Wednesday, November 22, 2006

Sony's PlayStation 3

Sony has recently come out with their PS3 and quite honestly, I'm still trying to figure out why they're allowed to stay in that business. They ran into the classic problem of being the top dog, relaxed a little bit, and is now getting walloped by the competition. However, even if Microsoft and Nintendo weren't around, Sony has made it a point to mess up in as many areas as possible. Every time a read a report, they've done something new wrong. For the fun of it, I compiled a list of some of the things I've heard:

  • Delays in development of the new system out (I know, lots of high tech firms do this, but it doesn't make it right).
  • Promised features they couldn't deliver on.
  • Cut back production estimates multiple times.
  • Doesn't have perfect backwards compatibility with older games.
  • There are very few games to choose from, especially relative to the competition.
  • The system is extremely expensive, again especially relative to the competition.
  • Their big claim to innovation are the graphics, which game developers aren't taking advantage of yet, but even still this is more of incremental improvement rather than true innovation (read "Leading the Revolution" by Gary Hamel to get more on this).

Historically, when companies have issues like these, they fall hard and fast. Just look at the ups and downs of Boeing and Airbus and you'll see what I mean. It amazes me that consumers would line up and fight to get this system. Is it really that cool? Everything I've read would suggest no. On the bright side, I believe the free market system is going to work and Sony has a very high chance of falling to third place in the gaming industry. I believe this because of simple math. Sony has sold 400,000 units, Nintendo has sold 2,000,000 units and Microsoft has sold 7,000,000 units. Furthermore, with the shortages of PS3's and Wii's, X-box sales have picked up again. By the end of the year, Nintendo plans on having another 1,000,000 units out. Sony on the other hand, wants to have another 600,000 units out by the end of the year - though analysts say because of the production process it might be closer to another 400,000 units. Oh yeah, don't forget that Sony and Microsoft lose money on each system and Nintendo makes money on each system.

From what it looks like, Sony can't produce enough units to catch up even if every single one of them sells. Knowing gamers, they're going to jump systems rather than wait for Sony to get their act together- which is already evidenced by the increase in X-box sales. It really is not looking good for Sony on plain raw numbers, which they deserve for all the mistakes they've made. Though I must admit, it would have been nice to see them put up a bigger fight against Microsoft. There's nothing like seeing two titans go after each other. Oh well. Perhaps in 6 years we'll see a better effort by Sony when the new wave of systems come out.

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