Sony announces PS3 price drop to $249.99

Sony is not messing around. At this year’s Gamescom the company announced they would be cutting the price of the PS3, yet again, bringing it down to $249.99 (or €249.99 in Europe and ¥24,980 in Japan) for the 160GB.  If Sony’s Andrew House is to be believed that price is effective immediately.

Sony announces PS3 price drop to 9.99

About this time two years ago Sony cut the price of the PS3 console down to $299 so apparently Sony’s M.O. is to reduce their prices in August. With the 160GB model now being $249.99 Sony has also priced the 320GB model at $299.99. Along with a cut to the PS3 price Sony also announced a new PSP model (available only in Europe) that will come in at €99 but strip out a bunch of features including the WiFi abilities of the system.

What’s interesting about this move by Sony is it wasn’t prompted by any such move by Microsoft or Nintendo. Sony states that PS3 is gaining momentum right now which means if they are to be believed, the price cut isn’t due to poor sales. The real problem is in the current console landscape there aren’t a phenomenal number of exclusive titles anymore. With the software library of the PS3 and Xbox 360 being very similar, price is often the deciding factor for a consumer who doesn’t have a brand preference. Microsoft has been aggressive about the Xbox 360’s pricing and as such has sold a boatload of consoles.

The other issue Sony has come up against is a nasty public view of the company after the hacking nightmare they faced this past April. The Welcome Back Program Sony introduced did a decent enough job of calming angry console owners but it didn’t do anything to change the public opinion of the company to those without a PS3 currently in their home. Sony is likely hoping to attract even more new customers to their system via this new price cut.

In theory this cut should generate a few decent months for the company, especially going into the holiday season, but it likely won’t result in mind blowing numbers. The economy is still rocky and that means adding another electronic device is a tough sell no matter how many features it has. With Blu-ray players being so cheap these days it behooves many consumers to skip the PS3 (especially if they have another console in their house) and just buy a standalone Blu-ray player to watch High Def movies.

The more interesting question is exactly what is Sony doing with the PSP. With the Playstation Vita launching early next year in most territories, why would Sony manufacture yet another model of the PSP? It doesn’t make sense to try and convince consumers to buy into a platform on its way out the door in the same breath as you are trying to get everyone hyped up about your new portable system. The message there is jumbled and confusing.

What does all of this price jockeying mean for Sony moving forward? Likely nothing for right now. Most of this is likely aimed at having a strong holiday season by moving consoles and software. Some are predicting Sony is already ramping up to launch the PS4 in 2012, but this price cut doesn’t read like a fire sale on the PS3. Sony will likely wait until Microsoft makes a move before even discussing the PS4 officially, let alone discounting the PS3 to make room. Speaking of Microsoft, it will be worthwhile to watch how they react to this price cut.

The real question is will Microsoft react to this with a cut of their own to keep their hardware sales strong during the holiday season or will they let it ride and see what happens?