Some thoughts on Launch Units and Price Drops

Well, I just read this perspective on launch units for various consoles over at joystiq, Sony: 1mln to 1.2mln PS3s for North America in '06 and it presents a better picture for Sony than most news has lately. I'm as responsible as any for the Sony hating, but in my defence, I really dislike Sony as a company (good products though...) so any Sony bashing from me is not part of the media trend of the season. Anyway, when you look at the chart, Sony's situation doesn't look so bad.

But what kind of internet crackpot would I be if I didn't throw down some fierce analysis that lacks any basis in reality? First, Sony wouldn't even be getting beat up on their launch details if they hadn't been making grandiose claims about what they would have available at launch in a misguided attempt to make themselves seem more on the ball than they really were. The internet pundits hate lies, and they feel like Sony lied to them for a while (Europe especially) about the launch details.

Sony needs to take a lesson from Nintendo's PR machine. The only numbers they have put out are 6 million units by March 2007. They're only now starting to assemble units as well, but they are using proven technology (besides the controller) so hitting that mark of 6 million 6 months from now is probably a good estimate. If you're wondering why Nintendo hasn't set a price and put out launch numbers for the Wii, it's because Sony wasn't sure until last week what they would be able to put on store shelves, and Nintendo was no different. I bet they're also finalizing the costs on the controller technology and figuring out exactly what they want the price to be. Since they're definitely under $300, they can quibble over amounts of $25 on the final price. $250? $225? Who knows. But Nintendo wants to maximize sales and profits. They'll definitely sell out in the holiday season, but in the long run, the cheaper the unit, the faster it will sell next year.

So, now that Nintendo has their act together, they'll announce how many units at launch and at what price. Just think of how much bad press (much of it unnecessary) Sony could have avoided by being patient. I also want to call attention to the number of units Sony is anticipating by the end of 2006. It's less than what they produced for the PS2, but they had been producing PS2s for almost a year when it launched in the US. Some speculate that the PS2 shortage was artificial, pointing to the fact that everyone who wanted one seemed to be able to find one in stores by christmas time. Unless they are really shortchanging Japan to supply the US (a smart move because however mad it makes Japanese consumers, they still won't buy any Xbox 360s) I doubt they will be able to hit those numbers and stockpile for the European launch.

Anyway, on to price drops. I sometimes wonder about the Game Media. Let's stop and think, how many people will buy consoles if they know a price drop is in the works? There's a reason price drops are announced days before they happen. Manufacturers want people buying as many systems at the higher price as possible. so asking Sony when the PSP price drop is going to be is a complete waste of time.

Similarly, Microsoft isn't going to announce price drops for the 360 regardless of if they are actually planning on dropping prices for the PS3 launch or not. That announcement would come a week before the PS3 hits to steal some of their thunder. It's as if the game media has no understanding of how businesses and consumers really work.

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