PlayStation 4 Could Retail for More Than $400

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PlayStation 3 set records as one of the most expensive game consoles ever released. When Sony (NYSE: SNE ) shipped the console in 2006, it offered two different packages, one at $500 and another at $600.

Since the former was only available in limited quantities, most consumers ended up buying the more expensive model. Panasonic (NYSE: PC ), NeoGeo and other electronics manufacturers had attempted to sell expensive game consoles in the past, but none of them were successful.

Not even Sega, which sold the Saturn for $400, could get away with charging more than the $200 to $300 benchmark. By charging $300 for the first PlayStation in 1995, Sony undercut the Saturn by $100 and was only $50 more than Nintendo 64, which was not released until the fall of 1996.

Sony reiterated this strategy with PlayStation 2, forcing Nintendo (OTC: NTDOY ) and Microsoft (NASDAQ: MSFT ) to keep their prices in check.

Microsoft broke the mold in 2005 when it announced that Xbox 360, its second game console, would sell for $300 and $400. The cheaper package was stripped of the hard drive and wireless game controller, reducing its value. The $300 model was also hampered by limited quantities, which encouraged consumers to spend an extra hundred.

This no doubt inspired Sony to take a risk with PlayStation 3 and charge even more for the console. The included Blu-ray player was another reason, as standalone Blu-ray players often retailed for as much as $1,000 at the time. Having experienced a great deal of DVD success with PlayStation 2, Sony hoped to rekindle that magic with its third console.

That strategy failed, however. While the company successfully forced filmmakers to abandon the HD DVD format, sales of Blu-ray players have disappointed manufacturers for more than four years.

PlayStation 3 also sold at a much slower pace (and sold far fewer units) than its predecessor. PlayStation 2, which Sony recently stopped producing , has sold more than 153 million units over the course of its 12-year lifespan.

The vast majority of those units were sold during the console's first five years at retail . In order for PlayStation 3 to catch up, it would have to sell 78 million units in the next five years. Considering the fact that the console only sold 75 million units during first seven years at retail, it is highly unlikely that Sony will reach that goal.

That said, PlayStation 3 is still a huge success. In addition to the higher price tag and a lower number of exclusive games, PlayStation 3 endured stiff competition from Microsoft (which sold 74 million Xbox 360 units) and Nintendo (which sold 98.8 million Wii consoles).

Now, after falling to second place during the current generation, Sony is rumored to be applying a more competitive price to its next console: roughly $430. The price comes from Gematsu , which translated a report from a Japanese newspaper that claimed PlayStation 4 will sell for 40,000 yen.

If the rumor is accurate, that price should make it difficult for Microsoft to charge more than $400 or $500 for Xbox 720. It would also guarantee that Nintendo will once again offer the cheapest console, as Wii U currently sells for $300 (for the standard console) and $350 (for the deluxe package).

A new deluxe Wii U set has also been announced -- this one retails for $390 and includes a copy of ZombiU, as well as the Wii Pro Controller. It will also come with the touch screen gamepad and a 32GB hard drive.

Follow me @LouisBedigianBZ

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This article appears in: Investing , Stocks

Referenced Stocks: MSFT , NTDOY , PC , SNE

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