Including price cuts.

AUG. 16, 2011 • Sony issued an immediate worldwide PlayStation 3 price cut. The 160GB model will have new suggested MSRPs of ¥24,980, $249 and €249; down from ¥29,980, $299 and €299.  SCE is also reducing the price of the 320GB PS3 from ¥4,980, $349 and €349 to ¥29,980, $299 and €299.

Impact: The PS3 has a carved out a level of success in each its three major retail markets: Japan, Europe and the U.S.  It has obviously dominated over the Xbox 360 in Japan where the Microsoft console never gained significant relative traction. On the whole in Europe it continues to run a bit ahead of Xbox 360, but in the U.S. the PS3 continues to lag behind.  The price cut will definitely boost sales and should help drive a strong unit sales performance through the holidays that should drive an extra bump in PS3 software sales.  No immediate response was issued by Microsoft, signaling it will wait to see how Xbox 360 sales respond before making a move. If Microsoft does initiate a price cut, we anticipate it will be coupled with the Gears of War 3 launch, the only significant exclusive software release on the platform for this fall.  As far as the magnitude of the cut, $50 feels about right given the expected 10 year life cycle for the PS3.  Cutting to $199 now would have left less room for future reductions in the years before any PS4 release.