July 9, 2009 6:00 AM PDT

Is Sony on the right track with its PS3 strategy?

by Don Reisinger
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PlayStation 3

The PlayStation 3 might make a comeback.

(Credit: Sony)

When Activision CEO Robert Kotick told reporters last month that his company might stop game development on the PlayStation 3 if Sony doesn't drop the price of the console, some were wondering how Sony would respond.

We didn't have to wait long.

Sony CEO Howard Stringer told Reuters earlier this week that he has no plans of dropping the price of the PlayStation 3, regardless of comments made by developers.

"He likes to make a lot of noise," Stringer said to reporters about Kotick's statements. "He's putting pressure on me and I'm putting pressure on him. That's the nature of business."

When pressed about PS3 price cuts, Stringer was more direct. He explained that if Sony dropped the price of its console it would "lose money on every PlayStation (it) makes. How's that for logic?"

Stringer echoed comments that I've heard numerous times from Sony representatives. Although the company is cognizant that its console is the most expensive on the market, it just can't drop the price of the PS3 for financial reasons.

I get that. And although I think it was poor strategy that got the company into this mess in the first place (being the biggest and baddest console doesn't always matter, after all), I do believe that there is a way out if Sony doesn't want to drop the price of the PlayStation 3.

PS3 Slim to the rescue?
There have been numerous rumors swirling about the possibility of Sony releasing the PS3 Slim. Those rumors suggest that the console will feature a smaller footprint than the full-size PS3 and could sport a $300 price tag. That makes the console $100 cheaper than the current 80GB PS3 model.

Sony has stayed silent on the possibility of a $300 PS3 Slim, but it makes sense to release it. The Slim will undoubtedly cost much less to develop, which means Sony can afford to charge a lower price.

With a $300 PlayStation 3 on store shelves, it creates a scenario where Sony, for the first time, is offering a console that's cheaper than the Xbox 360 Elite--Microsoft's top-of-the-line hardware--and the same price as the Xbox 360 Pro. When consumers go to the store with just enough cash to buy a single console, they'll finally see an affordable PlayStation 3.

More bundles, please
But Sony can't just offer a PS3 Slim and let that carry it to prosperity. Quite the contrary, it needs to continue offering bundles that ship with compelling titles.

Right now, you can buy a PlayStation 3 bundled with Metal Gear Solid 4: Guns of the Patriots and Killzone 2 for $399--the same price as an 80GB PS3 without the games. And although Microsoft offers similar bundles with its own console, I think most consumers will recognize that the bundle is a good value.

Bundling games with a console is like a price drop without the drop. Both of those titles currently retail for $60, if you buy them separately. If you bought a PlayStation 3 and those two games, you'd end up paying $520 before you even added another controller. But since they both come bundled with the console, you can have $520 worth of entertainment for $400. That's a $120 savings that might make some consumers think twice about the PlayStation 3.

And isn't that the point in the first place? For the last year, Sony hasn't enjoyed a single competitive advantage over Microsoft and its sales have shown that. But now that those bundles are available, Sony might be able to claw its way back into the race, even though Microsoft offers bundles of its own.

A two-pronged approach
But it won't be enough. Consumers who don't want to spend $400, regardless of a bundle's value, will still choose the Xbox 360 Pro or the Nintendo Wii to save some cash. And that's where the PlayStation 3 Slim can come in. If it's priced in the $300 range, it provides Sony with a two-pronged strategy that might just work. The company can offer a cheaper version of its console for those who don't want to spend too much and offer bundles for those looking for value.

If Sony can combine cost effectiveness and value, it could have a winner on its hands.

Now, we need to wait and see if it follows that strategy.

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Don Reisinger is a technology columnist who has written about everything from HDTVs to computers to Flowbee Haircut Systems. Don is a member of the CNET Blog Network, and posts at The Digital Home. He is not an employee of CNET. Disclosure.

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by sting7k July 9, 2009 6:21 AM PDT
Xbox Elite systems ($400, 120GB HDD) currently are coming bundled with Halo 3 and Fable 2. As well as all the cables you would ever need to connect to your TV and be HD ready out of the box.

PS3 isn't HD ready out of the box STILL and they want $400. Get a clue Sony.
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by ibeetle July 9, 2009 6:32 AM PDT
Is not HD ready out of the box? What the... Blu-ray Disc... uncompressed 1080i... built in non proprietary wireless... non proprietary hard drive... oh why bother.
by this1! July 9, 2009 6:37 AM PDT
xbox and ps3 bundles arent comparable, at least I dont think they are.

Elite comes with built in wifi right? okay so that arguments out, but, the ps3 still comes with a blu-ray player, and FREE ONLINE GAMEPLAY.

Sure, live is only 50 bucks a year, but ive been playing things like TF2, Call of Duty, Resistance, etc online for at least 3 years now, thats like an extra 150 (roughly).

I didnt buy an xbox for that reason, and quite frankly the only franchise that appeals to me enough to want to get an xbox is splinter cell.

To each his own.
by superdynamite July 9, 2009 8:21 AM PDT
What planet are you living on??? I hope you're kidding because you can't be serious.
by umbrae July 9, 2009 8:40 AM PDT
I think sting means the PS3 does not come with an HDMI or component cable. At least, that is what I heard.

The fact of the matter is the bundle are really comparable. Sure one has one thing and the other does have that but has something else. But what it really comes down to is that the cost of the system is determined by how you plan to use it.

PS3 has Blu-Ray: I don't care, and see no reason for it. My XBOX is not hooked up to the system I watch movies on, and multi-discs don't bother me: not that many games seem to need it.

PS3 has built in wifi: I don't care because Wifi is too latency heavy for me to want to play games on. I prefer a cable.

And those 2 items and the online strategy are really the only thing that sets these systems apart. PS3 owners will continue to tout the free online gaming, but I have yet to meet many people who own both that does not pick XBL as the winning service. Not to mention in the end XBL has a free account type too even though its limited.

The problem is that Sony has snubbed developers and users. They have made a very expensive system for no purpose than to push Blu-Ray. This is system is very difficult to develop, and does not really provide gaming much horsepower over traditional systems. The Cell is a good design, but it only makes developing game more difficult than any other vendor. Unfortunately, Sony hasn't learned this lesson yet, but I think they will. A price cut will show the beginning of this; however, that will be hard until they can manufacture the thing cheaper which is not very likely.
by d--keller July 9, 2009 11:03 AM PDT
I own both and chose the PSN. I paid for Live for 3 years. The service is pretty much the same for me because I don't really care about cross game chat. It is annoying that you still can't leave a voice message for a friend. Not $40 every 13 months annoying, but it is irritating.

