Sony announces new, cheaper PlayStation 3 and cuts price on top-line model

Robert Dow

NEW YORK—Sony Corp. today cut the price of its PlayStation 3 game console in the United States and announced an even cheaper model that will arrive before the holiday shopping season. The top-line PlayStation model, with an 80 gigabyte hard drive, now costs $499, down from $599. That effectively eliminates the lower-end model, which has a 60-gigabyte drive and has sold for $499.

A new low-end model with a 40-gigabyte drive will go on sale Nov. 2 for $399. Unlike the other PlayStation 3 models, the new one won’t be able to play games made for the PlayStation 2. In a statement, Sony said this was due to a more extensive lineup of games of the PlayStation 3.

This announcement in price reductions comes on the heels of a 20% reduction for the PS3 in Japan in September and an overall cut in prices in July. What has occurred in the console market these past 2 years is a minor miracle. Sony was the undisputed heavyweight champion of the world and now a few short months later it is a distant 3rd behind 2 machines with arguably inferior technology. The numbers don’t lie and in September not only did the PS3 trail the 360 in sales by over 400K consoles (thank you, Halo3), and the Wii by 380K units, but also trails the never-say-die PS2. This coupled with the 360’s 74% market share in software, the Wii’s 17%, and the PS3’s 9%, and Sony is in big trouble. In order to get the cost down, Sony removed the additional hardware that made the PS3 model will not be backward compatible for PS1 and PS2 games. It must have been a touch choice considering that the PS2 is still outselling the PS3 and Sony made so much hay over Microsoft’s decision to limit the ability of the XBox 360 to new games and a few select Xbox “classic” games. Sony needs a fix, it is in desperate need of a “must-have” title that can take advantage of the PS3s superior hardware and gives the console a chance to shine.

In a related story, Microsoft countered the price cut by Sony by offering a price reduction of their own. The 360 will be reduced to $304 (34,800 Yen) down from $348 (39,795 Yen) in Japan. The Wii is still the cheapest console on the home islands going for $219 (25,000 Yen).—CRD

AT&T, Napster To Unveil Direct Mobile Music Download
(from CNN Money)

NEW YORK -(Dow Jones)- AT&T Inc. (T) unveiled on Monday a service that allows its subscribers to download music from Napster Inc. (NAPS) directly to their cellphones, keeping pace with services already offered by rival wireless carriers. It represents a shift in AT&T’s stance on mobile music to an “over-the-air” download model versus “sideloading,” or transferring music from a computer to a phone through a physical connection.

The service, Napster Mobile, is an expansion of AT&T’s foray into music. In July, it began a download service called eMusic, which catered to the independent scene. [JPR Editor’s note: EMusic is an independent music site that specializes in music from independent artists. AT&T teamed with that company to create its eMusic offering.]

“The important thing you have to look at is it’s not a standalone offer,” said Roger Entner, head of the communications practice for IAG Research. “It’s another puzzle piece that hooks people into using their cell phone as a multimedia entertainment device.”

As price wars on unlimited minutes rage and revenue from talk time dries up, every major carrier is looking to offer more and more features: from games, ringbacks, TV, GPS to downloadable music. CTIA is in San Francisco this week, I’m excited to verify the rumors that some handsets are now capable of performing MRIs, if they are we won’t have mobile phones anymore but TriCorders.

AT&T is offering the Napster downloads for $1.99 which is $1 more than it costs to buy a song on Napster off the internet and $1 more than it cost to download an iTune song for your AT&T iPhone. Makes one wonder who exactly will be willing to pay the extra dollar.—CRD