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Pricing and the PS3

by User Not Found | Dec 21, 2006

One thing people continually fail to predict accurately is pricing. I have included myself in this in the past and we strive harder to improve. So much analysis of what will happen is based on today’s, or even worse, last week’s pricing. Our technology vendor clients hate to see dramatic price crash predictions, but that’s pretty much the rule of thumb. Latest example is Circuit City, whose shares crashed this week after they admitted being taken by surprise by flat panel TV prices. So whose forecasts were they relying on?

Prices fuel many press stories, naturally enough. The PS3 is said to be losing ~$200 a piece. Well, maybe, but that was last week’s news. As production ramps up the price equation has already moved on from any retrospective teardown analysis. The laser diodes and Cell processors will be churned out in their millions over the next few months, and the Japanese will do what they’ve always done best – squeeze every last ounce of inefficiency out of the manufacturing process – and costs will plummet. And Sony will meet their PS3 targets in my view, in spite of so much negative press, and go on to dominate the next console cycle.

I have lost count of the press calls I have taken wanting comment on how badly PS3 is performing. I do my best to explain that a few weeks is irrelevant in the ten-year lifecycle of a games console, but it’s hard work when most of the mainstream press is only interested in what might happen tomorrow. Sony haven’t thanked me for running this damage limitation campaign single-handed. It wouldn’t do Howard Stringer any harm to make his next task to sack whoever it is claims to do PR for them – there surely is good news somewhere inside that organisation but only they know why they make it so hard for anyone to find it.
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