Will it, or won't it? That's been the question surrounding the long-rumored price cut for Sony's
Factoring in the 17% price cut, consumers will be able to purchase the 60-gigabyte model of the PS3 machine for $499. (Remember, back in April Sony ditched its low-end model.) This makes the machine only about $20 more expensive than Microsoft's
This long-rumored development sounds like a perfectly logical move. Although the cut makes it more difficult for Sony to profit on the machines -- the company already loses money on each one it makes -- it should be helpful in driving sales to potential buyers with sticker shock, since the PS3 launch has been subdued by formidable competitive forces at the moment.
If you follow my coverage of Sony, you'll know I can't get behind the company's tendencies to say one thing and do another. There have been ample examples over the years of Sony denying things that turned out to be true -- and sometimes sooner rather than later. When rumors circulated that the PS3 launch would be delayed, for example, Sony denied that that was the case -- until it was the case, of course.
Sony's Ryoji Chubachi may have said that a PS3 price cut in North America wasn't out of the question back in April (yet at that time, other Sony spokespeople were denying his statements to that effect), but Chubachi himself denied a PS3 price cut just last week. True, it's possible that Sony simply had a lightning-fast change of heart and executed quickly -- word of problems with Microsoft's Xbox has had newswires buzzing -- but it still looks a bit suspect for those of us on the outside looking in.
Perhaps this tendency simply illustrates the risk any corporation faces when it becomes a massive entity, as Sony has. Maybe I'm being unfair, since I can't know exactly what transpires to allow such incidents to occur, but investors don't have to be understanding when they're gauging what kind of management strategies they're looking for in a company.
But regardless of whether incidents like this are the result of competitive fears or strategy, arrogance, disorganization, difficulties with transparency, or simply bureaucratic breakdowns in communication, I can't help thinking it's a good defensive policy for investors to avoid companies whose word seems to leave ample room for second-guessing.
Further Foolishness:
- Some Fools have thought shorting Sony might be a good idea, although others think the Japanese electronics giant shouldn't be discounted.
- Last spring, Sony quickly ditched its low-end PS3.
- Rumors that Sony might cut the PS3 price have been circulating since April.
Nintendo has been recommended in Motley Fool Stock Advisor. Microsoft is a Motley Fool Inside Value pick. Take a peek at either service free for 30 days.
Alyce Lomax does not own shares of any of the companies mentioned.
