Forget the $100 price cut: Playstation 3 is toast

Predictions are always dicey in this or any other tech business, but I think this and next week will go down as the weeks the Playstation 3 officially lost the video game war.  With the mini-E3 expo coming up next week, word has leaked that the PS3 price is going to drop to $500. This is an absolutely necessary move on Sony’s part — a belated admission that the $600 price, and by extension the bet on Blu-ray, were huge mistakes — but an absolutely painful one, as the company is already losing money on each PS3 sold and will be that much further in the hole now.

Even worse for Sony, the price drop likely won’t make a bit of difference.

The PS3, with a 60 gigabyte hard drive, will still cost $20 more than the high-end, 120 GB Xbox 360 Elite. (And even though Microsoft is taking a $1 billion hit by extending the 360 warranty to 3 years because of too many crashed systems, they’ve got more than enough cash to drop the 360 price by the holidays.) The PS3 online system is still much less robust than Xbox Live. And the PS3 still has no great games, and no good games you can’t get for the cheaper Xbox 360. Chris Kohler recently ran down the list of previously exclusive PS3 games that now are also coming out on the 360 (and you can bet Metal Gear Solid IV will also come out on the 360), and it underscores that there is simply no reason to buy a Playstation 3. With Halo 3 coming out on the 360, there won’t be any reason to get the PS3 come holiday season, either.

Then there are the little Xbox 360 advantages. When Grand Theft Auto IV comes out, only the Xbox 360 will have downloadable extra episodes. Virtua Fighter 5 will only have online multiplayer on the 360. The high-profile WWII game Medal of Honor: Airborne is coming out on the 360 in August, but has been delayed till November for the PS3. Even though PS3 plays Playstation 2 games, you still can’t use the PS2 Guitar Hero controllers — so you essentially can’t play the best game of the past three years on the PS3.

We’ll see what happens at E3 next week, but I just don’t see how Sony can pull itself out of this hole. Again, there’s simply no reason for anyone to buy a Playstation 3 this year. And even if Final Fantasy XIII comes out next year only for the PS3, by then it will be too late.

— July 6, 2007

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