Sony vs. Microsoft Case References a. Nick Wingfi eld, "Sony Cuts PlayStation 3 Price to Lift Sales," Wall Street Journal (July 9, 2007): B-4. b. Roger Cheng, "Business Technology: Microsoft Sets Price Cuts in Bid to Boost Xbox Sales," Wall Street Journal (August 7, 2007): B-4. c. Nick Wingfi eld, "Microsoft Cuts Xbox to $199," Wall Street Journal (September 4, 2008): B-9. d. Se Young Lee, "Microsoft Lowers Price for Xbox 360," Wall Street Journal (August 28, 2009): B-6

Sony vs. Microsoft Game Console Case Exercise In 2007, Sony launched the PS3, the next-generation product to the PS2, into an already hotly contested gaming console market. Between 2007 and 2009, the Sony PS3 product line has been most comparable with the Microsoft Xbox product line. Within each of these product lines, different product versions differed chiefly in hard drive capacity. Between these product lines, the Sony PS3 differed from the Microsoft Xbox chiefly in offering HD Blu-ray video playing. Read the following reference articles concerning the gaming console market (listed under item 8) and address the following questions. 1. At what price did Sony launch the PS3, and how did its price and features compare to the most comparable Microsoft Xbox 360? 2. How did Microsoft react to Sony's entrance into the high-end gaming console market? 3. By September 2008, which gaming console was winning more market share, PS3 or Xbox, and how did the competitor with the lower market share react? 4. How did the prices of the Sony PS3 and Microsoft Xbox evolve between 2007 and 2009? 5. In August 2009, Sony announced a further price reduction on the PS3. What was Microsoft's reaction, and how quick was it? 6. If you were advising Sony executives, what strategic actions would you suggest to minimize the risk of an increase in price competition in the gaming console market? Would you give the same advice if the Microsoft Xbox began to outsell the Sony PS3? 7. If you were advising Microsoft executives, what strategic actions would you suggest to minimize the risk of an increase in price competition in the gaming console market? Would you give the same advice if the Microsoft Xbox had a cost advantage to the Sony PS3