Sony CEO: No '08 PS3 price cut
Sir Howard Stringer tells <i>Die Welt</i> that his company isn't planning a further console price drop; says Wii "may be a superior business model" in terms of hardware profitability.
In the wake of last week's announcement of a new $499 160GB PlayStation 3, executives at retailer GameStop predicted a $50 price cut for the 80GB model by year's end. However, in an interview published today, Sony Corp CEO Sir Howard Stringer ruled such a move out. Speaking with the German Newspaper Die Welt, the Welsh-born executive--and first non-Japanese chief of Sony--was asked if his company planned to reduce the PS3's price by the holidays. "I think not," the executive stated flatly.
Stringer also had some choice words to say about one of the PS3's rivals, the Wii. He admitted to playing Nintendo's console, which he diplomatically described as offering "a different experience." He also said that he doesn't consider the console as a threat. "The Wii is not succeeding at our expense--it is not hurting us," he explained. According to last month's NPD figures, the Wii was outselling the PS3 in the US by two-to-one, with the Xbox 360 running a close third place.
Stringer continued, "The Wii is a well-made device that has found a new target group. For a while, we held the same target group with the SingStar karaoke game. But perhaps we neglected to pursue that avenue. PlayStation games are rather designed for those who play a lot. Although it's a different strategy, it pays off... The major difference lies in the fact that Nintendo makes money with the hardware alone, which may be a superior business model."
Unfortunately, by his own account, the CEO said that it will be a while until the PlayStation 3 hardware becomes profitable. Although Sony's PS3 manufacturing arm has hit a "production bottleneck" due to demand, Stringer joked that Sony won't make back its hardware-production cost "for as long as I live."
"The traditional business model for the PlayStation envisaged us making a loss with the hardware in the early years until the production costs had decreased to a point that enabled us to break even," explained Stringer to Die Welt. "In the meantime, we earn money with the games. We are currently at the stage in which we need to get a grip on the production costs. That takes time. We are already making more money with the games than we are losing with the hardware."
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