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PS3 super slim could "shift the tides in Sony's favor"

PS3 super slim could "shift the tides in Sony's favor"

Mon 23 Jul 2012 8:38pm GMT / 4:38pm EDT / 1:38pm PDT
Hardware

A 16GB flash-based PS3 for $150? It could be a game changer, analysts say

Sony Computer Entertainment

Sony Computer Entertainment is a Japanese videogame company specialising in a variety of areas in the...

playstation.com

PS3 "super slim" (PS3-4000) has been rumored for some time now, and it's starting to look more real. While the new PS3 doesn't appear to be making its official appearance at gamescom next month, the rumors suggest a 16GB model based on flash memory for possibly as little as £99 ($150). If Sony does indeed go forward with the aggressive pricing move, it could have a huge impact on Sony's competitors and the industry as a whole.

"A dramatic price reduction to $150 for PS3 would be terrific for Sony and for the industry overall.  A value-priced PS3 could rapidly increase the base and would free up more consumer revenue for higher software sales volume," M2 Research analyst Billy Pidgeon commented to GamesIndustry International. "Sony already has a strong edge in Europe, but the economy is weak and generous hardware price cuts will have big impact.  Microsoft would suffer deeper market share loss in Europe and with value pricing PS3 could outsell Xbox 360 in the U.S. where Microsoft has dominated monthly hardware sales."

"I think that the success of the 4GB Xbox 360 should have been emulated a long time ago"

Michael Pachter

"Microsoft is less likely to reduce console prices this year with already strong hardware sales and Halo 4 coming out in Q4, but should Sony price PS3 at $150 this year, Microsoft could see stronger incentive to cut Xbox 360 prices sooner in retaliation."

Michael Pachter, analyst for Wedbush Securities, believes Sony should have taken action with a cheaper PS3 SKU a while ago.

"I think that the success of the 4GB Xbox 360 should have been emulated a long time ago.  You're right that flash memory is cheap enough to allow Sony to price pretty competitively; I don't know how badly it will hurt Xbox, given that the PS3 has been cheaper than the core Xbox 360 for almost a year without significantly cutting into market share. However, a cut to this price range would almost certainly prompt a response from Microsoft, and if both of them are significantly cheaper than the Wii U, they will impact sales," he told us.

"This sounds logical to me. I think that Sony is probably spending around $150 to make the box without the hard drive, so selling at £99 would likely be below cost, but it's possible."

Lewis Ward of IDC Research is excited by the possibility of the PS3 super slim, but he also believes that selling for anything less than $200 would be foolish for Sony.

"I think it is a big deal if the 4000 SKU as currently outlined is real.
Things are moving fairly quickly in the console hardware space right now and this design appears to be a major step toward making game consoles like plug-and-play living room appliances and set-top boxes. Storage is moving to the cloud. Not only does it allow for software piracy checking but it's more efficient (and saves money) since many HD console owners today don't wind up using all the onboard memory they have. Of course, Sony could also sell add-on memory.
 I have no idea about the bill of materials but my understanding is that flash memory is disruptively inexpensive to manufacture. I don't think it makes a lot of sense though for Sony to deliver a SKU that retails for much less than Microsoft's 4GB Xbox 360 bundle, ~$200," he remarked.

"If these rumors are true, it could shift the tides into their favor into 2013"

Jesse Divnich

"Perhaps this offering will be Sony's final bid to drive up the PS3 installed base beginning this holiday season before turning its attention to the PS4. If the SKU proves popular it could push the PS4 launch window back to late 2014. I also think the PS3-4000 as outlined will put more pressure on the Wii U because then both its major competitors will have fairly compelling entry-level SKU priced in the $200 range. They'll be competing in Nintendo's historical kitchen as it were."

EEDAR's Jesse Divnich agrees with Pachter that a cheaper PS3 akin to the 4GB Xbox 360 is overdue, but he also questions the rumored price tag.

