Why Sony Needs the PS2 to stay above $99

As noted earlier today the Playstation 2 is dropping twenty dollars to $129.99.

And we ask, why didn’t they go all the way to $99? I think I know why. The PS3.

Every pundit, analyst, and scholar and predicted the pricetag of Sony’s third home game console to be anywhere between “very expensive” to “EXTREMELY expensive.” Sony knows it will have to east some loss on hardware, especially if they want to stay price competitive with the Xbox 360, or even competitive with a high end gaming PC.

Microsoft was able to afford a consistent loss on the first Xbox because they have a software department that pulls in quite a bit of money. Sony’s portable electronics empire it built in the 80s has been toppled by Apple’s iPod, and their home theater department doesn’t exactly dominate the market either. The most successful arm of the Sony machine is gaming, specifically the PS2.

By still being able to scratch a profit off this 5-year old console, they’re suring up a warchest to keep them stable for the coming Playstation 3 launch. This is not to say Sony will be able to afford to get a new box out the door for $299 or even $399, but it will substantially help them to continue selling the PS2 for the highest price the market will bear. If theres still people out there who don’t own a PS2 and are willing to drop $129 on it, then thats a few more dollars Sony can roll over into padding out a PS3 launch.

Sony really can’t afford to lose the market to Microsoft. And honestly, we all know that that Sony has had some of the best developers working on their systems in the past decade. So the only real deciding factor in the Xbox 360 challenge is price. Every penny will count.