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Analyst says PS3 needs $200 price cut to recover


An analyst at Bank of America believes for Sony to make up the ground they've lost this console generation they don't just need the expected $100 price cut, but a $200 price cut. The analyst who made these remarks to, Michael Savner, believes this is unlikely, but believes it is the way to recovery.

Savner says, "While Sony could cut the price by $150 - $200, we view that as less likely given that it is already losing approximately $200 per console at $599, based on our estimates ... Offsetting a potential price cut are decreasing production costs, which should improve significantly this year. We estimate that the loss per console could decline to about $50, assuming Sony does not cut its wholesale prices. Bottom line, we don't expect Sony to make up meaningful ground against the Wii this year."

So, according to Bank of America, Sony's gotta drop the price, take the loss, lose the year, and maybe they'll recover in the long run. But wait, there's more. Savner says that the success of the Wii is hurting the industry. That publishers have invested research and development in next-gen graphics and tech, so if the Wii is successful that money spent is useless. He also notes that Nintendo doesn't play very well with third party publishers so that'll hurt the entire industry. There's a lot of jargon in there, Savner simply could have laid it out in geek-speak we could understand: Save the PS3, save the industry.

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