Despite constant rumours of an imminent PS3 price drop, Sony says the price isn't the issue. The PS3 is holding its own against the competition. It's also juicy.
Recently I had the chance to chat with Michael Ephraim, head of Sony Australia's PlayStation business. Ephraim told me he was happy with PS3 sales, particularly in PAL territories including Australia.
"If you look at where we're tracking against other consoles... the Wii and the DS, especially during toy catalogues are very strong, they're definitely selling to a broader consumer base than we currently are. But if you look at our sales compared to a more comparable product in Xbox, in PAL territories we've closed the gap in the first half of this year. For a few weeks now we've had almost 1:1 sales with Xbox."
"Clearly they outsold us last quarter of last year when they dropped the price. But this year we've brought that back. The PS3 is holding is its own at a very premium price against the Xbox. We're generally very happy with the sales of the PS3 console."
I mentioned to Ephraim that Xbox had seen considerable growth recently with the Arcade console, which at $299 RRP is well under half the price of a PS3. Sony has of course experimented with several SKUs since launch - the PS3 has featured 20, 40, 60 and 80GB hard drives as well as various combinations of ports and chips providing PS2 compatibility. I asked Ephraim if not having an equivalent low-end version of the PS3 had hurt them.
"I think what we really have to look at the content. The price point on the console is a valid point. But it's more about people understanding the value for money with what you get on a PS3 versus a stripped down basic games machine which the Arcade is - there's no Blu-ray, there are many features that are just not there. So you're comparing apples and oranges.
"But if you're selling on the lower end, you need a library of content that is going to appeal to that customer. For example, we have incredible brand equity with Singstar, you know, we have 800,000 mics in Australia alone. Migrating that Singstar PS2 consumer to Singstar PS3 is a factor for the broader take up of our console."
"You have to look at the catalogue. You can buy the Arcade at $299, but if you're talking a family purchase, what kind of content is available? That's where we are extremely confident this year."
I mentioned a quote from Sony America boss Jack Tretton from E3 this year, where he noted how difficult a year it had been to "sell future technology". This is when, as I noted on Tuesday, I asked Ephraim whether he was comfortable going into this holiday period with an 80GB PS3 at $699 up against a rival console priced between $299 - $399. Here's his expanded answer.
"Let’s face it, we’d love to have a lower retail price, but we’re a company that needs to deliver a profitable result. The weakness in the Australian dollar hasn’t helped, you know, from being at almost parity to now being in the 70-plus cents range.
"As far as the model is concerned, we’re comfortable with the 80GB… which is of course upgradeable, so that storage capacity isn’t really a factor. And if you look at our sales where we’re tracking well against our competitor at a premium, I think we have a lot of value that’s just based on consumers understanding what the device can do. As people understand that more, the price becomes less of a factor.
"We have to compare apples to apples, and not apples to pears or whatever, because the PS3 in our mind does a lot more, there's a lot more content, there's a lot more diversity of content. As Jack said, it's hard to sell future technology, and that's something we've experienced here. But as you demo it to people, and show them features and functionality, there's no one I've demoed it to who hasn't said, 'Wow, I want one'.
"So there's a price issue, and there's an education issue, and there's the consumer getting their heads around their home entertainment solution, you know, what's the best box to have sitting in front of the TV. Price will work itself through one day. We're not overpriced for what we deliver... and with the Arcade, we're just not comparing apples to apples here."
Finally, I asked Ephraim if he felt the PS3 was the only apple in the basket.
"Well... it's a nice apple. A nice, shiny red apple. And it's juicy."
I'm interested to hear your thoughts on the price debate. Do you agree that the PS3 isn't overpriced for what it delivers? Do you think of the PS3 as a juicy red apple? What fruit analogies would you use for all three consoles?