Sony CEO Stringer: No PS3 price cut
Sony Corporation's Chief Executive Officer Sir Howard Stringer made statements at the Allen & Co. Conference yesterday affirming the company's pricing strategy for its PlayStation 3. If the video game console got any cheaper, Reuters quotes Stringer as saying, "[I'd] lose money on every PlayStation I make, how's that for logic?"
Last month, Activision Blizzard CEO Bobby Kotik went on the attack against Sony, saying, "They have to cut the price [of the PS3], because if they don't, the attach rates are likely to slow...If we are being realistic, we might have to stop supporting Sony."
"He likes to make a lot of noise," Stringer said of Kotik. "He's putting pressure on me and I'm putting pressure on him. That's the nature of business."
The public correlates the PlayStation 3's high price points with its low sales figures, but often neglects to take into consideration the fact that Sony has always offered the console at a tiny profit, or even at a loss because of the cost of the hardware.
When the console debuted in 2006, Sony Computer Entertainment of America President and CEO Kaz Hirai said the company would not be cutting any corners to get the console to market, which meant no settling for replacement processors or components, even though countless successful consoles before PS3 were released with lower power than had originally been planned.
Even though it was already taking a hit on its expensive hardware, Sony dropped the console's price by $100 in 2007, after Stringer told the Financial Times that the company was struggling with consumer-friendly pricing. In the ensuing quarters, sales of the PlayStation 3 went up, as the company's profits were simultaneously going down.
That decline in profit has only continued as the strengthened Yen decimates Japanese CE export profits. While cutting the price of the console is a sure-fire way to increase sales in the United States, the profits back in Japan are already decreased, and any further reduction would be -- as Stringer said -- not logical at all.