Sony Drops PlayStation Prices

LOS ANGELES -- Sony expects a long life for its PlayStation 2. So this week it dropped the gaming console's price to keep sales brisk while simultaneously announcing new online services designed to keep gamers coming back.

The new price is $150, and is designed to appeal to the more casual gamers, says Kaz Hirai, president and CEO of Sony Computer Entertainment America during a press event here the day before the Electronic Entertainment Expo opens. Sony also discussed its forthcoming PlayStation Portable.

"We're excited about the . . . price point, and it's a significant move because it demonstrates our commitment to the platform," Hirai said. While competitors have been quick to cut their prices in a grab for market share, Sony has been careful not to lower them too quickly, which could damage the growth of the entire console gaming market, he added.

"We take our role as the industry leader very seriously," Hirai said. "The health of the business rests on our shoulders." Sony expects the PlayStation 2's life cycle will be comparable to the original PlayStation, which is still in wide use nearly ten years after its introduction.

The PlayStation 2 price drop, from $180 to $150, puts the unit in line with Microsoft's Xbox, but it's still higher than Nintendo's $100 GameCube. Hirai said the price is significant to Sony because that's the price at which it moved more than 90 percent of the estimated 30 million original PlayStations sold.

Sales figures from NPD Group show that currently the company has sold about 23.2 million PlayStation 2s. Meanwhile, Microsoft has sold about 8.3 million Xboxes and Nintendo has sold about 7.3 million GameCubes.

More Online Options

At its press event Monday, Microsoft focused on its Xbox Live service, which the company says has nearly 1 million paying subscribers. Microsoft executives also had some fun at Sony's expense, mocking the PlayStation 2's online strategy, which leaves online development largely up to individual game publishers.

Sony executives clearly weren't laughing. Sony plans to take a more active role facilitating online gaming with the PlayStation 2, offering game publishers more online hosting options and new billing options, Hirai said. However, Sony won't deviate from its original plan, which leaves content control in the hands of those who developed the games, he said.

Instead of focusing on a subscription-based system like Microsoft's, Sony will create a new business model based on individual purchases, he said.

"Our players say a fee-based structure is a barrier to adoption," he said. "We think the future is mini-transactions."

Instead of paying a flat fee, PlayStation 2 users will be able to decide what they want to pay for, and what they don't, he said. The company hopes to create a system similar to Apple's successful 99-cent music downloads.

Of the nearly 25 million PlayStation 2 consoles sold, Sony says about 3 million now have the company's optional network adapter (the Xbox ships with an integrated adapter). Sony estimates about 1.3 million of its units are registered online, and expects to have upwards of 100 online-ready titles by the end of the year.

An Eye Toward the Future

While Sony executives largely focused their comments on today's console, the company also announced plans for the new processor it is developing to power the next-generation PlayStation. The chip will go into a desktop workstation.

Sony, Sony Computer Entertainment, and IBM are jointly developing the new cell processor, which will offer high data bandwidth, vast floating point capabilities, and a powerful parallel-processing architecture.

Beyond merely playing games well, the companies decided the processor was uniquely qualified to help create them too, said Masa Chatani, chief technology officer of Sony Computer Entertainment. As a result, the three companies are teaming to create a prototype cell-based workstation by the end of this year. In time, IBM will market the workstation to game developers and other entertainment industries.

"Cell-based work stations will help push game development," Chatani said. "This will revolutionize technology and business."