Gamers are always up for a console price drop, and next to the holiday season, E3 time is ripe for a price reduction. Will we see any at this year's convention?
Each console manufacturer has their own reasons for reducing the price of their current consoles particular to their own situation in the market. Here is how things might go down.
SONY
Given that the PS3 is in last place behind Nintendo's Wii and the Xbox 360, Sony has ground to gain by reducing the price of the system. Although the last price drop happened only last fall (160GB slim model for $249.99), a $199 model has a nice ring to it.
Sony will probably position this new price point squarely at younger new adopters rather than established gamers, and as such, getting under $200 could be critically important. If the company wants to bundle in a game to make things more enticing, it could add LittleBigPlanet Karting or PlayStation All-Stars Battle Royale.
As it has with some previous price drops, Sony will likely bolster the old $249 price point PS3 with a software bundle and/or a increased hard drive space. A God of War: Ascension bundle aimed at older gamers could fit this bill.
Finally, it's not too early to consider a price drop for the Vita. The handheld has quickly become stale, and a price drop is a sure-fire way to get a temporary boost in sales. It may seem a little desperate, but given that Nintendo quickly cut the price of the 3DS, it could be a way forward for the Vita. If Sony finds this unpalatable, perhaps a bundle with software while maintaining the Vita's current price could be more appealing.
MICROSOFT
As Wedbush Securities analyst Michael Pachter once told me, Microsoft is in a position where it could really do some damage to Nintendo. Given the popularity of the Kinect peripheral and the timing of Nintendo's upcoming Wii U system, a price drop involving the Xbox 360 and Kinect peripheral could be a splash of cold water to Nintendo's likely more expensive Wii U system.
Microsoft could advertise itself as an up-to-date system with motion control capabilities at a cheaper price, and with a huge back catalog of games, than Nintendo could with the Wii U – a system that should only pull Nintendo back to level with its competitors on some fronts like in graphics and online strategies.
So the question becomes: How low can Nintendo price the Wii U? Kinect bundles right now cost $299.99 (w/ 4GB 360), and if Microsoft could go all the way down to $200 with that bundle, it would likely be less than the Wii U, which by all accounts will struggle to cost less than $200.
As with Sony, we expect that a Microsoft price cut would set off a chain reaction of deals for Microsoft's other versions of the system, such as the 250GB Xbox 360 (now $299) and 4GB edition ($199).
NINTENDO
The original Wii and the 3DS handheld have taken different paths to popularity, with the former skyrocketing to fame and the latter's fortunes improving slowly from month to month. Despite their divergent paths, I don't expect either platform to drop its price.
The Wii is at a good price point already, and given that Nintendo will likely sell the Wii U at a loss for its early life, it would be smart for Nintendo to try and at least have one home console that makes money with every unit sold – even if the Wii's sales will take a hit once the Wii U is released. Then again, with its high-tech controller, the Wii U is different enough from the Wii's casual appeal that Nintendo could continue to push the original Wii as long as possible.
As for the Nintendo DS, seeing that it went through a very high-profile price drop last summer, at which time the company acknowledged it was going to lose money on each handheld sold, it makes little sense for Nintendo to undercut itself even more – especially as the 3DS's fortunes are improving.
What do you think? Will Nintendo, Sony, or Microsoft announce price drops at this year's E3?