PS3, 360, Wii price war won't be the same as last generation

The previous generation of game hardware saw price drops by each console matching the amount and date of the competing consoles. However, this new generation's machines are so far apart in price and the consoles are more expensive to manufacture, we can't even hope for a similar trend.

The last generation had consoles that were very similar in power and design. The costs of the components to build the systems dropped at approximately the same rate. However, this generation's systems have vastly different setups.

The Playstation 3 has two brand new, and expensive, technologies. Sony will want to PS3 price to remain high as long as possible because of the cost of the Blu-Ray drive and the Cell processor. Microsoft is still losing money for each system they sell, so they have no intention of dropping their price either. And then there is Nintendo, who is reportedly making quite a bit of profit off their system.

Nintendo will take less of a profit hit if it lowers the price of the Wii, but they probably have no need because of the large price difference with it competitors. Nintendo will appeal to the mass consumer who wants a game machine, but doesn't want to pay a lot. 360 will appeal to the mildly hardcore gamers who want graphics and online play. And the PS3 will appeal to the hardest of the hardcore gamers who want to go all out.

These target demographics probably won't buy a different system even with a $50 price drop. It will take much more for each respective system to reach the others' core demographic.

Yes, there will be price drops, but they will probably be more in line with the drops in manufacturing costs, compared to when the competition drops their price. So, analysts will not be able to use last generation as a guide to price drops, even though we all know they will try.

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Posted by Raknor

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