I dropped live a few weeks ago because Call of Duty is identical on both systems and one of them lets me play for free.

By the way, there is no latency with a decent wireless router and a 10ft HDMI is $6 on Amazon.
by worsethannormal July 9, 2009 11:25 AM PDT
@umbrae: There are plenty of things that set the systems apart.

Lets talk upgradability and price. to up grade the PS3's hard drive, you just go to the store and buy the 3.5" drive you want and install it. For the Xbox you have to go with a propritary and overly expensive M$ solution.

Let's talk flexibility, I have Ubuntu running on my PS3, what OS do you have on you xbox. Oh that's right, you can't install and OS even though the thing is basically a wanna-be PC.

Lets talk games, since there are so many multi-platform releases the only difference here is a smattering of exclusives. Since I own both system (bought the xbox just for exclusive) I can tell you that M$'s exclusives are a tad disapointing when compared to PS3 exclusives. Halo? Meh a well-done but average shooter, I've been playing FPs's since Castle Wofenstien 3D and Halo was/is more of the same. Gears of War? Fun game, but again nothing that inventive. They perfected the cover system, but again nothing really new. Fabel II, bored out of my frickin mind. Mass Effect, proves that every single part of your game can be broken (except the intolerably long chatty conversations), I mean combat was broken, inventory managemne twas broken, party management was broken, and most of the side mission were so repetitive and borring you could call most of the game content broken. And I could go on.

But the exclusives for the PS3have been exciting and inovative. Heavenly Sword was broken in the fact that the game does a horrible job at teaching the player how the combat is supposed to work, but once you figure it out, what seemed to be broken works well, as well or better than GOW. Infamous, took the platforming of Sly Cooper and married it to a Third Person Shooter, creating opurtunies for interesting "vertical cover" and fire solutions. And I could go on.

There is far more difference in these systems than you want to admit to yourself.
by SteveW928 July 9, 2009 3:03 PM PDT
@ sting7k -
OK, good point on the cable.... so spend $3 of the $50 you'll pay for XBL for a good HDMI cable and you've got $47 left over to do what you like with.

@ umbrae -
No, the PS3 isn't harder to develop for, only different. There is also a much bigger difference than just a blu-ray player. Doesn't provide gaming horsepower? Whatcha smokin' now? Why do you think the PS3 costs more to produce... it has LOTS of gaming horsepower, for now and the future.

But, the real difference is the games. The PS3, IMO, simply has better titles available.
by knewguy July 9, 2009 4:43 PM PDT
@Worsethannormal:I assume you are talking for yourself and not generalizing. I happen to like Halos over Killzones. And I thought Mass Effect was a great game. Its all upto individual tastes.
That apart, I think you are missing the whole point of the article. No one is disputing the greatness/value of the PS3.. the only thing up for debate is the Price of the system. And really, if the excuse for PS3 price was what you have put in ur post, then it really wont hit the spot with the general public. Not many people need an OS on their gaming machine. In spite of being a faily techy dude myself, i have never felt the need to surf on my gaming machine. People who need this facility can probably justify the price, but people who just want to game.. couldn't care a damn.
by popa pineapple July 9, 2009 6:55 PM PDT
I bought a PS3 some time ago and it WAS HD-ready out of the box. Not only do I use it for HD games, I watch blue-ray DVDS. If your point is it doesn't come with enough HD cables, that doesn't make sense either because everyone's setup is different. Besides, HD cables aren't that expensive these days.

I bought a PS3 because it had a more advanced architecture. It turned out that wasn't as important as I thought, mainly because Microsoft had a head start in creating a game architecture in software, making the advanced hardware architecture of a PS3 less of an advantage. I think Sony will still be proven right eventually, but Microsoft has certainly proven that imagination and innovation in the games themselves provides a huge advantage over the competition.
by SteveW928 July 9, 2009 10:45 PM PDT
@ popa pineapple -

I'm not sure I'd call it imagination and innovation... all I've seen is that M$ has been more successful at getting more titles ported to the Xbox. I've seen very few good ports, so I don't really care that much. The exclusive titles are really where it is at IMO... and I think the PS3 leads there. I do like Halo, but that is about the only Xbox game I can think of currently that I might be interested in (though Warhawk and Killzone 2 keep me quite happy.)
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by canefanjon July 9, 2009 6:40 AM PDT
you know what.....if sony would actually listen to its customers, instead of listening to their pockets, then maybe, just maybe they might learn something. I am a huge PS fan...and love every minute of playing and gaming. But dang it man., 300 dollars for a new psp go and 400 dollars for a ps3, then games and accessories, wow......not in this economy buddy.....lets see, ps1 obsolete, ps2 {99.00}, psp {169.00} pspgo! {269.00) ps3 {399.00 and up}....how about meeting in the middle with the Slim Ps3 say.....279.00...oh but wait a minute.....that means that the pspgo may need some rethinking on its price point.....try 199.00 for it....then you might have a market. but thats just one high teck redneck's opininon.....at least i have my 4 wheelers still.
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by SteveW928 July 9, 2009 3:05 PM PDT
Prices aren't just set by whims.... Sony has to charge what they do for the PS3, or lose money on each. They have been losing money until recently. Part of their plan was to do this... but they can't keep it up forever.
by blusky08 July 10, 2009 7:12 AM PDT
Sony could add a lot of value to the PS3 if they'd just add Netflix and other on demand services. Really, for $400 this thing should at least live up to the 'media center hype'. It would save consumers from extra devices like the Roku. And while we're at it, the PS3 could have made a great DVR solution. Bottomline: the PS3 doesn't live up to the "all in one" hype because Sony is too proprietary in it's thinking. SONY IS CRIPPLING THE PS3.
by SteveW928 July 10, 2009 10:18 PM PDT
@ blusky08 -

I agree with you there. The system has all the potential to be a total DVR, entertainment solution. To be fair, you can rent/buy movies from PS Store (well, if you're in the US that is), but I know what you mean. They want to do this stuff on their own and make the money off it. I guess that fits with the model of not making much on the system and recouping it with games and media. I understand why they are doing it... but agree that it so far isn't what it could be in that regard.

