Sony to PS3 Detractors: Go Sell Razor Blades

[Andy Chalk]

Sony to PS3 Detractors: Go Sell Razor Blades

Analysts and game publishers are turning up the pressure for a price cut to the floundering PlayStation 3 [http://www.playstation.com] console but as far as Sony is concerned they can all get bent.

Xbox 360 [http://www.sony.com] continues to make slow but steady progress.

"You can't ignore the guy who has half the market," said going to Nintendo [http://www.easports.com] platforms.

Pacific Crest Securities [http://www.janco.com/], who said, "The publishers need the PS3 install base to grow in order for most of these games to be profitable."

It's a refrain Sony may be getting tired of hearing, if the response of SCEA [http://www.us.playstation.com/] Marketing Vice President Peter Dille is any indication. Sony is well aware of the size of the PS3 user base and the questions about the system's profitability, he said, but has no immediate plans for a price cut despite the clamor. "Everybody in the development community would love for the PS3 to be free, so they could just sell razor blades," he said.

It's not all bad news for the company: PlayStation 3 exclusives like Gears of War [http://www.killzone.com/] franchise, said publishers who shift away from the PlayStation 3 risk losing out. "You make very good money on PlayStation 3 if you develop a good game," he said. "You can very easily take that game to Xbox 360 or PC."

And regardless of Dille's protest, Hickey predicts a price cut of $50-100 in either March or April, a cut that would be good news for publishers but much tougher to swallow for Sony, which is still manufacturing the PlayStation 3 at a loss. "It's an easy equation for [publishers]," Wilson added, "but it's very different from the one that Sony has to take on."

Which leaves just one question: What the hell does selling razor blades have to do with it?

Source: Bloomberg [http://www.bloomberg.com/apps/news?pid=20601101&sid=aLi3FF13LuVI&refer=japan]


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[Legion]

Stubborn Sony. If you had priced your console reasonably then I probably would own a PS3 rather than a 360 right now. I simply will not pay extra for blu-ray when I have no interest in it. Shame, but oh well.

 

[Brokkr]

Stubborn Sony. If you had priced your console reasonably then I probably would own a PS3 rather than a 360 right now. I simply will not pay extra for blu-ray when I have no interest in it. Shame, but oh well.

My sentiments exactly. I'm not interested in the Blu-ray at this time and am just not willing to fork over the extra money. I had a PS1 and a PS2, but went with the Xbox 360 this time around simply because of price.

 

[Rednog]

I bought a copy of MGS4 for $20 off a guy a while back, now all I have to do it wait for the PS3 to hit the bargain bin and I'll have played the only game I actually care about on the PS3...

 

[Jumplion]

I'm still wondering, what's up with all these analysts trying to predict when whatever it is will do whatever they think? If the PS3 drops its price, fine, if it doesn't, too bad. I have a hard time taking analysts seriously when they try to predict the craziest things even when the company themselves deny it repeatedly.

This isn't to say that Sony shouldn't drop the price of the PS3, they should, but for god's sake stop bitching and moaning about it. It'll happen when it'll happen. I havn't heard this much moaning since MGS4 on 360 rumours spouted out.

 

[scrape]

This is what razor blades have to do with it:

There's a saying "Give 'em the razor, sell 'em the blades", which alludes to the invention of the safety razor (the blade on a stick we use nowadays). The stick the blade was attached to was inexpensive for the consumer, and was often sold at a loss to the maker, but the consumer would continually have to purchase new blades (at a much higher profit margin for the company) as the old blades dulled. They'd recoup their loss several times over (especially since the consumer would probably be shaving the rest of their lives).

The idea is to sell consoles at a loss (unless you're Nintendo, who actually profits off the Wii even if they never sell another game) and make your money back as the consumer buys game after game and you get a cut of that. (Case in point: I got an XBOX 360 for FREE and have bought a dozen games already!)

It looks like Sony's just being greedy, since developers will likely get a bigger piece of the game-sale-price pie than they do, but since they're losing money on the PS3 console ALREADY, does it really matter how much more money developers get than Sony? Sony's getting negative profits now. ANYTHING positive would be an improvement, no matter how much more it may happen to enrich their business partners in the development houses.

