Sony announced PlayStation 3 would cost $599 for the 60GB model and $499 for a 20GB version during its E3 2006 press conference, triggering immediate negative reactions from consumers and analysts who questioned whether gamers would pay premium prices double that of Nintendo’s Wii for next-generation gaming.
The pricing announcement came from Sony Computer Entertainment’s Kaz Hirai, who attempted to justify the cost by emphasizing PS3’s Cell processor technology, built-in Blu-ray player, WiFi connectivity, and backward compatibility with PlayStation and PS2 libraries. The 20GB model omits WiFi, HDMI output, memory card slots, and chrome finish.
Industry reaction was swift and harsh, with many attendees audibly gasping at the $599 price point. Microsoft’s Xbox 360 Premium launched at $399 one year earlier, while Nintendo positioned Wii at $250, creating a $350 price gulf between Sony’s premium console and Nintendo’s budget-friendly alternative.
For Sony, the pricing reflects manufacturing costs for cutting-edge Cell processor and Blu-ray technology, but threatens mass market adoption. Analysts predict the high price point will severely limit PS3’s install base through 2007, giving Xbox 360 and Wii critical market share advantages during the crucial holiday shopping seasons.
Sony executives defended the pricing by noting PS3’s capabilities as an all-in-one entertainment system, but consumers seeking purely gaming experiences may balk at paying twice the cost of competing consoles.