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PS3 Price Cut Is “Ridiculous” Claims Analyst

PS3 Price Cut Is “Ridiculous” Claims Analyst

September 22, 2006 | By David Jenkins

September 22, 2006 | By David Jenkins
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More: Console/PC

Reaction to the Japanese price cut of the basic 20GB hard drive version of the PlayStation 3 has been unexpectedly negative according to analysts quoted in an article by the Bloomberg news agency.

The price cut, which will only affect Japan, was announced yesterday by Sony Computer Entertainment boss Ken Kutragi. The cheaper of the two hardware variations was originally priced at ¥59,800 ($515) but was reduced to ¥49,980 ($430), at the same time as a HDMI video port was also added to the unit.

Although price cuts before a launch are certainly not unusual in the history of the games industry, Yoku Ihara, head of equity research at Retela Crea Securities, commented that: “It's ridiculous to decide to cut the price before they start selling the PlayStation 3.” Adding, “They may cut the price again if sales don't go well.”

Meanwhile, Naoki Fujiwara of Shinkin Asset Management suggested that the price reduction was “negative for the short term because the company may not be able to sell enough consoles to cover an instant loss caused by the price cut.” The PlayStation 3 was already expected to be sold at a loss, with Sony allowing up to five years to recoup the costs.

Shares in Sony fell 1.9 percent following the announcement, although this coincided with a generally poor day for the Tokyo Stock Exchange and may not be entirely related to the price cut.

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