I suppose it's tied into the psychological quirk that makes more people want to live on $25,000 in a world where their neighbors get $5,000, rather than make a $1 million in a world where all their neighbors make $4mil. Greed is really not good when it actually works AGAINST self-interest.

 

[KDR_11k]

Did you really not know that the razor blades are a reference to the razor-and-blades business model? Its basic idea is to sell a base unit at a loss that then requires very expensive (and profitable) "fuel" to actually use. Besides the obvious razors the examples are things like printers and a few videogame consoles (contrary to popular belief however most consoles are sold at a profit, not loss, the razorblade approach is a recent phenomenon here).

I'm uncertain if Sony is in need of a pricedrop. On one hand, the maxime is "if you consider a price drop that means your product's value is below its price, rather than lowering the price you should seek to increase the value" but on the other hand increasing the value requires developers which aren't there without the most important thing: CUSTOMERS. They can use their first party teams to create some base material to get more customers and thus sales or maybe they could increase the value of the console itself without adding games but judging by their performance so far they have the wrong understanding of value so it would be doomed to failure. Sony sees value as an absolute size, every feature has a fixed value and you add them all up and the PS3 is a bargain. The real value is the value to the customer and Sony seems to have picked features with little to show there. You sometimes hear fanboy debates about which console has the most graphics power but the value to most customers is fairly low, that the PS3 is more powerful doesn't matter much.

Also the price IS high, the money I would have needed to buy a PS3 already bought me a Wii AND a 360 (which has a massive library overlap with the PS3 and thus fairly equal value at half the price). It'll be nearly impossible to out-value the competition when you're dealing with a price discrepancy like this. Sony has screwed itself into a corner, they're stuck with a system that's expensive to make and not coming down in cost but needs to go down in price (I believe MS had the issue last gen with the XBox). By now I think they should cut loose and make a new console to focus on, one with more customer value per cost.

I'm still wondering, what's up with all these analysts trying to predict when whatever it is will do whatever they think? If the PS3 drops its price, fine, if it doesn't, too bad. I have a hard time taking analysts seriously when they try to predict the craziest things even when the company themselves deny it repeatedly.

Analysts don't analyze, they quack. The best they can do is take old data, slap a new date on it and maybe extrapolate linearly.

 

[bridgerbot]

"If you had priced your console reasonably then I probably would own a PS3 rather than a 360 right now."

The price is reasonable, that Sony still takes a loss and sells it is reasonable.

"I'm not interested in the Blu-ray at this time and am just not willing to fork over the extra money."

As a PS3 owner with a HDTV, I could care less about Blu ray, I didn't buy it for Blu ray. I bought it because it had a built in wireless, hard drive, rechargable controllers, a low failure rate, and free online content. I don't have to pay $50 a year to play Warhawk (which is roughly the PS3 equivalanet to Halo 3). Blu ray is more of a bonus, not a major selling point.

The cheapest Xbox is $199. Once you add in a HD ($70-$150), a wireless network adapter ($50), pay for Xbox live ($50/year), hybrid rayovack NiMH Alkaline batteries ($10) you are already up to $380. A whopping $19 difference from the cheapest PS3. Then if you purchase Xbox live for another year, you are over the price of the PS3.

Then there's the fact that I don't have to screw with rechargable batteries for the PS3. I also don't have to worry about my discs being scratched and ruining my games, and I don't have to worry about my PS3 dying and having to send it back to be repaired.

So I just don't understand the cost argument against the PS3, since I would have to pay more to get the same features with the Xbox 360. So maybe there's something I'm missing, but features like having to buy a hard drive, paying for xbox live, having to buy a wireless network adapter, and failure rates were things that I thought about when buying a PS3 or Xbox 360. The PS3 seems like a better deal to me. At the time I also thought Play TV was coming to the U.S., it's a shame that it didn't.

Edit:spelling

 

[mattttherman3]

I believe that razor blades comment could mean that if sony did a price cut, they would be cutting themselves some profits?

 

[KDR_11k]

As a PS3 owner with a HDTV, I could care less about Blu ray, I didn't buy it for Blu ray. I bought it because it had a built in wireless, hard drive, rechargable controllers, a low failure rate, and free online content. I don't have to pay $50 a year to play Warhawk (which is roughly the PS3 equivalanet to Halo 3). Blu ray is more of a bonus, not a major selling point.