BTW, I get around this by running MythTV as my DVR, which the PS3 can then be used as a pretty good front-end player. Pretty much all you need to do this is a computer with a good amount of hard drive space to install MythTV on (I like: http://mysettopbox.tv/) and a HDHomeRun unit (http://www.silicondust.com/products/hdhomerun). Put this with the PS3 and you have a high-def dual-tuner DVR that is hard to beat.
by DrtyDogg July 12, 2009 1:10 PM PDT
@SteveW928: Hard to beat unless you are running Windows Media Center and use your xbox as a front end.
by SteveW928 July 13, 2009 12:08 AM PDT
@ DrtyDogg -
I guess you'll have to fill me in as to why that would be better...
by bookshire July 9, 2009 6:42 AM PDT
I hope you mean that it's not HD ready because it doesn't come with a cable for it. The system itself is HD ready, and the only extra expense is a $10 HDMI cable off NewEgg or someplace similar ordered a few days previous to the purchase. If you paid any more than that, boy did you get ripped off. Cables have the highest markup of any technological device, bar none.

PS3's biggest issue is people are refusing to see it as a hybrid device. Hybrid devices in general don't do too well in the public mind I think because alot of people assume if it does more than one thing then it can't do any one thing well. Still, the fact is the price is roughly comparable to (or not much more than) buying a stand-alone Blu-Ray player and some kind of mid-range gaming console and it only takes up one plug.

Sure hard core gamers and die hard Blu-Ray fans will pass it over for a dedicated piece of equipment, but for casual gamers like me who want both functions, it works really well. It's just too bad casual gamers aren't what the PS3 needs to stay afloat.
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by ibeetle July 9, 2009 6:43 AM PDT
I understand Sony wants to make a profit. Every company does; thats how they stay in business. But Sony also says to look at the big picture. The PSP division as a whole. The PSP, the PS2, the Playstation 3, soon to be joined by another member the PSP Go. Thats a lot of hardware, and if you look at the over all sales that puts Sony clearly in the number 2 spot in over all world sales.

What I do not understand is so what if the Playstation 3 is not making a profit. The division as a whole is. So they lose money on one product for a few years while the others make up the difference. That is what Toyota is doing with the Prius, and what Volkswagen is doing with the new Diesel Jetta. While they make money for the dealerships the parent companies are currently losing money on those models, but they know that when gas hits $5.00 a gallon again people are going to be lining up around the block for low gas usage, high milage vehicles.
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by BlitzBoy1120 July 9, 2009 6:45 AM PDT
I think that Sony should bundle 2 games and squeeze in one movie. Then people who buy the PS3 will notice the difference between normal DVDs and Blu-Rays and there would be a higher probability of them buying Blu-Ray movies. And a console with 2 games and a movie seems more appealing than just 2 games.
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by agt7648 July 9, 2009 6:51 AM PDT
I have no interest in buying a PS3 solely based on the fact that it just costs TOO. MUCH. MONEY. Sure, bundles are a great business plan, but what if the consumer wants neither of those games? Bundle Gran Turismo and any other popular racing game and I might be tempted. This recent bundle makes me want to put my money into my XBOX360 or Wii.
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by kelmon July 9, 2009 7:19 AM PDT
ZING! I hate bundles unless I am very lucky and the bundle provides a significant discount on the hardware and software that I actually wanted. If I didn't want the extras then the only thing that is important to me is the price of the hardware.

Right now I'd only be interested in a slimmer profile PS3 (the current hardware resembles a shoe box and I don't have space for it) at a reasonable price.
by umbrae July 9, 2009 8:46 AM PDT
I hate bundles too. I would like a BR player, and if the PS3 did Netflix Streaming and was $150 or less I would get it. The PS3 bundle would be a great saving, but since I hate MGS and Killzone this is no savings at all.
by SteveW928 July 9, 2009 10:47 PM PDT
True... but if they can't lower the price of the hardware, then adding games (where they have more margin) is about all they can do.
by mattaggz July 9, 2009 6:53 AM PDT
You all have no idea what your talking about...the first comment is just an xbox fan boy...the 3rd comment....no xbox comes with built-in wifi....its 100 dollars for the stupid adapter that you MUST purchase from Microsoft not like you could use a 3rd party one....PS3 is the best value you out there for "OUTTA the box" or whatever you people want to call it...when you add up all the extra accessories you have to buy for 360 your at the same price as the entry level ps3... PS3= Wi-FI, Hard Drive, and the ability to use what every bluetooth headset you already have sitting around...plus no online charge. You want all that from xbox lets see. you get the 360 elite that's 399 plus 100 for the wi-fi so thats more than a ps3 correct, not to mention ps3 has a bluray player, and the ability to surf the web from its xmb.
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by kelmon July 9, 2009 7:25 AM PDT
This is exciting and all but it doesn't change the fact that the PS3 is expensive for a games console. When it costs about £150, then I'll be interested in it since all I am going to do is end up giving Sony more money for their games (which are also damned expensive). If it helps, I have absolutely no interest in the 360 and don't care what it costs.

It should be noted that something only offers good value if what it provides is of value to YOU. For example, I have no interest in Blu-ray so the PS3 coming with a Blu-ray player delivers absolutely no added value to me. Just adding stuff on doesn't make the price any easier to swallow.
by terminalblue July 9, 2009 8:37 AM PDT
you can always spot the sony users becaue they are the first ones to call out the "fanboys". you need to learn the difference critical analysis and an actual attack.
by umbrae July 9, 2009 8:48 AM PDT
@ terminalblue

So true it made me laugh.

As I have said before, the value comes in what you want to do with it. You want to play games over a slow Wifi connection: fine. You want BR: fine.

I don't, so the extra cost of the PS3 is not what I consider a value: I consider it lock in.
by roachbrain July 10, 2009 5:37 AM PDT
When does system failures key into the 360 as a value??? Oh shoot almost forgot "Xbots, broke a$$ fanboys" is that better? LMAO

Seriously want to attack Sony for selling a great "quality" system for what's it worth when M$ basically sells you a defective unit then bleeds the money out of your pockets with no 3rd party support for accessories.

