Sony Cuts PlayStation 3 Prices as Many Xboxes Fail
Facing slower-than-expected sales of its PlayStation 3 video game system, Sony said it would announce Monday that it planned to lower the price of its console in the United States by $100, to $500, effective Thursday.
Context & Ripple Effects
This cut ends months of waffle: after reports in June that Sony was weighing a PS3 price reduction and March chatter that a cut might be ahead, the company moves just days after its president publicly denied having any plans to lower prices (July 6). The $100 drop to roughly $499 also lands close to the $500 figure floated back in CNN's early-2006 pricing coverage — a number once framed as the accessible scenario rather than the entry point.
First-order effects
- U.S. buyers get the 60GB PlayStation 3 at $499 from Thursday, with syndicated reports (Engadget, GameSpot) adding that an 80GB model arrives in North America in August at $599 — a two-SKU ladder replacing the single high-price configuration.
Second-order effects
- Microsoft faces the sharper immediate squeeze: alongside the reported-but-unconfirmed wave of Xbox hardware failures, a $499 PlayStation 3 undercuts the argument for paying premium prices for a comparable-tier console, forcing a response on either price or reliability messaging.
- Nintendo, riding the cheaper end of the market, is largely insulated on price but now competes against a Sony machine pitched as better value per dollar than it was a week ago.
Third-order effects
- If the console-recoup pattern holds — hardware priced down to build installed base, profit promised from games (Sony pledged exactly that in June) — each cycle raises the stakes on software margins and platform exclusives as the real battleground, with Howard Stringer's broader recovery-to-growth pledge for Sony riding on the PS3's turnaround.
The trend: Console makers are treating launch-era hardware losses as an investment, cutting prices within the first year to buy installed base ahead of the holiday season.