtua Fighter 5 to name a few). 

The fact the PS3 is still not selling 150K units a month has to be worrying Sony.  These Sony gamers are out there but are they willing to pay $499 for a game console?  So far it has been suggested that general consumers are not willing to purchase a product that costs over $399.  The iPhone and the PS3 are examples of consumers not willing to drop they hard earned cash on over priced electronics.  Apple has already drastically dropped the price of the iPhone.  Sony's price drop seems to have had a good effect on their sales but they still trail the Xbox 360 and the Wii.  It has been suggested by industry analyst Michael Prachter that Sony will come out with a $399 PS3 with a 40GB hard drive for the holidays.  If Sony doesn't announce this product this week at Tokyo Game Show then it will not happen.  This price drop would allow them to compete against the Xbox 360 more head to head and would probably get more PS2 gamers to stay with Sony.

The problem with drastic and/or frequent price cuts is they make you look desperate.  Sony took a huge gamble on including BluRay in the PS3 and so far it has failed.  BluRay forced Sony to push the release date and price the console out of the average gamer's affordability.  As Microsoft drops their price they again capture more market share from Sony squeezing them out of the high end console market.  This holiday season could be the last for the PS3 if they can not manage to sell over a million units in December.  A drastic move might be what Sony needs to do to save the PS3.  Otherwise we will be hearing about how this holiday season the winners were Microsoft and Nintendo. 


http://www.joystiq.com/2007/09/11/is-the-ps3-above-the-average-consumers-price-ceiling/
http://www.joystiq.com/2007/09/07/pachter-399-ps3-by-next-april-xbox-360-rebounding-in-aug-npd/2