Sony: Who Needs a PlayStation 3 Price Drop?

Sony teased Final Fantasy XIV and The Last Guardian. Microsoft trotted out new Halo games. Nintendo laid down Mario and Metroid. Everyone sang to the rafters at last week's E3 about motion controls. And in the end, despite recessive economics, no one budged an inch on pricing.

Sony even had the audacity to announce its new diet-handheld--the PlayStation Portable Go--for $250, eighty bucks more than its $170 PSP-3000 for "smaller," "lighter," Bluetooth, 16GB of local storage, and extrication of the UMD disc drive. Is miniaturization worth that much? You tell me. And no, the new downloadable games won't be cheaper--they'll be priced same as the UMD ones were.

At least one major game publisher weighed in disappointedly. Activision CEO Bobby Kotick told Bloomberg: "Of all the things that the hardware companies need to be doing right now, it's recognizing the difficulties of the economy and pricing their hardware appropriately."

GameStop CEO Dan DeMatteo echoed Kotick's comments in a conference call: "The hardware price points, where they are right now given this economic environment, are too high...if the platform holders are going to make the numbers that they've forecasted for the year, those numbers will have to change."

What about the other guys? It's hard to criticize Nintendo, whose $250 Wii may be priced high given its low manufacturing costs, but whose sales have--up until now--justified its position. And while Microsoft may be gouging consumers on its peripheral costs ($100 Wi-Fi? $150 for 120GB?), they dodge system price criticism by unbundling everything and easing your upfront investment.

Sony's position? "We're very happy with the price point that we have," said games division honcho Kaz Hirai at E3, adding the company "will move when we think it's appropriate at some point in time."

Defenders of Sony's position? "It's the profit-margins, stupid." With manufacturing costs still surpassing retail pricing as recently as May, the PS3 remains a loss leader for Sony. If you're selling $50 short, losing $500k on a hundred thousand units is a lot easier to swallow than $50m on a million. Sony advocates say the company's simply waiting until the system passes a certain cost-threshold, and while the PS3's consistently placed last in domestic hardware and software sales since its release, it's actually been gaining sales ground over the last 12 months, relative to the competition.

Rumors of a cheaper PS3 Slim? Price cutting to follow, finally, end-of-summer? Where the so-called expert analysts have been flatly wrong, laymen needn't dogmatize. I'm giving up second-guessing. With Sony's compelling 2009 entertainment lineup at odds with hardware pricing and consumer spending, the company will either turn out to be the turtle--"slow and steadfast wins the race," or the mule--"sedate and stubborn loses it." For all our sake's, let's hope it's the former.

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