In the midst of the financiapocalypse, with consumers stuffing money in mattresses and sprinkling themselves with holy water to avoid the layoff plague, you might think companies like Sony would slash and burn their typically premium prices to move whatever HDTVs and Blu-ray players and cameras they could. Nope. We talked to Sony Electronics President Stan Glasgow this morning about why Sony is holding steady on prices and staying out of the low end, even as consumers are obviously looking spend less. He also dished about Circuit City's fairly grim prospects, Blu-ray sales not meeting expectations and why Sony knew the economy was going deep into the crapper in February, before Alan Greenspan.
Glasgow didn't drop specific numbers, but he did mention that Blu-ray sales weren't meeting their original expectations, thanks to the economy. So you might expect Sony to cut the price on its entry level BDP-S350 below its current $299 MSRP. But they're not—Glasgow says they're holding firm on that price as their low-end through the holiday season, though he said you can expect $249 before too long, which jibes with what he told me in the Spring. I couldn't get him to commit to $199 next year. (BTW, You actually can pick up the S350 for $249 right now at Amazon, but going below $299 is entirely a retailer's prerogative.) All that said, Sony is optimistic for Blu-ray overall because it's the kind of "family gift" people buy in a recession when they're staying home more—besides, they fully expect (as we've seen) players below $200, even under $150 from lower end manufacturers. They don't see the adoption timeline slowed down either, as long as prices fall with their projections.
Why Sony Won't Go Cheap
President of Sony Electronics Consumer Sales Jay Vandenbree said that Sony has never really played in the low end (in HDTVs or otherwise), and they won't now. Why? Because, he says, during a recession, people stay home and actually trade up to better quality stuff since they're holed up, which Sony thinks puts them in a great spot. Question for you guys: Is this true? Are you skipping vacation and getting a TV instead? To that end, Sony's actually enforcing prices on some of its premium products like XBR7 and XBR8 HDTVs and its Alpha DSLRs, so that they're same price at every single retailer—it's not just a minimum advertised price, retailers cannot actually sell these items for cheaper than Sony says. It's an interesting bit of psychology to maintain the premiumness of the brand during the recession, to say the least.
How bad is the Circuit City situation? Glasgow put it this way: No one in their industry has ever survived a Chapter 11 bankruptcy, especially not on that scale. He's hopeful they'll bounce back, and thinks they could, but it's going to be "hard."
Lastly, an interesting bit of trivia: Sony knew the economy was going to hell back in February. How? Camcorder sales fell like a rock. Camcorders are the proverbial canary in the coal mine, plunging before everything else. (All of their vast historical data over the last few recessions back this up.) It's because, Vandenbree says, there's "nothing more discretionary than camcorders," so it's the first to go when consumers feel a crunch, making it an early warning sign.
Unfortunately, there's nothing that'll ring the opposite direction, when everything's about to get better. Everything gets better at once. So we'll know life's good again when it actually it is.