The cheapest Xbox is $199. Once you add in a HD ($70-$150), a wireless network adapter ($50), pay for Xbox live ($50/year), hybrid rayovack NiMH Alkaline batteries ($10) you are already up to $380. A whopping $19 difference from the cheapest PS3. Then if you purchase Xbox live for another year, you are over the price of the PS3.

This is what I mean with the wrong value approach (BTW, I got my 360 Pro for 200€ with the 60GB HDD, operate the thing with a LAN cable and a wired controller I had bought for my PC earlier and don't bother with Live because I know I won't play online enough to justify the cost, only problem is getting enough games for the system to actually justify the hardware cost since it seems to be lacking in interesting games). Feature parity is not a valid comparison because most customers do not attempt to reach feature parity. How many people actually need a WiFi bridge on the thing? How many people need to buy the HDD separate when the Pro already includes it for a very low price difference? How many people actualy get Live Gold? Hell, how many people actually hook their console up to the internet? If the people who do all that are a majority of your audience that means your audience is too small, too focussed.

And hell, even if the PS3 beats the 360, what kind of victory is that? "Yay we've gone from breaking the record for most consoles sold to a fight for second place"? As EA notes, their support is going to the Wii, not the 360. The PS3 doesn't have to beat the 360, the two are so similar almost any game made for one will be available on the other too, they're effectively one market. The Wii is the odd one out, it needs special games while also holding a massive chunk of the market (even if you assume zero overlap between 360 and PS3 owners the Wii market is the same size as the two combined, with overlap it's even larger). The PS3 has no chance against the Wii in the current situation.

 

[Simriel]

*sighs* Sony for some reason seem to be trying to sell their ridiculously priced console on the exclusive games. But lets face it are 3 good exclusives and a Blu Ray player most people wont use enough to justify shelling out that cash?
(the games i mean are Killzone 2, MGS4, and GOW3 none of which I'm interested in, but a lot of people like)

 

[AceDiamond]

snip

Yeah cause the PS3 didn't have to go through 5 hardware permutations to get to that point, oh and everybody who buys a console these days clearly has an HD-TV, and needs wireless in order to play games online.

Seeing as how the HD market has not taken off as fast as people thought, and I didn't need to buy a wireless adapter, I can safely say that I know how to run a wire to my router without anybody tripping over it. Hey look at that, I saved myself money!

And do people only buy rechargeable batteries because they have a game controller? I doubt that, so why does that even factor into costs?

Oh, and the one time my 360 bricked 2 years ago I got it repaired for free. So, I lost some time, big whoop. Also you act like your PS3 is apparently invulnerable just because it didn't suffer the same failure problems as the 360s did. Well maybe that's deserved, but what happens when yours breaks? Is that irony or just plain funny? Who can say.

Simply put, I bought a 360 because the PS3 did not have any outstanding quality to me, especially in its game library (the mountain of PS3 returns my place of work got post-Christmas 2006 would seem to indicate to me I'm not the only one who thought that way). That is why I bought a 360 despite problems, that is why I only spent the same amount of money then to get it for as much the cheapest PS3 is now (this was back when the 360 was still $400). Seriously I don't even know why I responded to this, but the fact that you had to lump on a bunch of add-ons half the customers don't even need to try and justify your argument, plus the fact you thought that somehow made you "correct" just struck a nerve.

Sony is trailing because they made epic cock-ups in how they did business when they were working up to the PS3's release. No amount of pricing spin will change that.

 

[CyberKnight]

I believe that's called a "strawman", setting up an unstated argument and knocking it down, in an attempt to discredit an argument actually stated. Sometimes, as in this case, the strawman is the stated argument taken to an illogical extreme.

No one is suggesting you give away the console for free, you dork. Just reduce the price to a lower (non-free) price so that people will buy the thing.

 

[Cliff_m85]

Sony could fix their problem in one of two ways. I'd suggest just lowering the price of the system and reap the rewards as more games are put out.....


or just incorporate more nudity into their games. Either would be awesome!

 

[level250geek]

Metal Gear Solid 4 is a Blu-ray disc full of movies with a few game play segments scattered here and there. Killzone 2 and Resistance 2 are both inferior to Gears of War 2 and Halo 3. Most other PS3 games can also be had on the 360. That leaves only LittleBigPlanet as a killer exclusive for the PS3. Your opinions of that game aside, that's still only ONE killer exclusive.