"The potential for new hardware seems plausible this far into the PlayStation 3 launch, and most certainly the PlayStation 3 has suffered by not having an entry-level SKU.  I am, however, shocked by the rumored price. If these rumors are true, it could shift the tides into their favor into 2013," Divnich said.

"Currently, the entry level SKU represents about 20 percent of Xbox 360 sales, which throughout the year adds up to a significant amount of units.  A competitor at the entry-HD console price point would not only benefit Sony, but the entire industry. It would be a move that the industry would welcome, but again the price point seems a little unbelievable."

If the pricing does turn out to be completely off, Sony could always use the strategy of bundling more into the SKU, Pidgeon noted. On the other hand, if the pricing is roughly accurate, then what happens to all the inventory of the current model in the channel? "Managing the price of the stock in channel and at Sony warehouses of the current version would be a balancing act," noted Nick Parker of Parker Consulting.

What is clear, even if PS3 super slim doesn't bring about a $150 console, is that a PS3 price cut is waiting in the wings. "A price drop of the current PS3 has been built into most end of year forecasts anyway," said Parker.

17 Comments

Andrew Goodchild Studying development, Train2Game

1,255 421 0.3
16Gb,is that instead off a HDD? On a console that has mandatory installs of up to 6Gb (I believe, correct me if that's wrong or outdated)?
And if it's slim, I'm guessing no room for an internal HDD to be added?
Is that actually fit for purpose. On the Xbox, at least the had has always been removable an no games require installing, even if they run better if you do.

Posted:2 years ago

#1

Joe Winkler trained retail salesman, Expert

171 4 0.0
Damn Andrew! I wanted to write the exact same thing. Let's see how those installs work in the cloud.. I own a 40GB PS3 and it'S always out of memory. To be fair: I have a few videos on it, some music, and the free game downloads from the "welcome back pack" (Infamous etc.). External flash drives (we call them USB-Sticks) with the incredible space of 64 GB are priced at about 30-50 €uros. So let me guess: in mass production, these little sticks cost about 5 to 10 €uros. Why just 16GB? I dosn't make sense if you're not able to add a (internal) hard drive for installs.

Posted:2 years ago

#2

robert troughton UK General Manager, Epic Games

224 100 0.4
They could just open up network or external storage with this... 16gb as "play-space" is fine if there's additional space available for longer-term storage.

Posted:2 years ago

#3

Bruce Everiss Marketing Consultant

1,692 594 0.4
This generation of consoles has remained far too expensive for far too long. Price elasticity of demand tells us that this severely limits the market. The PS3 and 360 should have been $149 a few years ago.
We now have the capability of 22nm fabrication and memory is ridiculously cheap, yet this has not been reflected in console hardware prices. Though it is evident in the pricing of more modern devices, like the Nexus 7.
Microsoft have now got round their pricing problem using the mobile phone business model and a $99 price point.
Sony, it seems, are going for a barebones system solution.
But the problem that both of them have is that the games are still £40. And the market has moved on with Steam, App Stores, Facebook etc etc.

And the people who say that "core" gamers don't use these less expensive means of gaming are deluding themselves.

Posted:2 years ago

#4

Adam Campbell Associate Producer, Miniclip Ltd

1,218 1,053 0.9
The expense of this generation is the reason the next will continue to (and has to) be delayed.

Posted:2 years ago

#5

Curt Sampson Sofware Developer

596 360 0.6
And the people who say that "core" gamers don't use these less expensive means of gaming are deluding themselves.

But who cares if they do, so long as they also keep buying $60 games? Which they do in huge quantities for the right game. Just look at Skyrim.

Posted:2 years ago

#6

robert troughton UK General Manager, Epic Games

224 100 0.4
Mobile gaming has been a great success for a few years now - but it's not the pot of gold that many think... for every Angry Birds and Infinity Blade there are thousands of games that don't do well at all. The console market is a little fairer than that - though, of course, the investments required are considerably higher.

