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Sony mum on PlayStation price cut
It's PS2 vs. Xbox 360 this holiday season. How will Sony fight to stay on top?
October 28, 2005: 10:46 AM EDT
Game Over is a weekly column by Chris Morris
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NEW YORK (CNN/Money) - Could Sony have a November surprise up its sleeve as Microsoft prepares for the Xbox 360's launch?

While the company, its partners and analysts have all maintained there are no plans to lower prices on the PlayStation 2 this holiday season, a recent announcement has raised questions about whether there might be a shift in Sony's plans.

As part of its earnings release Thursday, the company raised its PS2 shipment forecast by 1 million units.

The PS2 has always been popular (last holiday, retailers couldn't keep them in stock), but it faces stiff competition this year. Let's be honest: It's not the youngest kid on the video game block; in fact, it's the oldest. It's still the strongest, though, and doesn't intend to give up its sales crown - even for the short term - without a fight. That could conceivably mean a price cut.

Sony (Research), naturally, isn't saying anything. Calls to the company for comment were not returned.

Analysts are mixed. Michael Pachter of Wedbush Morgan Securities, in an Oct. 10 note, predicted a large cut in the days leading up to the Xbox 360's launch.

"We expect a price cut for the PS2 later this year," he wrote. "We believe that Sony will respond to Microsoft's (Research) introduction of its next generation console with a cut from $149 to $99 some time before the November 22 Xbox 360 launch. We think that Sony has positioned itself to lower price by reducing the production costs of its console when it redesigned the box to a smaller format."

He's less sure of that these days, he admitted, but hasn't ruled it out.

"Every day we get closer to Christmas, my confidence lessens," said Pachter. "Once we get past Nov. 15, there's no chance."

Arcadia's John Taylor said he's not expecting any price cuts from Sony, noting that all of the company's previous price cuts have come in March, May or August.

"Sony has never cut price during the holidays," he said. "I don't think it's in their DNA."

If a price cut were coming for North America, he said, there would be more noise about volume availability. So far, there's not. (It's worth noting, though, that hardware companies have been known to surprise retailers with price cuts sometimes with less than 24 hours notice.)

American Technology Research's P.J. McNealy agrees that price cuts are unlikely.

"Sony has had good PlayStation 2 hardware volume so far this year," he said. "Their focus right now is to drive PSP hardware more than anything else. Sony also doesn't want to be perceived as responding to Microsoft and the 360 launch by trying to grab our attention with a PS2 price cut."

The Xbox 360, hitting stores Nov. 22, will undoubtedly be one of the hottest gifts this holiday season. It's going to be one of the most expensive gifts as well, with a price tag of $299 for a no-frills version and $399 for a bells-and-whistles version.

Should Sony decide against cutting prices, there are other ways to make the PS2 more attractive to consumers, such as bundling the hardware with one or more popular games. The extra units could also be earmarked for Europe, which has been a particularly lucrative market for the company lately.

The time is coming for a PS2 price cut, even if it's not this holiday season. The system has been holding at $149 since May 2004. (Sony actually didn't want to cut prices at the time, but once Xbox sales surged after a similar cut in March, it was forced to respond.)

So is a price cut imminent? It's anybody's guess. As Taylor so philosophically put it: "The (video game) world is full of speculation and hypothesis right now, but very low on fact."

How does the Gizmondo compare to the PSP and Nintendo DS? It ain't pretty

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Morris is Director of Content Development for CNN/Money. Click here to send him an email.  Top of page

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