Analysts: Sony facing 'major pressure' to reduce PS Vita price

Nintendo's 3DS cuts place the spotlight on Sony's strategy

Despite Sony's insistence it will not lower theretail cost of the PS Vita to counter Nintendo's recent 3DSprice cut announcement, some industry analysts are saying the electronics giant would do well to reconsider or possibly face a disastrous launch.

“Gamers are increasingly anticipating Sony to lower prices, especially after the 3DS cut,” said Hideki Yasuda, a Tokyo-based analyst at Ace Securities Co. in an interview with Bloomberg, adding,“Sony is under major pressure to cut the price of the Vita or risk a major failure.”

Above: Nintendo advertises the 3DS's new price in Japan

Late last month, Nintendo announced it would be slashing the price of the 3DS by 33% worldwide come August 12th, leading many to assume Sony woulddo the same for itsupcoming handheld. Kazou Hirai, president of Sony’s Consumerand Products Services group, denied the idea, saying, “We have a very good product at a very affordable price...There’s no need to lower the price just because somebody else that happens to be in the video game industry decided they were going to.”

Despite Hirai's positive outlook, there are others beside Yasuda who aren't so sure of Sony's future. Koki Shiraishi, an analyst at Daiwa Securities Group Inc. predicts the PS Vita will sell only half that of the original PlayStation Portable in its first two years, explaining the evolution of smartphone tech has made it much more difficult for handheld systems to find success. Further, Kazuharu Miura, an analyst at SMBC Nikko Securities Inc., originally estimated PS Vita would sell 2.5 million units by March, but is now reconsidering, adding, “If strong titles aren’t there for Vita, there is a risk I might have to cut my estimates.”

Not all number crunchers are warning Sony about its launch strategy, however. As Shiro Mikoshiba, an analyst at the Tokyo-based Nomura Holdings Inc. explained: “The customers Sony is targeting with its Vita are those willing to spend a lot of money. That’s a valid strategy even if the volume’s low as long as it can sustain the higher price.”

Sony isn't a stranger to adjusting its prices, but it seems set in its waysregarding thePS Vita. After all, lowering the price now may come across as too much of a reactionary move to Nintendo. Then again,knowingthe system willmiss a 2011 holiday launchin North America and the UK,it's arguable the systemwon't be in astrong position to sell for $249 ($299 with 3G) months after everyone has already emptied their wallets.

Enough with the talking heads. Now it's your turn. Should Sony stand firm on its price, or should it heed advice from analysts and consider a cut?

Aug 9, 2011

Source:Bloomberg


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