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Hamish Hayward

Sony have been losing money on their 60GB PS3 since it was introduced in the UK. Volume of sales has been lower than anticipated - with one significant factor being the high launch price. The pattern has been much the same in other countries worldwide.

The new 40GB PS3, released in the UK on October 10 2007, is the result of some significant cost cutting efforts on the part of Sony. A lot of the changes were made after discussion with PS3 users. Sony advises that it has made the changes after "feedback from thousands of existing PS3 owners as well as research into future potential PS3 owners."

Possibly one of the most controversial decisions was the lack of backward compatibility with both PS1 and PS2 games. However, Sony's research seems to suggest that this is not an important factor for new users. Presumably, anyone who has a lot of PS2 games also has a PS2 console on which to play them. The backwards compatibility with PS1 and PS2 games was one of the more expensive items to implement on the earlier PS3 version.

Here's a nice quotation form Ray Maguire, the MD of Sony Computer Entertainment UK:

"As we approach our first PlayStation Christmas, it is satisfying to be able to offer UK consumers the choice of two PlayStation 3 packages both now representing remarkable value"

And there's no doubt about it - it does look like a better deal for consumers. It seems like a very aggressive marketing strategy by Sony in the run up to Christmas.

It is worth noting that Sony intend that, in future, only the 40GB PS3 will be available in the UK. The price drop on the 60GB model is intended to boost their sales between now and Christmas and use up the existing stock. After the current stocks of 60GB PS3 consoles are depleted only the 40GB version will be available to the public.

Sony also admit that they have been losing money on the 60GB consoles sold to date and, more surprisingly perhaps, admit that this will continue, even on the reduced cost 40GB console. They will lose less money than before, but they will still lose.

Another factor which will help sales between now and Christmas is the increasing number of PS3 games becoming available.

Current game console market leader, Nintendo, advised that there were no plans to cut the price of the Nintendo Wii. According to George Harrison, senior vice president of Marketing for Nintendo America: "We are still selling everything we can make."

Microsoft's XBox 360 had a recent price cut in August of 2007. With the release of the latest offering in the hugely popular Halo series, imaginatively titled "Halo 3", which is currently only available for the XBox 360, a cut in the Xbox price seems unlikely in the near future.

Hamish Hayward

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