PS3 Narrows Gap On Xbox, The Price Cuts Are Working


Sony (SNE) execs always say, over and over again, there’s no price cuts on the PS3 coming anytime soon. The reality is little different: Over the past month we’ve seen virtually every major retailer out there including Wal-Mart (WMT), Dell (DELL), Amazon (AMZN) and Best Buy (BBY) all offer some type of ‘limited time only’ deal on the PS3, with discounts typically in the $50 to $60 range.

And it’s working.

The NPD group just released their eagerly awaited report on US gaming sales, and the PS3 showed marked improvement against Microsoft’s (MSFT) Xbox 360. Over the critical month of December, the X360 outsold the PS3 by just shy of 2-to-1, 1.44 million consoles to Sony’s 726,000. In January, Sony improved dramatically, selling 203,000 units to Microsoft 309,000, narrowing the gap to 2-to-3.

(Overally, the entire video game industry plunged from the holiday month of December, but that’s to be expected.)

Sony still has a ways to go, but there’s no denying the market is price sensitive. But the company can’t afford to wait much longer to make its price cuts real and permanent, gaming consoles have strong network effects, and everyone wants to be on the system their friends are on.