Sony needs to launch the PlayStation 4 Neo at $400

Sony has to launch the PlayStation 4 Neo at $399.99.

It’s a magic number for hardware, and has the nice history of being the price point Sony used to more or less dominate Microsoft in this generation of consoles. If Sony is showing its hand in terms of hardware performance, software support and even pricing today, it has to be aggressive in trying to create an image of a product that is better than anything Microsoft is releasing in 2017 with the Scorpio.

That requires an aggressive price, and even $499.99 is going to seem high to a marketplace where the price of hardware has been moving downwards so rapidly. Microsoft attempted to launch the Xbox One at $499.99 and found itself with a bloody nose. Sony itself launched the PlayStation 3 at $499.99 for the 20GB system and $599.99 for the 60GB system and learned a painful lesson: you can't assume you'll dominate a new generation of consoles because you did the last one. Price is everything.

Ask anyone who works in retail: Explaining "power" is difficult. Creating a more powerful system that requires a lot of buzzwords to explain and launching at a higher price is a large bet on your ability to communicate why it's worth paying for that power. 4K is already confusing enough for people who don't follow technology; selling the "best" PlayStation at the price of the first PlayStation 4 is a simpler approach for the holidays, and will put significant pressure on Microsoft.

It wouldn’t shock me if Sony started with the $399.99 price and worked around it. It would have the benefit of seeming like Sony wasn’t rising the highest price to get into the PlayStation brand, as the PlayStation 4 launched at $399.99. The company also has the benefit of three years of components becoming both less expensive and more powerful.

My highly unscientific survey shows that at least a good chunk of people agree with me, even if their thoughts on pricing may be more hopeful than realistic. Several people feel that a more powerful PlayStation 4 at $399.99 is an instant buy, while prices above that edge the hardware into a "wait and see" attitude.

Sony needs to keep its dominance in the console race, and it needs to show off a product with the power and price point to make people feel comfortable buying on day one. Sony wants to build its lead, not maintain it, and it also has an expensive VR headset to sell you. This is a time when a low price is more important than ever. Microsoft is looking to create a more powerful system with the Scorpio, and they’re hoping Sony blinks first in terms of revealing power or price today.

We may not get either. But Sony needs to launch the Neo at $399.99.