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 a premium price 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 the 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 a 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 the manufacturing costs of cutting-edge Cell processor and Blu-ray technology, but threatens mass-market adoption. Analysts predict the high price point will severely limit PS3’s installed base through 2007, giving Xbox 360 and Wii critical market-share advantages during the crucial holiday shopping seasons.
Sony executives defended the pricing by highlighting the PS3’s capabilities as an all-in-one entertainment system, but consumers seeking purely gaming experiences may balk at paying twice as much as competing consoles.