Sony Slides and Wii Don't Care

The Bank of America announced today that Sony's $100 price cut in the PS3 won't do enough to help their bottom line. Nintendo's Wii is doing so well, Sony would have to have a $200 price cut to make a dent. The Bank doesn't see that happening.

At first, it seems strange that Sony won't respond more to demand pressures (though it is a wonderful example on how cheating people in a free market is quite difficult). But then it becomes quite clear.

For decades, graphics sold games. The common public just couldn't get enough. But as graphics improved, each additional improvement became less important. And thus by comparison, other things became more important--such as innovative game play. Sony is having a hard time accepting that the marginal utility of good graphics is so much lower than the marginal utility of doing something other than siting on the couch and mashing buttons.