TGS 06: Analyst: PS3 price drop a sign of 'weakness'

Industry analyst Mike Wallace issued an investor memo today reacting to news that Sony intended to drop the price of the low-end, 20GB PlayStation 3 in Japan.

Wallace, who covers the game industry for UBS Securities, called the move "a questionable business decision and a sign of weakness" on the part of Sony.

Stating that Sony said it made the move "in response to consumer complaints about the console's price," Wallace paints the decision as window dressing at most.

"This price cut is only on the 20GB version of the PS3 in Japan, which in our view is not significant given that the US is the key market for the PS3," Wallace said in the memo.

He emphasized that even at the lower price point, the model remains more expensive than either the Xbox 360 or Wii in Japan, and he goes on to further dilute the impact of the price drop by reiterating his view that the 60GB PS3 model is likely to be the more popular one in Japan, regardless of pricing.

PlayStation boss Ken Kutaragi said yesterday that in Japan, Sony would cut the price of the lower-end PS3 (with the 20GB hard drive) to 49,980 yen (US$429) from 60,000 yen (US$515).