Kmart Ad Trumpets Xbox Price Dip

A Kmart advertising circular is a strong indication that the rumors about a possible price cut for the Xbox 360 might be right. The discount chain's sales ad for the week of July 13 lists a US$299 price for the 20 GB Xbox 360. It represents a $50 decrease from the $349 Amazon.com lists as the price for the console.

When asked to confirm the price drop, Microsoft spokesperson Katie Abrahamson declined to do so.

However, Rob Enderle, principal analyst at the Enderle Group, told that the $50 drop is not a surprise -- though it comes a bit earlier in the year than he had anticipated.

"We thought they were going to do a price cut before the back-to-school season. This is a little earlier than I think most folks figured it was going to happen, but sales for consoles are typically slow now. The Xbox is the oldest of the three [current generation consoles]. With Nintendo ramping reasonably well into the holidays, it was about time for Microsoft to pass some of the cost savings it's been seeing on the component side back to consumers,"

he said.

Odd Timing

Price cuts for items with a big draw during the holidays typically occur closer to the end of the summer season, and Enderle said slashing the price in July seemed a little early and catches people when they historically are not in the market for a video game platform.

"I probably would have done it closer in so that I could catch the wave of people wanting to buy. Doing it this early -- people aren't really in the 'buying the game console mode' right now, and typically don't get into it until Christmas,"

he explained.

However, what may make this year different is an economic downturn, Enderle pointed out.

"[People] are staying home. They're thinking about things to do with the kids now that they aren't going anyplace. One of the things parents are likely to do is buy them a game system or something else to keep the kids entertained,"

he said.

Pricing Strategy

The $50 drop for the 20 GB Xbox 360 still leaves Nintendo's Wii as the lowest-priced gaming console available. However, for the Wii, the price of the console is not the major draw, according to Enderle.

"The things that are moving the Wii have to do with what the Wii does and not necessarily price,"

he said.

"I'm still continually disappointed by their price cuts,"

Yankee Group analyst Mike Goodman told.

"They would be in a much better position if they would be a little more aggressive on the price front -- create [a] little separation between themselves and Sony and create a better reason [for consumers to buy an Xbox 360]."

Microsoft needs to put distance between itself and the PS3 and lessen the distance between the 360 and the Wii, he said.

Enderle also expects to see a price cut from Sony for its PlayStation 3 console this summer.

"The price of components continues to drop, and the Blu-ray drive is a fraction of the price it once was. I think a lot of folks are anticipating that Sony will take a pricing action before we get into back to school,"

he explained.

Source: TechNewsWorld

Sony Pulls Update Following PS3 Firmware Fiasco

Sony's 2.40 firmware update for the PlayStation 3 video game console ran into problems less than an hour after the company made it available for download Wednesday. Owners began reporting problems as a result of the download on the PS3 Forum, leading Sony to pull the update from availability.

"A limited number of PS3 users have reported that the XMB (XrossMediaBar) is not displayed after updating to the PS3 system software ver. 2.40. We have temporarily taken the 2.40 update offline and are currently conducting tests to determine the cause of this problem. We will announce through our Web site as soon as we are ready to resume the system software update,"

said Al de Leon, a Sony spokesperson.

The firmware flop has "embarrassed Sony," according to Michael Gartenberg, a JupiterResearch analyst.

"To release an update like that and then have to pull it because it was turning people's PS3s into PS paperweights is an embarrassment. This is a pretty big black eye for them. You can be sure before this update gets released again into the wild Sony's going to really go over it with a very fine-toothed comb to make sure this circumstance doesn't happen again,"

he told TechNewsWorld.

Black Eye

Gamers have reported a variety of maladies related to the firmware upgrade, Chris Roper, editor-in-chief at IGN.com, PlayStation Team, told TechNewsWorld.

"Some people weren't able to install the update -- their system would just reset at some point without having applied the patch. Others have had worse issues, where their system would no longer even boot. It seems that it has something to do with a hard drive corruption issue, as swapping out for a fresh hard drive then allows it to boot,"

he said.

After downloading and installing the update and then trying to play a game, claimed forum poster ASickness, the PS3 displayed nothing but a blank screen.

"I get a black screen forever ... I can't even get demos to start ... I got my PS3 on Launch day ... so my warranty is out now ... any advice?"

