Next-Gen speaks with six games industry analysts who weigh in on the potential impact of the rumored $399 40GB US PlayStation 3. The verdict within…

Right now, there are more console configurations on the market than ever before. You have three Xbox 360s (four if you count the Halo 3 hardware), while rival PS3 has seen three configurations (20GB, 60GB and 80GB) introduced since its launch. Meanwhile, Nintendo’s plugging away with its one-configuration Wii.

Now there will be a fourth PS3, the 40GB model, which has been announced for Europe, Japan and Australia. The number of models is undoubtedly confusing for average consumers (granted, the 20GB is virtually phased out and the 60GB is following suit), but this latest PS3 could be Sony’s key to regaining some market share from Microsoft (and possibly “non-competitor” Nintendo?).

Will a cheaper PS3 make a difference?

The six analysts that we spoke with all agreed that the rumored $399 40GB PS3 for the US would facilitate an up-tick in PS3 sales this holiday, but to varying degrees.

Industry analysis mainstay Michael Pachter with Wedbush Morgan suggests that with each price drop, PS3 will be able to sustain higher monthly sales. He predicts as much as a 50 percent increase in US PS3 hardware sales if the console drops to $399.

“We should expect sustainable sales of 225,000 units [for non-holiday months],” Pachter says. “November is typically double the other months, so expect around 450,000 units, and December is typically double November, so expect around 900,000 units.”

Billy Pidgeon with IDC isn’t as confident in PS3 sales. “I don't expect major uptake on PS3 this holiday,” he says. “Xbox 360 needs to make the most of this holiday and build up the base, but Nintendo could move more Wii consoles than the others combined.”

Lazard Capital Markets’ Colin Sebastian believes that there will be a “meaningful up-tick” in sales once a cheaper 40GB model is introduced, but a less-expensive console from Sony will have to be backed by a stronger third-party developer strategy.

“If Sony is focused on building a large installed base for the PS3, they need to lower the hardware price and give publishers additional incentives to create compelling content for the platform,” he says.

Janco Partners’ Mike Hickey says Sony can only do what it can with what it’s got this holiday. “We don’t think there is really anything Sony can do beyond a dramatic price cut and a verbal outcry for PS3 Blu-ray buyers to turn the tide of their dismal holiday sales outlook relative to the Xbox 360,” he says rather bleakly. “[From a software standpoint,] consumers seem to be struggling with the ‘why pay considerably more for considerably less?’ purchasing dilemma. We are increasingly less confident Sony will show anything remotely remarkable on the PS3 for this holiday.”



The competition: Xbox 360

Console makers’ respective holiday blitzes are certainly ramping up. There’s Microsoft with the recently-announced Xbox 360 bundles, which throw in two free games with a 360 or Elite, not to mention the August hardware price cut.

Nintendo—well, there are no price cuts or extra incentives for consumers to buy the $250 Wii. There’s just plenty of momentum and Nintendo of America boss Reggie Fils-Aime saying, "good luck finding one."

But is it possible for a $399 40GB PS3 to sway Xbox 360 and Wii consumers away from their console preferences?

Arvind Bhatia with Stern Agee thinks that Microsoft’s established library and strong holiday lineup are enough to keep a leg up on Sony. “Microsoft won’t have to worry much this Christmas. However, if Sony plays it right, next holiday season could be more competitive for Microsoft.”

“The cheaper price point will only be drawing customers who already planned on purchasing the PS3 but were deterred by the price,” insists Jesse Divnich with The SimExchange. “Consumers have already made up their minds as to what systems they plan to purchase, or at least put on their list, this holiday season…. Microsoft need not be concerned with any short-term strategy Sony may implement…”

But Pachter, who has said that he expects the PS3 to eventually win the console war thanks to Blu-ray, argues, “Microsoft apparently is concerned [about the PS3 this holiday], hence the two-free-game bundle.”

However, he concedes that Microsoft will likely win this holiday battle. “I'm pretty confident that [Xbox 360’s] pricing advantage and software lineup will allow Microsoft to maintain its lead over Sony this holiday, but am less confident that will be the case in spring, with [LittleBigPlanet, Metal Gear Solid 4 and Gran Turismo 5] on the PS3, and a likely further price cut.”

Sebastian says frankly about the situation, “Microsoft will be fine this holiday with Halo 3.”

The competition: Wii

It’s crystal clear that Nintendo is living up to its promise of targeting a decidedly different (or perhaps broader) market than Microsoft and Sony with the Wii. But regardless, we ask how a lower-priced PS3 and Sony’s “high-end console” message would affect Wii consumers’ decisions. After all, the PlayStation brand is still strong with the mass market—but is it strong enough to warrant the extra $150 for average Joe Consumer?

“Ummm, no,” answers Pidgeon matter-of-factly. “The mass market wants the Wii, and doesn't want a PS3 yet. Sony's mass market play is PS2. Also, hardcore and enthusiast gamers want a Wii and are likely to own multiple consoles.”

Sebastian adds, “Wii has momentum of its own, with a very differentiated value proposition for gamers, so I think Nintendo is fine even with a lower priced PS3.”

Pachter holds strong to his previously established notion that the Wii is a supplement to competitors’ offerings (PSWii, Wii60, and all that).

“[Sony] has to convince consumers to buy a Wii and a PS3, not a Wii and a 360. Competitive pricing should get [Sony] there,” he says.

That aforementioned high-end, “PS3-is-surf-and-turf-to-your-Happy-Meal” message from Sony has diminished, and is therefore not a factor in swaying the Wii consumer, according to Janco’s Hickey.

“…The ‘high-end’ shine of the PlayStation 3 has quickly taken mud in most consumers' views,” he says. “While the testosterone-heavy, Chevy vs. Ford-like console battle between gamers will likely continue its illogical path for many years to come, the Wii is unquestionably a true value for gamers who enjoy fun, digestible content at a reasonable price point.”

Divnich puts it more succinctly, “A cheaper PS3 model and Xbox 360 software bundling is a barrier on Wii sales like a person trying to stop a train with his hand.”

News-Source: nextgen