New PLAYSTATION®3 Model
New 40GB PS3 at €399 — Sony Computer Entertainment Europe (SCEE) today announced details of its exciting new PLAYSTATION®3 …
Context & Ripple Effects
Three months after SCEE held off a Euro price cut in July 2007, the company has found another route to a lower number: a new 40GB PLAYSTATION 3 at €399, announced today and picked up the same day by the BBC. It closes a loop that opened back in January 2006, when press speculation about a $500-class PS3 price first framed cost as the console's central problem.
The announcement also lands on top of SCEE's summer platform push — PlayTV turning the PS3 into a digital personal video recorder, unveiled at Leipzig in August, and the Sky joint venture plus BT broadband deal extending Sony's content and connectivity reach onto the PSP. A cheaper box makes those attached services easier to sell.
First-order effects
- European buyers get a €399 entry point to the PS3 for the 2007 holiday season — a de facto price reduction delivered as a new SKU rather than the cut SCEE declined to make in July.
- Retailers can now tier the PS3 lineup into a premium configuration and an entry-level 40GB model, widening the addressable customer base without repricing existing stock.
Second-order effects
- Microsoft and Nintendo head into Christmas 2007 facing a sub-€400 PlayStation in Europe, pressure that typically forces bundle-and-price counter-moves of their own.
- With PlayTV and the Sky-backed PSP download service in place, the cheaper console competes less on raw specs and more on its role as a living-room recorder and content-delivery device.
Third-order effects
- If the SKU-rotation approach works, console generations settle into multi-tier lineups refreshed through the cycle instead of a single model with occasional official cuts.
- Hardware sold closer to cost becomes the front door for services — TV recording, video downloads, broadband partnerships — shifting where console economics actually live.
The trend: Console makers are reaching lower price points by introducing stripped-down new SKUs rather than cutting sticker prices, then monetising the installed base through attached services.