Sony slashes PS2's price $100 before electronics expo
Just a week before the video-game industry's giant annual Electronic Entertainment Expo, Sony on Monday fired a shot across the joysticks of competitors Microsoft and Nintendo with a $100 price cut in its hugely popular PlayStation 2 system.
Effective immediately, the PS2 will be available in stores for $199 -- the same price as Nintendo's GameCube system and $100 less than Microsoft's Xbox.
The move further solidifies Sony's lead. The new price ''more than doubles the audience that can afford a PlayStation 2,'' says Richard Doherty of The Envisioneering Group, a Seaford, N.Y., technology assessment firm.
''This is really a price cut that will hurt Microsoft more than it will hurt Nintendo,'' he says. ''Nintendo is already at $199 and is making money (on GameCube systems), and they can cut the price $50 if they want to. Microsoft still can't make Xboxes for $299, let alone discount them.''
Sony has sold nearly 10 million PS2 systems in the USA in the 18 months since it hit the market -- a rate that is more than double the sales rate of the original PlayStation. Microsoft has sold more than 1.8 million Xbox systems since November; it had a week's head start on the Nintendo GameCube, which has sold more than 1.5 million, according to The NPD Group.
The PS2 plays disc-based video games and DVD movies. Sony also will cut the price of its original PlayStation to $49 from $99.
System makers have used the show historically to unveil systems and announce price cuts. But Sony's Kaz Hirai says the company decided to announce the price drop early because ''E3 is all about content, and we wanted to make sure we were focusing on that.''
He brushed aside suggestions that the announcement was timed to ambush any price cut from Microsoft, which has an event scheduled for Monday on the eve of the Expo, also called E3. ''I've seen and read rumors about them possibly doing some price move, but it was not a factor,'' he says.
Nevertheless, ''this is a very tactical move'' for Sony, says IDC analyst Schelley Olhava. ''I equate it to a chess game -- anticipate what your opponent is going to do and move first in order to gain the most favorable position.''
Her Framingham, Mass., research firm expects the video game industry to grow 26% in 2002 to about $11.7 billion in revenues.
In more jockeying prior to next week's Los Angeles-based Expo, Nintendo announced it will begin selling GameCube online adapters this fall ($34.95 each for either a dial-up or broadband version). The first game playable on the Nintendo network will be Sega's Phantasy Star Online.
Next week, gamemakers will convene in Los Angeles to unveil upcoming goodies for the systems, as well as for PCs, cellphones and handhelds such as the Game Boy Advance.
So far, Doherty says, ''PS2 is a clear leader for Sony. With Xbox, Microsoft has a beachhead, but I don't know if they have the beach. That next big wave could wash them out, and I think Sony is trying to create a tsunami.''