Said it before and I'll say it again you get what you pay for.
by mattaggz July 9, 2009 6:53 AM PDT
You all have no idea what your talking about...the first comment is just an xbox fan boy...the 3rd comment....no xbox comes with built-in wifi....its 100 dollars for the stupid adapter that you MUST purchase from Microsoft not like you could use a 3rd party one....PS3 is the best value you out there for "OUTTA the box" or whatever you people want to call it...when you add up all the extra accessories you have to buy for 360 your at the same price as the entry level ps3... PS3= Wi-FI, Hard Drive, and the ability to use what every bluetooth headset you already have sitting around...plus no online charge. You want all that from xbox lets see. you get the 360 elite that's 399 plus 100 for the wi-fi so thats more than a ps3 correct, not to mention ps3 has a bluray player, and the ability to surf the web from its xmb.
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by ewsachse July 9, 2009 7:24 AM PDT
But I have a hard wired lan at my house, so I did not need built-in WIFI or the external WIFI adapter. Therefore I saved $100.
by Aanon July 9, 2009 6:57 AM PDT
It's only been a few weeks since D. Reisinger told Sony what business strategy they should pursue. Here he goes again, without a clue - again.
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by SalaciousPuck July 9, 2009 6:58 AM PDT
Sony's strategy is to get to the end of the PS3's (probably short) life and lose as little as possible. They knew they had a loser on their hands early, when people got sticker shock and bought the sanely priced alternatives. Long term, the PS3 isn't any better off - lots of expensive components and no way to make it cheap (blu-ray, hard drive, etc), so it will never hit the sub $200/$150 sweet point where systems like the Playstation 2 sold 100+ million units. The PS3 will never be what the PS2 was.

Sony had no chance at being competitive in price or really to match the quality of exclusive content they had in the past. They are basically sitting this one out, just trying to keep their foot in the door for next generation -- withering the brand in hopes that they can offer something the market wants next time.
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by ilnewsome July 9, 2009 10:28 AM PDT
I think that Sony has a better plan. Keep the PlayStation 3 on track for where it is. Yes it'll sell slow now, but in 3 years when ALL studios are making A LOT of Blu-ray disks, and the price of 1080p HDTVs drop people will be walking through Walmart saying: Well, I need to buy a Blu-ray player. And Teenaged Johnny will say, why don't you just grab a PS3, we can download and stream movies, TV shows, play Blu-rays, and all my favorite cross platform and exclusive games and 40% of the movies on NETFLIX you'll NEVER get to see on XBOX because Sony own's the movies.

Honestly, PS3 was too far ahead of it's time. PS3 is (what marketing people call) the innovator's and first-adopter's machine. There are only so many of them. The average consumer is a retarded I want to save money and get nickle and dimed later consumer. All you people saying: I don't need or care about Blu-ray or WiFi in 2-3 years will be saying DAMN now I need a Blu-ray player or WiFi because I don't want to bother with Wires. As for PSN, it's been announced there will be some major infrastructure updates across the PSN and PS/Sony products. You turn on your Sony HD TV and up pops your PSN friends list and you can play a few PSN games right on your Sony TV. You can download/stream TV shows and PSN Exclusive Movies right to your Sony TV/Laptop/PSx/BD Player
by ilnewsome July 9, 2009 10:34 AM PDT
I will also add that PS1 did this to Nintendo 64. They took a lesser product, played it up, pushed it out and called it a success.

N64 had smoother graphics and gameplay than the PS1, it had almost non-existant loading times, a much lower failure rate on the console side: No Disk Read Errors, no broken laser readers, etc. But because the developer could develope more easily and freely for the PlayStation and the game disks were cheaper than Cartridge Paks, PS1 won that war. N64 lost most of it's non-first party/second party developers so it was left with mostly Only on Nintendo titles like Cruis'n Racing Series, Goldeneye 007, Zelda, and Mario titles.
by headinmysights July 9, 2009 11:39 AM PDT
@ilnewsome
You turn on your Sony HD TV and up pops your PSN friends list and you can play a few PSN games right on your Sony TV. You can download/stream TV shows and PSN Exclusive Movies right to your Sony TV/Laptop/PSx/BD Player

Better plan! :D I'll turn on my Toshiba TV, my XBL friendslist will pop up, and I'll play a few XBLA games right there. Then I'll download/stream TV shows using the software that's already built in, and I'll use my Dell to stream any media that I can imagine (not just what Sony happens to have) right to my TV! And guess what? I can do that right now. :)
by SalaciousPuck July 9, 2009 1:42 PM PDT
The PS3 sells slow now and will never have the content to speed up. It's slow now and the hardware doesn't scale cheap enough to sell more systems later. The PS3 isn't going to suddenly start selling.....it's a flawed product that will never deliver. And, retailers just won't carry the PS3 into its old age. Retailers & publishers are going to drop the price heavy, sales light PS3 just like they did the original XBOX (which had the same baggage).

Maybe it would do better if the Wii and the 360 didn't exist. There you have products that scale - they can eventually be made for cheap........both could achieve $200, $150 or even $99 price points w/ a profit, at some point in the coming years. Both could potentially sell PS2 style numbers. That's something retailers can grasp in a few years.

Blu-Ray was DOA...or maybe OOA (outdated on arrival). Most consumers rightly see an imperceptible difference with the cheaper and more common DVD. Oh, and it launched when the entire world was going digital. Sony and hardware focused companies may want another cash cow, but it won't happen.
by Hyper_Dude July 9, 2009 3:09 PM PDT
"Blu-Ray was DOA...or maybe OOA (outdated on arrival). Most consumers rightly see an imperceptible difference with the cheaper and more common DVD."

If you've watched a DVD vs a Blu-ray disc and still "see an imperceptible difference", then you're either blind or your TV sucks. The difference between the two is night and day, perhaps not as large as the difference is between VHS and DVD, but it's nearly as significant.

Between blu-ray or downloads, I consider blu-ray the more viable option, since it gives people a physicial manifestation of a purchase and doesn't require a fast internet connection. People clinging onto DVD technolgy now because DVD discs and players are cheap. Once Blu-rays discs come down to about $20, people will be more willing to consider them.
by blusky08 July 10, 2009 1:03 PM PDT
IMO, the CURRENT PS3 is not so future-proof as claimed. Within one or two years it's going to be outdated because 1) Many other DVD/Blu-ray players will be streaming wirelessly for 1/4th the price; 2) Download services are increasingly being supported by HDTVs themselves; 3) Other players are including Netflix, Amazon and other download services while Sony continues to cripple the PS3; 4) There is a new HDMI standard 1.4 that includes a *new connector* and is designed to handle Internet and 3D content.
by Marauder62 July 9, 2009 7:11 AM PDT
Let me put my bias up front: I own an XBox 360 and greatly enjoy the offerings of XBox Live.
I'm going to leave the Wii out of this discussion because it caters to a different gamer segment than PS3 and XBox.

