With the Xbox One continuing to lag behind the PS4 in sales, despite having unbundled the Kinect camera which brings the cost of their console on par with the PS4, Microsoft is looking at price in order to win the ever-so-important holiday quarter. To that end, Microsoft has announced a $50 price cut on the Xbox One that will remain in effect until January 3rd in hopes of enticing holiday shoppers. Sony, for its part, appears to be unfazed by the move – and when asked about the price cut in their most recent earnings, the company seemed to suggest that no such cut would be in order from them.

Chief Financial Officer Kenichiro Yoshida:

 In the second half, during the Christmas season, in markets such as the United States, our competitors will be carrying a lot of promotional activities and therefore we have to take a very conservative view of the competitive landscape. 

According to Yoshida, Sony’s focus will be to drive PS4 sales this holiday and with the momentum the PS4 has enjoyed, Sony plans to revise their sales estimate upwards.

 The business is currently going smooth and doing very well. Getting into some detail, in September two big titles were released. Thanks to that the number of subscribers and also network sales are gaining momentum, so combining all these factors we decided to revise our sales numbers upwards. And also, the third quarter… December is the biggest season and we have momentum as we approach the holiday season. We expect to sell a lot. 

While Sony is targeting to further grow the PS4 user base, don’t expect that to come at the expense of profits. In their most recent earnings report, PlayStation and especially the PS4 was one of the only bright spots for the company. Thanks to strong demand for PS4, FY 2014 might not end as bad as they’d predicted earlier which would have seen the company lose $2.1 billion. Yoshida once again:

 In regards to the price cuts done by Xbox, how are we faring? Well, for the operating profit for the next year we’ll find another opportunity to explain. On the 25th of November we will be holding our IR day, and there Andy House who manages the game business is going to explain the direction that we anticipate in the game business going forward. 

For Sony as whole, while continuing the growth of the PS4 instal base is important, profits are even more crucial. Seeing how the PS4 is ahead of the Xbox One by a healthy margin, Sony will likely not lower the price of the PS4 to match the Xbox One which would negatively affect their bottom line. Instead, Sony can look at PlayStation as the one bright spot while they figure out how to stabilize the rest of the company and more specifically, their mobile division.

Discuss:

Is Sony making the right move by not matching the temporary Xbox One price drop?