Illustrating once again that this year is not going to be your typical E3, one of the most-predicted pieces of news actually came down two days before Sony's press conference. Sony announced early Monday morning that they would lower the price of the 60 GB PlayStation 3 to $500, and introduce an 80 GB package for $600.
But the real news came when people started taking a closer look at the package shot for the new version, and found out that the hardware-based backward compatibility would be removed from the 80 GB version, replaced with the limited software-based functionality from the PAL version of PS3.
All this taken into account, it's tough to know what to think about this move. Here's our version of events.
The debate right now seems to be mostly centered on whether or not the PlayStation 3 really got a "price cut" or not. Sony did originally ship a $500 version of PlayStation 3, which it discontinued earlier this year. All things being equal, the barrier to entry for PlayStation 3 is exactly where it was when Sony launched in November. Then again, are all things equal?
Now, it's true that few people actually bought the $500 PlayStation 3. That's because the value proposition was off. If you're already doing the early-adopter thing and blowing five bills on a high-def piece of game hardware with a small library, there's just no reason not to spend another $100 and get the fully-featured machine.
The difference between the 20 GB configuration and the 60 GB might not have been as pronounced as that of the Core and Premium Xbox 360s. But it wasn't trivial, either. For another $100 you got three times the hard drive space, extra media slots, and built-in wireless communication.
Players didn't want it, and Sony didn't want to sell it to them -- mostly because, if the tech analysts at iSuppli are to be believed, Sony was losing more money on the lower-end model. So the low-end PS3, which was really only released to take some of the edge off the $600 sticker shock, was put out to pasture within months. And good riddance -- who wants a crippled box?
The new two-configuration plan is much better for gamers, although there are still similarities to the launch plan. They're selling a box that costs less to produce, for more money. Sony has removed the Emotion Engine chip that gave PS3 near-perfect (after some bug fixes) compatibility with its more popular, skinnier younger brother. But instead of "passing the savings on to the consumers," as Jack Tretton has said numerous times today, they're jacking the price up for the cheaper model.
Which brings me to Motorstorm. Pack-ins, as a rule, don't last very long. They're adding in Motorstorm to sweeten the deal for now, but I doubt this will be the case through the holiday season. And when they take it out, they'll have to do something to the price of the 80 GB. This whole plan seems to be a stopgap measure, which they'll only undertake until they sell out of the 60 GB models.
Of course that's the plan. Sony isn't going to manufacture two different versions of the PlayStation 3. I wouldn't be surprised if they've stopped making the version with the Emotion Engine built in, entirely, by this point, and that the 60 GB version will go away for good once they sell out of the inventory stockpiles that they've built up.
Now, this might take a long time. PlayStation 3 isn't selling. And I doubt this pricing plan will change that to any significant degree, because PlayStation 3 launched at $500 and it didn't work then, either. The fact that this $500 model is actually worth purchasing will certainly bring over some of the would-be PS3 owners who've been on the fence. But it won't do anything to make the rest of humanity jump after it.
That said, the $500 version is the PS3 to buy. This is the last iteration of the hardware that will include full, complete backward compatibility. Yes, Sony could technically start burning the midnight oil and getting the software functionality into shape, but that doesn't seem to be a priority. If you care about playing older games, this is what you want. Contrariwise, if you think it's a fair trade to get a free copy of Motorstorm and a trivial amount of extra storage in exchange for having the dial turned way, way back on your backward compatibility, well, hey. Sony's betting you're the majority.
From a pure business standpoint, this accomplishes a key goal for Sony: they're making some tough moves towards profitability by cutting parts out of the console then keeping the price essentially level while they do that. They're not really in a position right now where they can make up their losses on volume, so they've got to do it in other ways.
If you're going to take the jump, this is probably the time. The 60 GB PlayStation 3 might be the best version of the hardware out there, and I doubt Sony will ever lower its price. They'll move to a single SKU, with the revised hardware, as soon as they possibly can.