Now, having said that, getting the price of the PS3 down to what consumers will see as affordable is just the first task ahead of Sony. That will certainly help. However, the real task is coming up with a viable answer to XBox Live. Trumpeting Sony's free service is meaningless when no one in their right mind would pay for it in its' current state. It has no value.

On the other hand, a staggering number of gamers are willing to pay the annual fee for XBox Live. Regardless of how anyone may feel about it, that many people are only going to pay this type of fee if they see a value in the service. XBox Live is perhaps responsible for more XBox 360 sales than anything else. I have no numbers to back that up, it's just something I suspect.

Sony also has an issue with how the PS3 is perceived in the market. The feeling is the PS3 is techically superior but suffers from poor execution. All of the money and marketing was spent on the hardware as well as telling folks how great it was. Very little on the actual experience of using the console. Microsoft spent time on the user experience and it continues to pay off for them, it's an experience that people are willing to pay an annual fee to keep.

There is also the nagging impression that Sony missed the boat by tying the PS3 to BlueRay. Technically superior, has gained acceptance from the big studios, but has not translated into big sales of the PS3. Even when you can argue the PS3 is great value if you just wanted a relatively inexpensive BlueRay player. Physical media is being trumped by streaming video or download on demand. Granted, Sony most likely has this capability but they are doing a lousy job of telling anyone about it.

That's not to say that most PS3 owners are not satisfied with the console itself. They are, but I suspect they are less than satisfied how Sony is letting them down by adding value to their purchase.
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by kelmon July 9, 2009 7:31 AM PDT
I tend to agree with a lot of that. I personally have no interest in playing games online but it is quite clear that a lot of people do for reasons best known to themselves. Having free online gaming on the PS3 is great as long as it is backed up with good titles and a good online experience.

Sony absolutely messed up with tying the PS3 to Blu-ray. Doing so prevented them from bringing the product to market on-time and then pushed up the manufacturing costs to boot. Worse, it seems that customers are pretty indifferent to Blu-ray at present so it isn't even a must-have feature that will justify the extra price.
by Fake_Guy_Incognito July 9, 2009 8:25 AM PDT
I wonder if people forget that thanks to the PS3 Blu-Ray "won the format war" and now Sony is in place to make a good deal of money for the lifetime of that format.
by umbrae July 9, 2009 9:01 AM PDT
@Fake Guy,

There is no way tying BR to the PS3 won the war. The lack-luster sales of the PS3 provde that; not to mention lack-luster sales of stand alone units and BR movies.

BR won the war because Sony bought out 3 studios that were not only strong HDDVD supporters but official sponsors of the HDDVD spec. Right before E3 HDDVD had a big presentation with sales outshining BR, but then 1 day before all the backing studios dropped it without warning.

This was NOT a consumer decision. It was corporate money and backdoor deals. The studios were all upset that new media combined was dwarfed by DVD, and Sony bought or feared them into it.
by Wildreamz July 9, 2009 9:38 AM PDT
No, Sony did not mess up tying the Bluray to the PS3, it helped them win the format war which is much more important then the console war. With that said, I believe the BR will actually lower the cost of game production in the long run and more "future proof" than DVD format that 360 chose.

Xbox720 is unlikely to happen because people have spend their money on Xbox360 and it will be hell of a promotion and development cost to come up with xbox720and expect people to abandon their old console for the new one when less than half of the population of the developed world have YET to embrace HD, not to mention get developers to make games for such a console. This product cycle will be MUCH longer than the PS1/PS2 era(5years), unless HD is being pick up real quickly and higher than HD emerge faster than expected.

Though I highly suspect that our eyes can even appreciate anything higher than 1080p.
by ilnewsome July 9, 2009 10:50 AM PDT
I think most of you are forgetting that there have been over 30 million PlayStation 3s sold. 30 million was announced at E3. XBOX is only ahead of that by a couple million, no significant number. When you look at US sales only is where you see the biggest difference.

Value in XBL isn't what people are seeing. People are looking down at the price stickers and saying, they both do the same thing (play games), but this one is cheaper, let me get this one. If they had a peice of paper looking at a total cost of the life of item they would overwhelming pick up a PS3 and smile knowing they did so. No need to buy a BD player in the future, no need to pay for PSN for however long they have a PSN account, all the technology is included for fast pace that techonology continues to evolve (like WiFi, Internet browsser, bluetooth, custom hard drives, Next Gen Disc player, etc.) If your 360 hard drive fails prepare to pay 2-4x more for a replacement than you would for the same size HD in a PS3.

And Blu-ray isn't BR it's BD for Blu-ray Disc. Blu-ray is one word. Don't blame me for that one. Besides how does BD flow off the tounge compared to BR. And thanks to the 30 million additional BD players out there on PS3's, yes the PS3 did help Sony win the war. Toshiba had no mass produced way to distribute it's HD-DVD players and the XBOX was a JOKE as it was just an add-on that people were going to wait to see who won before they bought one. Of corse, since innovators and first adopters are buying PS3's they're going to want some innovative BDs to go alone with it. Duh!
by headinmysights July 9, 2009 11:45 AM PDT
With no offense meant to PS3 owners, because I think it has some fantastic games and I wish that I had one: my friend who has a PS3 has actually begged people to trade their 360 for his console. He doesn't care about having to pay $4.16 a month to get good online service. He's too busy being angry at the long updates with the PS3, the slow service, the constant DCs. Remember, I really do like the PS3, I wish I had LBP, Resistance, and some of those PSN games. I'm just sayin' what my friend thinks.
by SteveW928 July 9, 2009 10:59 PM PDT
@ headinmysights -

Sounds like your friend needs a better internet connection. I don't have long DL times for updates, or slow service, or constant disconnects and I'm on PSN with a PS3. If the problem is the internet connection, having XBL won't help.
by ewsachse July 9, 2009 7:22 AM PDT
Why would the PS3 Slim "undoubtedly cost much less to develop"? Any proof of this or are you just speculating?