Mobile gaming will definitely continue. But so will console gaming. You'd be deluding yourself to disagree...

Posted:2 years ago

#7
seeing as one can connect a USB drive, perhaps a HDD USB3 is not too far off?

Posted:2 years ago

#8

Nicholas Pantazis Senior Editor, VGChartz Ltd

1,021 1,470 1.4
Installs on PS3 are often over 8GB, and I am always out of space on my 120GB model. This is a terrible idea.

Edit: Also I seriously doubt the PS3 could be profitable at under $200. Its expensive and obscure cell processor has not dropped in price nearly as quickly as more standardized chips.

Edited 1 times. Last edit by Nicholas Pantazis on 24th July 2012 2:08pm

Posted:2 years ago

#9

Andrew Jakobs Lead Programmer

242 99 0.4
But look at this, at that price it's also a very great Blurayplayer and a mediocre mediaplayer (due to it's lack of popular container/codec support) and you can also play some games with it, in that case 16GB is enough, but if it also has a possibility to insert/replace the HDD like you can with the slim's and the phat's it's an excellent choice, because if you run out of space, you can just buy your own size HDD, which is propably even cheaper than buying the SKU with a larger HDD..
The biggest problem I have with this new SKU is that it being a toploader and not a slotloader anymore, I like the easyness and clean design of a slotloader.

Posted:2 years ago

#10

Greg Knight Freelance Developer

56 49 0.9
Looks to me like a partner device for PSN. Download games installed, its a winner.

Posted:2 years ago

#11

Paul Erickson Senior Analyst, IHS

10 0 0.0
Much like the flash-based Xbox 360 entry level SKU, they dont need the HDD. They can play with the use case everyone is well accustomed to, just using the disc. So I dont know that they need or will miss a HDD at the entry level.

With BD players being so cheap, with an entry level 360 at a lower price, a $99 subscription model Xbox deal that Microsoft is potentially expanding to other regions, and with Sony having a weaker over the top content play than Microsoft, they are overdue for a cheaper SKU of some sort.

Also consider that Blu-ray as a format is still struggling a bit outside of North America, UK, France, Germany, and Japan. Having BD playback as a primary advantage is not a game-changer, but lowering the bar of entry is.

Microsoft can afford to price war as they have been in the black on 360 hardware mfg costs since late 2006. You can expect a cheaper flash-only MSFT streamer box or a sub-$149 cut on the 4gb 360 if Sony comes to market with this. Nevertheless, at #149 it would be one heck of a BD player deal if it has wireless - you get PS3 gaming as a bonus.

Edited 1 times. Last edit by Paul Erickson on 24th July 2012 8:46pm

Posted:2 years ago

#12

Greg Wilcox Creator, Destroy All Fanboys!

2,196 1,176 0.5
It'll be a bigger PSP go to some users who prefer on board storage or simply can't afford to buy an external USB drive if the unit supports one.

Posted:2 years ago

#13

Andrew Goodchild Studying development, Train2Game

1,255 421 0.3
@Paul Erikson
But any Xbox game will play from a disc, as already stated many PS3 games require compulsary installs, as someone pointed out sometimes over 8 Gig.

Posted:2 years ago

#14

Curt Sampson Sofware Developer

596 360 0.6
An 8 GB install is a real rarity; most games are 4 GB or even significantly less. Still 16 GB is a bit cramped.

Posted:2 years ago

#15

Craig Page Programmer

390 234 0.6
The $150 price won't do them much good if they're bankrupt in 5 years. They should sell it for $175-$199 and make some money.

Posted:2 years ago

#16

Ken Gratz Product Development Director, Larva Game Studios

1 0 0.0
It's a great idea and a good entry price point for new consumers. This also allows Sony to ultimately shift more software units into the market, which equals more royalty revenue to offset the assumed loss on the hardware. This is nothing new to the industry.

Plus with Gaikai and expandable memory, the 16gig flash seems like a good entry-level point.

Posted:2 years ago

#17

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