Price cut boosts PlayStation 3 sales
LOS ANGELES - U.S. sales of the PlayStation 3 more than doubled in the weeks after the company slashed the video game console's price $100 and launched a low-end model, Sony Corp. CEO Howard Stringer told The Associated Press Wednesday.
Context & Ripple Effects
The doubling of U.S. PS3 sales caps a year-long repricing arc that Sony telegraphed before executing: reports of a possible cut surfaced as early as March 2007, Sony was openly mulling the move by June, and it pulled the trigger on a $100 reduction in July — timing that coincided with widely reported Xbox 360 hardware failures. The final piece landed in October with the 40GB low-end model, giving the console both a lower floor and an entry SKU.
First-order effects
- Sony CEO Howard Stringer gets his first hard demand datapoint since the cuts: U.S. sales more than doubled in the weeks after the $100 reduction and the cheaper model's launch, validating the two-step strategy of price cut plus entry-tier hardware.
- The 40GB model becomes the volume engine of the lineup, shifting the PS3's sales mix toward the low end just as the holiday quarter begins.
Second-order effects
- Microsoft now faces pressure to answer during the holiday window, since the PS3's lower entry price erodes the Xbox 360's cost advantage — the very advantage that mattered more while Xboxes were failing at high rates, per the July coverage.
- Every PS3 sold is also a Blu-ray player placed into living rooms, so the sales bump accelerates the format war against HD DVD by expanding the installed base of Blu-ray-capable hardware.
Third-order effects
- If the elasticity holds through the holidays, console economics settle into a familiar pattern: hardware priced near or below cost as the customer-acquisition spend for software and content attach — the structure that later matured into the [[a:/concepts#console-to-service-flywheel|console-to-service flywheel]].
- Sony's willingness to absorb a year of weak demand rather than launch cheap suggests future console cycles will treat early price discipline as a deliberate positioning phase, not a mistake to be corrected.
The trend: Console makers are converging on aggressive hardware repricing plus stripped-down entry SKUs as the standard lever for resetting installed-base races mid-cycle.