Typically, smaller devices cost more to create because of the complexities of jamming electronics into a small space. This is why a laptop with the same specs costs more than a desktop.
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by Fake_Guy_Incognito July 9, 2009 8:30 AM PDT
They already spent the money to create the smaller chip set . "The cell" was 90nm in the first gen ps3, then Sony shrunk it to 65nm for the current gen, and the "Slim" ps3 will be using a 45nm chip set which creates less heat, which in part will require a smaller cooling fan and other electronics that contributed to the high price. Also Blu-ray drives are also considerable less expensive to produce and are more reliable. I am also sure there are many more cost saving procedures they are taking inorder to maximize profit with out risking reliablity.
by celticbrewer July 9, 2009 11:44 AM PDT
Thanks ewsachse, I was going to post the same thing.

To incognito- since development was already spent, why can't they reduce the price of the non-slim model, too? Both products need to have the same capabilities, right? So why does one (supposedly the superior one given your reasons) cost less then the other? Why continue to sell the bigger version?
by SteveW928 July 9, 2009 11:02 PM PDT
Yes, they have done the cost reductions on the current model... so the slim isn't going to save much, if anything. Fake_Guy_Incognito could be correct that they will do their next series of reductions into the 'Slim', but it then has nothing to do with it being slim, and I'd expect them to drop the current model if they did that.
by heathdumpert July 9, 2009 7:34 AM PDT
i have xbox 360 and ps3. never use the xbox, basicly cause the online cost me. and the controllers aren't as comfortable. ps3's picture quality is top notch in comparison. blu-ray works on it, so does normal dvd's, hell i can even download movies to the hardrive anytime i want on the free internet. the system overall is better, hand down. may cost more, but the price is worth it. if activision won't make games for ps3 anymore, it'll be their loss. i'm not buying an xbox game ever again. the internet isn't free on xbox. their wifi adapter works seldom at best. and all that is on xboxlive is a bunch of middleschoolers talking about each others moms as if they can do anything with them.
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by Fake_Guy_Incognito July 9, 2009 8:33 AM PDT
Acitivision threat hold no water, the amount of money they lose will be staggering. Imagine nearly 40% of their profit from the COD, GH, and other of their franchises disappearing. Even if you include the cost of development for those games they will be loosing hundreds of millions of dollars profite, not even mentioning all the DLC they charge gamers these days.
by headinmysights July 9, 2009 11:49 AM PDT
@Fakeguy

Maybe CoD, but if you think that the PS3 is 40% of GH, you're crazy. The Wii has probably got 40%, then the 360 w/ 35%, and then the PS3 w/ 25%. Maybe.
by sparrowhyperion July 9, 2009 7:37 AM PDT
Well... First off, I don't have a lot of money normally. I'm disabled and my wife lost her job just before last X-Mas. However... I had been saving for almost 3 years for a new video game. My venerable old PS2 was starting to act up, and honestly; I haven't seen a decent new game out for it in a while. So we saved a few dollars here, and a few dollars there until we almost had enough to get a PS3. Well the good timing fairy came a calling and the folks at Social Security finally got me part of my back payments.

Now, my Wife and my Daughter were always complaining that the DVD player in our room was starting to act up as well. So I made the decision to forgo the Wii and X-Box 360 we were planning on and get the PS3. I am very happy we did. It was easy to set up. It detected my wireless router right away even though it was separated by 3 walls and about 60 feet. and since we had to replace the bedroom TV last year when the 10 year old RCA decided to die on us, it looked great on our 32" LCD.

The PS3 has a great Blue Ray player, and plays some old DVDs we had even though they were so scratched that our old DVD player wouldn't touch them. The games also look much better than the PS2 ones ever did. We spent just under $300 on Ebay for the 80GB bundle with some odd game in it. We then spent $10 for a Sony Remote on Ebay. I found a lot of 3 10' HDMI cables on eBay for $12.95 so I snagged the bunch (10' is long enough to hook my PC up to one of the 3 HDMI inputs in our TV as well, to use it as a giant monitor). I was in no way disappointed with the console.

That being said, I have to say that Sony as a company stinks. First off, pricing the PS3 so high is just moronic; especially in this economy. If I had not already earmarked a large ***** of the money I had to spend on it, I would not have gotten it. If I had not gotten part of my disability settlement, I would not have gotten it either. Sony has always been a pain in the butt to deal with. I got a Sony Walkman MP3 player last spring for my Birthday. It's mall, holds 8GB and neatly fit in my shirt pocket, so I used it all day long. At the end of May however, it simply stopped working. I contacted Sony support and after a brief email communication with a very rude tech, I got an RMA and sent it in. About 3 weeks went by and it never returned, and I had no further communication from Sony. I decided to contact them and after a week of email tag, they said yes they have it, yes it's broke and if I pay a $35 fee, they would replace it. I couldn't believe it... $35 to fix a DEFECTIVE unit. I told them where they could place their $35 and told them to send it back. I was not outlaying $35 to replace or fix it. 2 weeks later it arrived back at my home, tossed in a yellow mailer envelope without so much as a packing list. It had a ding in the back and was scratched. THIS is why I hate dealing with Sony.....

The pricing of the PS3 is just a further example of the company's arrogance and stupidity. It seems that they think that they can do whatever they want and people will still buy their products. In the case of my MP3 player. my Mom in Law and my Wife surprised me with a brand new 120GB Zune which is better than the Sony ever was. I know it cost a lot more, but sometimes you have to take a stand. Unfortunately with a Game console, your options are limited. You Have Sony which is arrogant and greedy, Microsoft which is even worse, and Nintendo which has games that to me look like they wee designed for 4th. graders. (I HATE MARIO!) So Sony unfortunately is the lesser of the evils in this case.

The only thing I can see putting the brakes on Sony's overpricing scheme is a massive customer revolt. Maybe if folks say NO loudly enough, Sony (Like Horton who heard the Whos), might get the clue it has obviously been missing up until now.

Oh well, it will probably never happen but it's a nice thought. And don't even get me started on the gouging you get when you want to buy a game or accessory. If it weren't for eBay, I would not have the system. I figure it will be justified when the next Final Fantasy game comes out whenever...

Happy Gaming...
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by umbrae July 9, 2009 9:10 AM PDT
Totally agree with you on Sony. The last Sony product I bought was an HDTV. This was before flat screen TVs were available (or anywhere near affordable). The thing needs to be serviced twice a year. After researching (being an electronics major), I found this to be a design decision. Sony intentionally put all 3 color guns on the same circuit. This means the alignments shifts gradual over time (requiring re-calibration) and eventually blows out the guns. Even though only one of guns may blow out, since they are all on the same circuit you still have to replace all of them. Replacing all three guns (even today) costs more than I bought the TV for. And back then it was almost $5000.