That's a $400 system with one must-play game. True, it has wireless built-in, and rechargeable controllers, and free online play. But here's the thing: if I don't want these things, I save money by getting a 360. If I do want these things, then I've spent the same amount of money with the added bonus of access to a much, much better software library.

The PS3 looks good under the hood, and if it was even $50 cheaper I would consider getting one (then I could take the savings and buy that one killer game). If it was $75 dollars cheaper, I'm sold. If it was $100 cheaper, it would be an absolute steal. As it stands right now, you can get a fully-loaded 360 for the same price and play much better actual games, not just tech demos posing as games. There is more to buying a console than bells and whistles (that's why you never buy at launch!); when you think of buying a console as buying a key to a software library, it's clear why Sony is losing.

 

[Galletea]

Opinions on the games are hardly relevant at this point,and there probably will be a price drop, but it makes no sense to do it now. They need to wait for the next really big title to make it profitable, or the number of units sold is unlikely to make a huge difference. I might be wrong, of course.

 

[Jumplion]

Metal Gear Solid 4 is a Blu-ray disc full of movies with a few game play segments scattered here and there. Killzone 2 and Resistance 2 are both inferior to Gears of War 2 and Halo 3. Most other PS3 games can also be had on the 360. That leaves only LittleBigPlanet as a killer exclusive for the PS3. Your opinions of that game aside, that's still only ONE killer exclusive.

The rest of your argument just lost weight when you showed this hypocracy in this statement. You act as if Killzone 2 and Resistance 2 are complete and utter crap, yet our opinions of the game don't matter since you think there's only one game worth playing.

I, personally, found Killzone 2 and Resistance 2 to be imensly enjoyable and found them better than Gears 2 and Halo 3. That's my opinion, but for some reason because you think Killzone 2 and Resistance 2 are inferior to Gears 2 and Halo 3 then that only means that there's 1 killer exclusive for the PS3.

There may be one killer exclusive for you personally, but don't go around saying that the other games are "inferior" to your other precious games as if it's fact. And even if you don't personally like it, you cannot deny that KZ2 and Resistance 2 are all exclusives for PS3 that were both heavliy hyped and supported. I'm pretty sure they're easily classified as "killer exclusives".

As for everyone else, we've been through this argument over and over again. We flip over the 6 in 2006. The PS3 has plenty of exclusives, whether or not you like those exclusives or take an interest to them personally is another story. The price point, I won't debate on, since there are two different positions on it. For one, yes it's expensive but for two, it's a fairly good deal for an all in one package.

Yeah cause the PS3 didn't have to go through 5 hardware permutations to get to that point, oh and everybody who buys a console these days clearly has an HD-TV, and needs wireless in order to play games online.

Seeing as how the HD market has not taken off as fast as people thought, and I didn't need to buy a wireless adapter, I can safely say that I know how to run a wire to my router without anybody tripping over it. Hey look at that, I saved myself money!

Obvious sarcasam aside, I hear people complain all the time that the PS3 doesn't come with HD cables. Yet clearly there arn't enough HD transfered people to have an HD cable. Yet the 360 comes with a cable, but not everyone has an HD-TV, hm? But wait, the PS3 doesn't come with an HD cable, even though the 360 comes with one, but people don't have HD-TVs, so why the hell are you complaining about something that isn't neccessary that you want neccessary?!?!

blech, rambling, sorry.

 

[scotth266]

Stubborn Sony. If you had priced your console reasonably then I probably would own a PS3 rather than a 360 right now. I simply will not pay extra for blu-ray when I have no interest in it. Shame, but oh well.

My sentiments exactly. I'm not interested in the Blu-ray at this time and am just not willing to fork over the extra money. I had a PS1 and a PS2, but went with the Xbox 360 this time around simply because of price.

Yup. The PS3 in my eyes is little more than a glorified Blu-Ray player/multimedia center.

It also plays games. So what? They nixed the backwards compatability, so now the second of my three reasons to get the damn thing is gone, but the price is still sky-high.

But really, who cares at this point? The Wii and 360 have kicked the PS3 round' the proverbial playground. The only people who claim the PS3 to be a success are the hardcore fanboys. And who really pays attention to them anyway?

Sony has lost this round, and if they don't get their shit together for the next go, they might face severe problems...