PlayStation 3 officially drops $100 USD

By Stevie Smith Jul 9, 2007, 13:00 GMT

Despite Sony issuing a categorical "no" at the tail end of last week regarding an imminent price drop to its under performing PlayStation 3 videogames console, the Japanese electronics behemoth has now executed a corporate 180° turn and confirmed that a $100 USD cut will come into effect today.

The latter half of last week saw the Internet ablaze with PlayStation 3 price cut rumours, which sprang up following the scanning and posting of a leaked promotional flyer from US retail giant Circuit City. The flyer in question clearly showed the PS3 priced at $499 USD – a solid retail drop of $100 USD – as did a similar circular emanating from Best Buy in Canada, which reduced the console by $150 CAD.

Net-based speculation suggested that any retailer-led price cut would likely come into play following the close of the new E3 Business & Media Summit 2007, which takes place this week in California and closes on Friday 13. Sony initially refused to comment on the flyer "rumor" before Sony President Ryoji Chubachi later stated that the company had no intention of reducing the cost of its latest piece of gaming hardware.

However, Sony’s much-talked about $100 USD price cut has now arrived, marking a hardware cost reduction of 17 percent in the US and an increase in Sony’s belief that the PlayStation 3’s retail performance can vastly improve as a result.

"Our initial expectation is that sales should double at a minimum," said Jack Tretton, chief executive of Sony Computer Entertainment America (SCEA), in a Reuters report. "We've gotten our production issues behind us on the PlayStation 3, reaching a position to pass on the savings to consumers, and our attitude is the sooner the better."

While Sony has confirmed that the current 60GB PlayStation 3 will sell for $499 USD (the same as the defunct 20GB PlayStation 3) it has also announced that the improved capacity 80GB PlayStation 3 will hit US shores in August and slide into the vacated $599 USD slot. The 80GB pack will include million-selling off-road racer Motorstorm and is aimed at the more download-intensive PlayStation Network gamers, says Sony.

Wedbush Morgan analyst Michael Pachter notes that Sony’s move is "pretty consumer-friendly" and outlines that the company has "come down the [manufacturing] cost curve pretty fast." Pachter doesn’t share Sony’s retail enthusiasm concerning the $100 USD reduction however, and offers that the price cut will likely lead to around 50 percent hardware sales improvement boosting Sony into the region of around 120,000 units per month.

The newly positioned $499 USD 60GB PlayStation 3 (which is also Blu-ray equipped) will still fall $20 USD short of the $479 USD price attributed to the 120GB Xbox 360 Elite; though the Elite is not HD-DVD equipped out of the box. The price difference between Sony and Microsoft could swiftly grow again note industry watchers who believe Microsoft might counter Sony’s move by uncovering its own price cut strategy during this week’s E3 event.