: The Upcoming Price Drop I Can't Confirm

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The Upcoming Price Drop I Can't Confirm

Sony will drop the price of the PlayStation 2 this May, presumably on May 11th during it's E3 press conference.

There, I said it.

Do I have any definite sources for this? No, not really. The signs are everywhere though. This morning, Reuters issued a report saying that analysts have determined that Sony needs to drop the price of the PlayStation 2. It seems that with the Xbox price drop, Microsoft may have sold more units than Sony in the past month. Next month isn't looking too great, either.

Back when the Xbox price dropped, EB Games stores received materials regarding a PlayStation 2 price drop. E-mails sent out to every store made reference to upcoming price drops, in the plural. Just last week, the price of a used PlayStation 2 dropped to $129.99 at EB Games stores.

While EB Games employees aren't always the best source of game-related knowledge, the corporate portion of EB Games knows what they're doing. The upper management has to know what is going on, if only because their careers depend on it. When EB Games takes in a used system, they give a certain amount of in-store credit. Then they mark up the system to a higher price in order to profit. When the price of a system drops, they have to drop the price of the preowned systems, and they're not making as much money from them as they could be. So they drop the price of the preowned systems a few weeks in advance, usually putting the price at what will become the price of the new system. That way, buying preowned seems like a really good deal to the regular person, and EB Games sells a lot of preowned systems. Sure they lose a little money, but it's better than losing even more. When the system price drops, the preowned price usually drops another $10 or so, and they generally have a lot less inventory due to the previous price cuts. Pretty smart, eh?

In other words, when EB Games drops the price of a used PlayStation 2 to $129.99, that means the price for a new PlayStation 2 will be $129.99 in a few weeks. Combined with this mornings Reuters report and the current sales data, you practically have confirmation of the price drop. Besides, do you really think Sony is going to let Microsoft outsell them?

4/27/2004 Chris Faylor

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