I have not bought ANYTHING Sony since.
by d--keller July 9, 2009 4:24 PM PDT
Could have gotten a new PS3 for $250 using Sony's credit card deal. How is their pricing moronic? You are using the blu-ray and the wifi. If you utilize those two features, there's nothing else out there that's even close to it.
by SteveW928 July 9, 2009 11:12 PM PDT
@ sparrowhyperion -

I agree on the Blu-ray and DVD playing ability... it works REALLY well. It is probably one of the best up-converters for normal DVDs I've seen as well... which is important if you have a bigger LCD, as DVDs look pretty bad without good up-conversion.

On the price.... Sony planned and designed the PS3 long before the current economic situation hit. They are now just doing the best they can with it. I'm sure they would LOVE to drop the price $100... if it wouldn't mean losing money. Heck, I'm sure they'd love to sell them for $50 if they could build them for that much.

Look at it this way... when you buy a PS3, you're getting nearly your money's worth in parts (when I bought mine, I got more than my money's worth of hardware). When you buy an Xbox or Wii, you're getting much less hardware for your hard earned money.

On the games, yes there is more margin... but do the math some day... they aren't making as much as you might think. Dev for the average title costs about $15M... so figure out how many copies they need to sell just to recoup that.
by CylonCheese July 9, 2009 7:38 AM PDT
Longtime Xbox owner, Xbox Live is outstanding and worth every penny! They are adding features and value on a monthly basis to keep up with what people want. I don't think Sony can say the same thing...

Also, love them or hate them, Microsoft is an American company and in these times maybe that has something to do with Sony's failure and lack of sales?
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by Hyper_Dude July 9, 2009 12:53 PM PDT
Who cares if MS is an American comany? Do you only buy American cars, ignoring the fact that plenty of Hondas and other "imports" are built in the US? Sony has plenty of offices and developers in the States? Perhaps only short-sighted individuals who can't think in the broader-longer term.
by roachbrain July 10, 2009 7:08 AM PDT
20 mil+ is considered a failure???? We're talking millions of units sold at $400 bucks that is hardly a failure in my eyes. Not to mention had it been the same price range as incomplete-box it would have out sold it by a wide margin.

Also can you please explain how XBL is better than PSN?

I had them both and besides the voice chat thing on xbox I don't really see much a difference but that PSN you can use a browser. Yes I do use the browser and have a sweet PC in my living room. It's nice to know I don't have to get out of bed to walk to the living room to check on my emails, watch youtube, hulu, and whatever ells I can do, watch, or read on it. >_< Adult toys for adults only Xbox = 13 year olds talking about there dongs.

No lag problems here, or disconnects. Warhawk, Killzone, Red Faction, LBP, Street Fighter, and a lot more all play beautifully.
by turtle5181 July 9, 2009 7:39 AM PDT
"not HD out of the box"? know your facts before u post, the PS3 runs 480-1080... "out of the box" not to mention Blu-Ray. No it doesnt come with an HD cable... but hell, all HD TV's dont even come with the cable. But if you want to pay for online play or swing nun-chuks...lmao, be my guest. Dont get me wrong, the Wii is a fun console to play on but looking at those graphics get old if you ask me... very PS2 like. The X-box is just overrated in my opinion... I have 3 cousins which 2 bought the X and one of them brought the 3 along with me... the X-boxes literally STOPPED WORKING (around 3 years) maybe 2-3 months apart from each... the PS3's are still kicking... NO I dont work for Sony or ANY of its affiliates, but my opinion is the PS3 ist the best console on the market
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by umbrae July 9, 2009 9:14 AM PDT
I have an original 360 from the initial release and only had to send it in once, and that is because it got struck by lightning. I also know 10 people with 360's that have never had an issue.

I know people like to harp on the 360 fail rate, but I think many of those are not design failure but usage issues. But in the end, if my initial release machine dies, MS will fix it for free. If you release PS3 dies, you are out of luck. I would rather have a well support machine that breaks than one that is unsupported. I would not say the same thing if it was my Car, but its only a gaming console.
by celticbrewer July 9, 2009 11:55 AM PDT
I guess your friends are lucky, Umbrae. Everyone I know with an xbox has had problems- and I don't by the "usage issues" as most are in the IT field. One guy is on his 4th xbox- NOT including the times he had to send them back to M$ for the "free" fix you tout. Hey, it may be free, but you're without a console for weeks.

M$ put out a cheap product and backed it up with free support (after the media got hold of all the problems people where having), hoping that there wouldn't be too many failures. It was a decent business decision, but that's not what I'd call customer-centric. They can lowball sony for a while and, of course, it helps to have all that xbox live loot coming in consistently.
by roachbrain July 10, 2009 7:33 AM PDT
Umbrae "I would rather have a well support machine that breaks than one that is unsupported."

Wow, this is so good I?m going to post again. Xbox fanboys at there masochistic best.
by DMAN3k July 9, 2009 7:39 AM PDT
Err... MGS4 is one of the "Greatest Hit" collection so the price is $29.99 retail. Where did you get the $60 from? And Killzone 2 might as well become a "Greatest Hit" in a month; it currently can be brought for as low as $39.99 new.

So yeah, you saved $70...

But my customized bundle I got from Dell a couple of months ago also included a remote and another controller for $386 with those two games. How do you like them apples?

Oh, and people who want a PS3 right now, don't buy it! It's an useless paperweight. I call it the POS3. The only good online multiplayer exclusive POS3 got is Killzone 2; and I'm sorry, but Halo and Gears of War are way better. And Left 4 Dead has a much more fun appeal!

The free PSN is useless without good exclusive multiplayer games. Everybody knows that most if not all games made for X360 and the PS3 looks better on the X360 due to Sony's bad graphic library that they proclaimed to be made hard deliberately. More like they rushed the release due to the HD format war! Isn't POS3 supposed to come out with MGS4? So why did it come out 2 years later? So the POS3 was rushed out 2 years too early!

