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PlayStation 3: What if...?
Is Sony engaging in early damage control or some incredibly savvy (and risky) marketing?
August 24, 2005: 12:27 PM EDT
Game Over is a weekly column by Chris Morris
Sony's PlayStation 3
Sony's PlayStation 3
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NEW YORK (CNN/Money) I'm starting to wonder if Microsoft might have gotten suckered.

As you may have heard, the company unveiled plans last week for two pricing levels for the Xbox 360. The $400 package is significantly more expensive than console prices of the last few generations, but it offers everything you need to really see the machine at its best. A bare-bones $300 version falls into traditional pricing structures, but won't fully showcase the power of the 360.

Microsoft would never acknowledge that perceived competitor pricing played into its decision and that may very well be true. But it's worth noting the company made the plunge past the $300 point at the same time Sony has been shouting far and wide to anyone who will listen - that the PlayStation 3 is going to be an expensive piece of hardware.

Last month, for instance, Sony Computer Entertainment president Ken Kutaragi reportedly told attendees of the company's PlayStation meeting "I'm not going to reveal [the PS3's] price today. I'm going to only say that it'll be expensive."

At that same event, Kutaragi mentioned "I'm aware that with all these technologies, the PS3 can't be offered at a price that's targeted towards households." And just one month earlier, he reportedly told Japanese magazine Toyo Keizai "Our ideal [for the PS3] is for consumers to think to themselves, 'OK, I'll work more hours and buy it.' We want people to feel that they want it, no matter what."

Now, before the emails start, I should probably mention that, like the rest of you, I have absolutely no firm idea what Sony will charge for the PlayStation 3. It may indeed be as expensive as the company has been warning.

But just for argument's sake, what if Sony is playing a high-stakes round of chicken?

After all, the company has almost a year before the PS3 hits the streets (or more if you believe some conspiracy theorists) and we probably won't see it in the U.S. until next holiday season. Wouldn't it be a sharp marketing move to set consumer expectations for a high price, then surprise them with something drastically lower?

It's not like Sony hasn't done so before. The PSP, when it launched in Japan, cost just $186, despite rampant speculation the portable device would cost upwards to $300. Granted, those were analyst expectations and not company proclamations, but Sony sure didn't go out of its way to guide those analysts lower. In fact, it even stayed silent after Atari CEO Bruno Bonnell lobbed a public verbal grenade, predicting the machine would cost $500.

By prepping consumers to spend $400 or $500, then announcing a retail price of $300, you convince them they're getting a bargain and potentially create an even bigger buying rush than a system launch normally does.

Microsoft, meanwhile, scares off some potential buyers with its $400 price tag, giving it a smaller head start in the race to a substantial installed customer base and erasing some of the competitive advantage it has in being first to market.

There's a flipside to this hypothesis as well. Sony might have been talking up higher prices to convince Microsoft to make the first move.

While a few historical consoles have crossed the $300 price point, none were serious contenders for significant market share. The Xbox 360 is a test case and one that could meet some consumer resistance.

But it also gets buyers used to the idea of paying more than $300 for a video game machine. If the PS3 does, in fact, come out at a premium price, it won't be the first time consumers have seen a higher price. They might be unhappy about it, but by the time the PS3 hits shelves they will have had time to adjust to the fact that prices are moving up.

Don't misunderstand: The Xbox 360 will sell out this holiday season with ease. After that, the images in the crystal ball get murkier. And Microsoft's decision to offer two pricing tiers may have been solely tied to the cost of the hardware. But Sony is quite adept at using the media to its advantage. And I can't help shake the feeling they've done so again.


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


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