ASickness wrote in a post.

Damage Control

"[Sony] did respond quickly, and the good news for them is that they acted responsibly and pulled the update until they could figure out what was going on. The problem is that ... firmware upgrades can be tricky because you're basically reflashing the device, and all you need is a byte to go in the wrong place and suddenly things stop working,"

Gartenberg explained.

However, he continued, it is incumbent upon vendors to ensure that this type of situation does not happen when they release firmware upgrades. That is especially true for Sony as it tries to push the PS3 as an entertainment device beyond gaming.

"It's pretty unacceptable, about as unacceptable as you can get. In the course of any type of firmware upgrade or operating system upgrade, you're going to have a certain number of users who may experience problems. The challenge for Sony -- and every vendor in this day and age -- is that we live in the age of the Internet. So all of a sudden when things go wrong, they are not isolated problems. Everyone knows about them, and the perception may be worse than reality, and what matters is the perception,"

Gartenberg pointed out.

In the Dark

While Sony responded quickly, removing the software from its servers less than 24 hours after releasing the update and learning of potential issues, the company has dropped the information ball since then, Roper said.

"It pulled the update within a reasonable amount of time, but as far as what we've seen, there has been no explanation of what the problems are or how to fix them, or when a patched update would be back online,"

he noted.

"Just this past Friday, Sony wouldn't tell us the release date for the update since they were still trying to figure out when it would be done. Coupled with these issues, it seems like it was rushed out the door without proper testing,"

Roper continued.

As for Sony's ultimate response to gamers whose systems have indeed become paperweights, Roper said Sony should fix the machines free of charge. In doing that, the company would be taking a page out of archrival Microsoft , which spent billions of dollars to repair its gaming platform when users experienced issues following the release of the Xbox 360 .

"Given that this is Sony's fault and not the end users', Sony needs to help people out and fix their systems. Hopefully that wouldn't require shipping the entire system back, but if need be, that's what really needs to happen,"

Roper advised.

Sony Gives PS3 a Shot of Adrenaline: Movies and a Twirling Globe

Sony's Blu-ray won the battle of high-definition DVD formats, but its PlayStation 3 gaming console has been losing the war over networked home entertainment. That will change this summer, promised Kaz Hirai, president of Sony Computer Entertainment, during a Tokyo press conference announcing new PS3 services for the U.S. market.

Sony will roll out on-demand movies and TV shows for download via the PS3's broadband-enabled PlayStation Network. It will also launch Life With PlayStation, offering news headlines and weather information with a spinning-globe user interface reminiscent of Nintendo's Wii News.

The company will announce pricing and other details, including when the services will become available in Europe and Japan, in July.

Late to the Movie Download Game

Sony has been promising a video download service through its PlayStation 3 since last summer, but has watched as rivals Microsoft and Apple have eclipsed its plans with their own on-demand entertainment download offerings -- Xbox Live Marketplace and Apple TV, respectively.

Xbox 360 and Apple TV owners can now stream HD movies into their living rooms -- even though Sony and the Blu-Ray DVD player built into every PS3 outlasted the now-obsolete HD-DVD format.

"These things are hard to do,"

Michael Gartenberg, vice president and research director at JupiterResearch, told TechNewsWorld.

Sony had promised deals with companies like Real Networks and AOL for its previous generation console, the PlayStation 2, and never delivered, Gartenberg pointed out.

"It's not surprising, and the challenge that each of these companies is going to have is getting out there and working in these new formats before consumers become entrenched in something else. That's why you've got this land grab going on,"

he said, referring to the struggle over dominance of the living room waged by Sony, Microsoft, Apple and, recent entrant Netflix, with its Roku media player.

Sony's Next-Gen Challenge

Sony has lost more than US$3 billion on the PlayStation 3 since its launch, but additional networked services and cost-trimming will bring the PS3 business unit to profitability by March 2009, said Hirai.

"Sony said the things they needed to say,"

Gartenberg remarked.

"What Sony has found in this generation was a Microsoft that was much stronger than it had been the last time around. It came to market a year ahead (with the Xbox 360) and didn't squander that year. At the same time, it's facing a revitalized Nintendo, which was the last thing everybody was expecting. All of this is putting tremendous pressure on Sony."