The 20GB version of the PS3 will now launch in Japan for only ¥49,980 ($429 / €334) instead of the previously announced ¥59,800 ($513 / €400). Sony Computer Entertainment made the surprise announcement at the Tokyo Game Show.
They further announced that a HDMI port was going to be included with that version, after all. Here is the official press release:
PLAYSTATION®3 HDD 20GB EQUIPPED WITH HDMI AS STANDARD
Recommended Retail Price of 49,980 Yen (Tax Included) in Japan
Tokyo, September 22, 2006 – Sony Computer Entertainment Inc. (SCEI) today announced that PLAYSTATION®3 (PS3) with 20GB hard disk drive (HDD) will come equipped with HDMI(*) (Ver 1.3/supporting Deep Color) output as standard with the system. PS3 with 20GB HDD will become available in Japan at a new recommended retail price of 49,980 yen (tax included).
Since SCEI first announced product specifications of PS3 at the Electronic Entertainment Expo (E3) in May 2005, demand for enjoying full HD quality image and realistic digital sound through HDMI has grown tremendously. Given the sharp increase in availability of flat displays supporting HDMI in the market, SCEI has decided to equip HDMI as standard on all PS3 systems.
SCEI, with strong support from software developers and publishers, will offer a broad lineup of exciting and innovative titles and vigorously promote the PS3 platform.
To prevent any speculation about price drops in other regions, 1UP has spoken to Sony reps on the ground who specifically ruled this out.
So is Sony getting scared? Or are they merely passing cheaper component prices on to the consumer? We don´t know. However, a price drop prior to the product launch is always an embarrassment. It shows that the company has failed to take all the relevant factors into account when drawing up the original price.
Let´s remember the spectacular price drops of the recent past. Within roughly two months of its launch, the original Xbox dropped from €479 ($613) to €299 ($383). Media interpreted this as an attempt to kick start sales. Subsequent to the announcement, Nintendo followed suit, dropping the European price from €250 to €199 prior to launching the console, before slashing the price in the US a month later.
This hurt both the Xbox and Gamecube significantly, causing potential buyers to turn towards PlayStation2, a console that always seemed to have a solid price and whose price drops over time always seemed to have been planned ahead. Microsoft and Nintendo, instead, appeared to be headless chicken, hastily adjusting their prices just after and just before their product launches, respectively.
Now, it´s Sony´s turn to be the chicken - in more than one way, perhaps. Of course, there is no denying that a lower price makes a product more attractive and may cause a surge in sales. But it damages faith in the company and, ultimately, the product itself. And while the PS3´s new price point may ensure better sales in Japan, it´s not good news for Sony overall. Especially if words on this gets out to North American and European customers, they may be inclined to ask why they are bearing the brunt of Sony´s hasty change in pricing policy.
To my knowledge, Sony has never had to make rushed price adjustments like this one, which undoubtedly helped the PlayStation as a product. My guess is that this announcement will indeed tarnish the PlayStation´s image significantly. In the short run, this will not even boost PS3 sales, because Sony was already sure of selling out the first batch, anyway.
EDIT Analysts are sharing my opinion. Here´s what some told Bloomberg:
"It's ridiculous to decide to cut the price before they start selling the PlayStation 3. They may cut the price again if sales don't go well."
Yoku Ihara, Retela Crea Securities Co., Tokyo.
"(The price reduction) is negative for the short term because the company may not be able to sell enough consoles to cover an instant loss caused by the price cut."
Naoki Fujiwara, Shinkin Asset Management Co., Tokyo.
Sources: Sony Computer Entertainment International, Bloomberg
Thanks to: Joe_News, 1UP, Next-Gen, Joystiq