Sony Corp. (SNE) has elected not to mark down the price of its PlayStation 3 system for the holidays. The most basic version of the console, which was released in November 2006, is currently priced at $399, compared with $199 for Microsoft’s (MSFT) Xbox 360.
Sony Compouter Entertainment president and CEO Kazuo Hirai told The Financial Times that the PS3 is a good value because it plays Blu-Ray DVDs and that, instead of discounting, the company has added more value to the machine including increased memory and "Home," a much-anticipated online community: "When you really compare apples to apples, then I think we have a very good value proposition."
There’s no question that Sony will give up substantial market share by sticking to its guns on price — but is it a savvy move or is Sony just being arrogant. Nolan Bushnell, the inventor of Pong and founder of Atari, would probably say the latter. In a 2006 interview, Bushnell correctly predicted that the Nintendo Wii would be the star of the new generation of consoles, adding that Sony is a "arrogant and capricious" company.
It will be interesting to see if Sony’s ballsy move pays off. The question is whether most consumers will really compare apples to apples or simply buy the more affordable system in what is expected to be an extremely weak holiday shopping season marked by an unprecedented promotional environment. The $399 system will also be competing with special holiday sales from every other store in the mall — not just video games.