Microsoft Calls Sony's PS3 Kettle Black For Blu-ray Bundling (MSFT, SNE)

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Includes: MSFT, SNE
by: Yankee Group

By Carl Howe

You have to love Microsoft's (NASDAQ:MSFT) hyper-competitive streak; it produces such amusing stories. Yesterday, HDBeat noted that Microsoft Europe bosses are claiming that Sony (NYSE:SNE) is "forcing" consumers into Blu-ray purchases. The article cites a GamesIndustry.biz article with the following quote:

"Sony is now making people pay an extra few hundred pounds for a Blu-Ray DVD drive which we don't know is going to be the standard in the next-generation DVD formats,” Thompson (MSFT-owned XBox UK head) insisted.

"This is the company that brought out Betamax – we don't quite know where they're going to go with this,” he added, in a pointed reference to Sony's defeat in the format war against VHS.

The article goes on to say:

Thompson's frank views were backed by Europe boss Chris Lewis, who added: “[PS3's] is an interesting price point that in my view forces the consumer down a choice path in a way that I'm surprised to see.”

SonySo let's get this straight: Microsoft is arguing against the dominant player bundling a feature into its new product. And if that's their position, can the EU use those statements in its antitrust case? After all, if we substitute product names and companies in the quote, we get some interesting conclusions:

“Microsoft is now making people pay an extra few hundred pounds for Windows media player which we don't know is going to be the standard in the next-generation player formats,” Thompson insisted.

“This is the company that brought out Microsoft Bob – we don't quite know where they're going to go with this,” he added.

Microsoft can argue all it wants about PS3, but I think one of the commenters on the story at HDBeat has a good handle on what this all means:

These comments suggest to me that this guy doesn't think people actually want a 360 so therefore have no choice but to buy a PS3. I think Microsoft are getting scared that the PS3 is going to out sell the [XBox] 360 even with it's higher price.

We noted last year that Sony's high price may actually be a very savvy marketing strategy where high demand is likely to outstrip supply. After all, why should eBay (NASDAQ:EBAY) sellers reap big profits when Sony could be? But if Microsoft is currently engaged in trash talk about PS3 before the product even launches, you know that this is going to be a marketing battle royal.

My prediction: Anyone planning to get a PS3 for Christmas should order it as soon as retailers will accept pre-orders. No matter how many Sony makes, they will be sold out. Sony's pricing and marketing strategy is both burnishing their brand as the premiere gaming system and maximizing the value of their launch production runs. And since when does Microsoft think that maximizing profit is a bad thing?

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