E3: Pachter Predicts 80GB PS3 Price Cut To $499

As Wedbush Morgan's Michael Pachter and Lazard's Colin Sebastian provide their analysis following the close of this year's E3, Pachter predicts that once Sony's stock of 60GB PS3s sells out, the company will accordingly lower the price of the 80GB unit to the same $499 entry point. "In our view, the Sony entry level price of $499 is here to stay," said Pachter. "We believe that there are presently 2 – 3 million 60Gb PS3s produced and not yet sold, and expect the entire supply to be diverted to the U.S. to honor the new lower price point. Once these units are sold through, we expect the company to lower the price of its 80Gb model to $499 on a standalone basis." "We think it is important to note that the 80Gb model does not contain emulator hardware (the 60Gb model does)," he continued, "indicating that the production cost of the 80Gb model is likely in line or below the production cost of the 60Gb model. Although we think that Sony’s public relations gaffe was unfortunate, we do not believe that the company has ill intent, and we expect the $499 price point to be maintained until early next year, when the 80Gb model will likely be cut again to $399." Both analysts were surprised that a price cut for the Xbox 360 was not announced, with Sebastian saying the news, or lack there of, "disappointed some investors," both analysts have said they still believe an announcement will come soon, likely, said Sebastian "before the end of the summer." "It appears to us that the company is trying to deal effectively with its warranty issues," concluded Pachter, "and was concerned that a price cut so soon after the warranty announcement might send an unintended signal that discounts were required to move hardware. We continue to believe that a price cut is appropriate, and expect cuts later in the year."