I would only recommend the POS3 if Sony release more exclusive multiplayer games preferably ones with co-op single-player campaigns not the multiplayer content exclusive like Resistance 2. Seriously, currently the POS3 is no more than a paperweight that I could watch expensive blu-ray movies with and most people cannot tell the difference between native 1080p and upscaled 1080p. USELESS!
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by Ja-Nail July 9, 2009 9:17 AM PDT
Go choke on your fanboyism already. The only reason the 360 has better graphics on mutiplatform games is because the 360 develpment kit was available first. So the game was already in develpment before they started working on Ps3. It's the third year of the Ps3's lifespan. the average game takes how long to develop. You must be crazy or have never played Killzone to even speak such blasphmy. Halo has not been good since Halo 1, wich I purchased on release date with the original xbox while you wre playing your ps2. Gears has so many buggs it crazy, not to mention it's a killzone knock off. I had the 360 at launch and it broke in 3 months, I got another and it broke in 1 month got another 1 and sold it got a Ps3 and never looked back. Why would I invest in something that gonna break. I go with more reliable products if im gonna spend my money. Why you are waiting to get your 360 back I will be playing Killzone,Infamous,Mgs4,LBP,Resistance 1 & 2,Ratchet and Clank, Heavenly Sword,GT Prolouge, and all the same multiplatform games you were ejoying before your system died.

Also to everyone saying the Ps3 is expensive, yes at launch it was, not any more. Look at what you get. Bluray, built in wifi, free online, and a quality product. Unlike 360. When the digital download era really takes flight, have fun replacing your hard drive. I just put in an 500 gig Hdd for $89+ tax while you have to pay $150 for 120gigs. Unlike Sony everything for 360 has to come from Microsoft. They are Raping you guy with no Vasaline and you guys don't care. In a society where people wear $300 jeans$120tshirts throwback Jordans and SB Dunks the complaining doesnt make sense. Go complain to Nike for charging you 100 for a pair of shoes that cost $2 to make. Go ***** at Abercrombie,Ed Hardy and other designers.
by celticbrewer July 9, 2009 12:00 PM PDT
Maybe it's only useless if you spend your time playing shoot em up games with your little friends, online. I have no interest in such garbage. I hate multiplayer (and yes, I've tried a few MP games on PC, Wii, Xbox, and PS). Just because it doesn't fit your little niche doesn't mean it's useless.

And you bought a Dell? A $400 one at that? You should not be talking to anyone about technology.
by roachbrain July 10, 2009 7:38 AM PDT
Warhawk HELLO.....That game trumps Halo MP. Dude you're so lame i'll just stop here becuase wow you're so lame.
by turtle5181 July 9, 2009 7:40 AM PDT
u might want to read your nearest PS3 manual or just go play one... not HD out of the box?
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by Ja-Nail July 9, 2009 9:36 AM PDT
Neither is 360 they had to rerelease the system remember it didn't even have an Hdmi hook up and proven that when the system lauched the game were not true Hd. How many 360 games run in 1080p. In the voice of Kat Williams "don't worry i'll wait.
by July 9, 2009 7:43 AM PDT
I almost bought an Xbox 360 for its integration with Windows Media Center. What I failed to realize was that the cheap Arcade version doesn't sport an internal hardrive and all but the Elite version don't Wi-fi out of the box. Plus, reliability has been a problem for the 360 right? Still, E3 was a homerun for Microsoft and I would have never considered buying into Xbox before.
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by C0mmanderB0nd July 9, 2009 8:03 AM PDT
So if cables have the "highest markup" why can't Sony toss in an HDMI cable with a $400 High Definition console???? I do find it funny they build in a wireless adapter as an essential piece of the hardware, however an HDMI cable, or any HD output cable is an optio???

That doesn't make sense!
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by bookshire July 9, 2009 8:15 AM PDT
Oh I didn't say it made sense, I just said HDMI cables are cheap. And yes, cables DO have the highest mark up. I used to work for a white box computer store and we sold shielded VGA cables for $12...we paid our supplier $2 per, as only one example. Cables are the easiest things for a factory punch out in large numbers, comparatively.

So yeah, they really should have included one with the console, but my point is, if they insist on not doing it that way, it not hard to get one for cheap
by Don Key July 9, 2009 2:53 PM PDT
@C0mmanderB0nd, don't forget that the PS3 is the *only* Blu-ray player that Sony sells that doesn't come with HDMI cables.

@Ja-Nail every single 360 game is upscaled to 1080p even launch units when using VGA. The PS3 can't even upscale games to 1080i. So if you play a game like Little Big Planet on an HDTV that is 480/1080i only, it doesn't run in the HD 1080i mode, it downscales it to 480p.
by SteveW928 July 9, 2009 11:24 PM PDT
Yea, I'm not sure why they didn't throw in an HDMI cable... probably to make retailers happy, as they love to sell someone a $3 cable for $60 or whatever. Or.... maybe because many people would end up having to buy another cable anyway to get the length they want/need. If Sony had bundled an HDMI cable, it would just be sitting in my parts drawer. (If you don't believe me on cable prices... just visit monoprice.com.)

@ Don Key -
I have never tried what you are talking about, but the PS3 has one of the best up-scalers I've ever seen. Who has a 480/1080i only TV? Is there such a thing? All I can say is that I have a 1080p LCD and all the games I play look AWESOME on it.
by sanjayb July 10, 2009 9:24 AM PDT
@Don Key - don't forget that the PS3 is the *only* Blu-ray player that Sony sells that doesn't come with HDMI cables.

Huh?? I bought a Sony S350 Blu Ray player last Christmas. I didn't see any HDMI cable in the box. You might want to rethink that statement.
by Don Key July 11, 2009 3:33 PM PDT
@SteveW928

Yes, 480p/1080i only TV's were very common about 4-5 years ago. While the 360, HD cable boxes, Stand alone Blu-ray players... even HD-DVD players support these TVs. The only HD device that *doesn't* support 1080i is the PS3 believe it or not. As my Mom used to say... "How can everyone be wrong except for you?"

Read more up on the glaring flaw of the system here:

http://ps3.ign.com/articles/746/746282p1.html
by SteveW928 July 13, 2009 12:29 AM PDT
@ Don Key -

Ahh... I see what you're talking about now. This isn't in general, but for this group of certain older CRT owners. Can you tell the difference between 480p and 1080i on a CRT? I suppose big ones maybe.
I'm talking about for everyone else... the PS3's scaling is awesome. It make old DVDs look so good you almost don't need Blu-ray. :) And the games look really good.
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