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Why Does Sony Frustrate Some Consumers? It Has To, Says Analyst

| 2 Aug 2007 20:05

In an essay examining the meaning behind Sony's PlayStation 3 pricing moves, which have come under withering fire, Rob Fahey makes some interesting points about the company's predicament.

The analysis notes that the so-called price cut in the U.S. managed to anger consumers because it was really a temporary downgrade of stock, as the 60GB units are no longer in production.

He also notes that Europeans felt slighted after receiving no price respite whatsoever.

The derision, however, may be unwarranted:

"Assuming the dollar conversion rate to be USD 2 to the UK pound, a rough estimate which has held broadly true for some months, this means that the UK equivalent of the US price point is GBP 300. The UK price point, meanwhile, comes out at approximately GBP 362 once you subtract the VAT from the price - a much fairer comparison with the US price point," the article notes.

The reason Sony is hemming and hawing with these kinds of indirect deals instead of a straight price cut, Fahey argues, is the tough position in which the company finds itself compared to competitors because of the PS2's continued profitability.

"Sony's dilemma is apparent," Fahey said. "PS3 is the future, of course - for Sony at least, if not necessarily for the industry as a whole. However, the harsh reality of the present is that Sony cannot afford to do anything that will damage the PS2's lifespan and profitability. Unlike Microsoft, it is faced with an almost impossible balancing act; attempting to establish the PS3, without crushing the PS2."

That line of thinking, the author notes, goes a long way toward explaining Sony management's depiction of fairly slow PS3 as just the beginning of a longer-term effort.

Source: Gamesindustry

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