E3 '07: Sony already discontinuing $499 PS3?

[UPDATE] European exec says North American price drop is just to flush out existing inventory, a statement contradicted by US reps, and then confirmed by Kaz Hirai himself.

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Source: See below.

The official story: See below.

What we heard: The console wars heated up this week when SCEA knocked $100 off the price of the 60GB PS3 cutting into Microsoft's Xbox 360 price advantage. Unfortunately, gamers across the Atlantic won't get a similar price cut on the system. Last night, Sony Computer Entertainment Europe instead announced a new PS3 bundle that would come with two games--Resistance: Fall of Man and MotorStorm--and an extra controller.

When asked why European consumers aren't getting the same treatment, SCEE president David Reeves said that the North American drop wasn't really a drop at all.

"Let's understand what the Americans have done," he told GameSpot UK. "They're going to introduce an 80GB model at $599 with MotorStorm on August 1, and they've got stock in trade of the old model. They're just selling it off, they're not dropping the price. The price from August 1 is going to be $599 because all the 60GB models will have gone. They've got to find a way to get rid of the old stock, and that's what they're doing."

Reeves gave nearly identical statements to several European outlets, setting off a firestorm before the sun rose on the E3 Media & Business Summit in Los Angeles. To help clarify the matter, GameSpot contacted Dave Karraker, senior director of corporate communications at Sony Computer Entertainment America. However, his answer further clouded the waters by directly contradicting Reeves' statement.

"Those quotes from David Reeves are not accurate," he told GameSpot. "As announced this week, SCEA's product offering in North America consists of a 80GB PS3 available in August at $599 and a 60GB PS3 available now for $499. We have will have ample supplies of both models to meet the needs of our consumers for the foreseeable future." Follow-up calls for further clarification were not returned.

Bogus or not bogus?: Indeterminate. On one hand, Reeves no doubt has insight into Sony's North American plans for the system. On the other, SCEE and SCEA are not the same operation, and it seems strange for SCEE to downplay SCEA's price cut announcement like this. (Shouldn't Microsoft and Nintendo be doing that instead?) It's also bizarre that SCEE would break "bad news" that--if true--SCEA would no doubt convey at a time of its own choosing, with every last word delicately selected so to ruffle as few feathers as possible.

At the same time, dropping the 60GB system less than a month after dropping its price makes no sense. On top of the consumer outrage at once again being deprived of a $499 PS3 (the original 20GB $499 system was discontinued in April), it could easily have fished out a retaliatory price cut from Microsoft. Such a forced cut might stifle Microsoft's ability to turn a profit with its console business this year (as it has repeatedly stated it will), but that won't do Sony much good if consumers are choosing between a $600 PS3 and a system half the price that plays a lot of the same games.

But Reeves ultimately isn't the one who makes the call on the system's North American price, and SCEA says it's not going to drop the 60GB PS3 for the for foreseeable future. Frankly, discontinuing a system after heavily promoting its price reduction would be a disaster, PR-wise. It also wouldn't do any favors for a system playing catch-up to the 360, which launched a year ahead of Sony's machine, and the Wii, whose budget price and nontraditional gameplay are stoking sales.

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