Sony Computer Entertainment has failed to cut the price of the PS3 in Australia despite the fact that the exact same unit is now being sold in the US at $600, some $399 cheaper than in Australia.
SCE in Australia are also pocketing the difference caused by the increase in the value of the Australian dollar which when the PS3 was launched in February 2008 was $0.75 to the US dollar. today the US dollar is worth $0.85. In the USA the price of the same PS3 unit sold in Australia has been slashed 17%.
Yesterday SCE did not return calls on the issue.
Across the the board the Sony product range in Australia is massively overpriced with Sony insiders blaming Australian retailers for the problem. While the PS3 is $399 dearer than the US PS3, the recently launched Sony Blu-ray player is $599 dearer than the same model in the USA. The Sony SLR Digital Still Camera is some $499 dearer than the same model being sold in the USA.
In the USA, a mass market retailer like Circuit City is taking a margin of arond 12%. In Australia, the likes of Harvey Norman which is among the most expensive of retailers to buy a CE product is taking over 35% plus a product training rebate. In addition it is forcing vendors to pay for advertising in a Harvey Norman catalogue, plus pay for the training of Harvey Norman staff. All of this extra cost is passed onto the Australian consumer while Harvey Norman reports record profits.
Thirty-six hours ago Sony executives said that they would not be cutting the price of a PS3 in the USA. Then overnight at the E3 games show in Las Vegas they slashed $100 off the US model in a move that should boost the video game console’s lackluster sales.
The new PS3 still costs twice that of Nintendo Wii console, whose motion-sensing controller have made it a best-seller.
“Our initial expectation is that sales should double at a minimum,” Jack Tretton, chief executive of Sony Computer Entertainment America, said in an interview.
“We’ve gotten our production issues behind us on the PlayStation 3, reaching a position to pass on the savings to consumers, and our attitude is the sooner the better.” The price drop was widely anticipated by industry analysts despite Sony President Ryoji Chubachi telling Reuters last week that the company had no immediate plans for one.
Wedbush Morgan analyst Michael Pachter said Sony’s price reduction would not double sales but may boost them by 50 percent to about 120,000 units a month. “The greater significance is that Sony is signaling to the market that we’re coming down the cost curve pretty fast in making this thing. It’s a pretty consumer-friendly move,” Pachter said.
Sony’s move comes at the start of the video game industry’s annual E3 trade show in Santa Monica, where some expect Microsoft to respond with its first price cuts on the Xbox 360.
Nintendo, whose Wii is selling so well that it is still hard to find in stores eight months after its launch, is not expected to budge on pricing.
The Xbox 360 and Wii have outsold the PS3 by several times in the crucial U.S. market, leaving Sony, whose Playstation 2 dominated the last console generation, in the unfamiliar position of playing catch up.
Sony is counting on the price cut to help it significantly grow sales of the PS3 ahead of the crucial holiday shopping season that accounts for most of the annual sales of highly profitable gaming software.
Sony is also introducing a new version of the PS3 featuring an 80-gigabyte hard drive and a copy of “Motorstorm,” an off-road racing game that has already sold a million copies.
The new model will sell for $600 (A$697) and is aimed at gamers who expect to download a lot of games and other content from Sony’s burgeoning online network.
Sony also hopes the PS3 will win some converts following Microsoft’s admission last week that the failure rate of its Xbox 360 console had been unacceptably high, forcing it to book $1 billion in repair costs.
“We’re especially proud of the fact that the PlayStation 3 has the lowest failure rate of any PlayStation product. It’s absolutely the gold standard,” Tretton said.
“The quality of the product and long-term viability is what ultimately wins.”