Combating Inflation

Here’s one way to do it:

The government ordered that the prices of many goods be cut in half, in order to tackle the world’s highest rate of inflation – more than 3,700%.

I was a little disappointed that it’s not as creative as Chavez’ inflation plan, which centered on taking 3 zeros off the currency (in other words, a $1,000 bolivar bill would now be a $1… I’m not making this up).

It should be noted that in the case of Venezuela the currency "revaluation" didn’t work and inflation is still up in the stratosphere, while in the case of Zimbabwe I think I’m on safe ground in suggesting that forcing merchants to sell goods below cost isn’t a remedy for inflation, and neither is putting them in jail when they refuse.

iPhone vs. PS3

While writing my PS3 is a disaster post this morning it occurred to me that Apple in one week sold 1 million iPhones while Sony in 6 months has sold just 1.4 million PS3 consoles. Both have the same price point, the iPhone being more expensive when contract costs are taken into account. That’s pretty damn stark when you consider it for just a moment.

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Yes The PS3 Really is a Disaster for Sony

I wrote back in January that the PS3 was a disaster for Sony, and like all good posts the best content was found in the comment thread. Some agreed with my assertion and a few disagreed, but here we are 6 months later and the PS3 is getting outsold 4-to-1 by the Wii, they slashed the price by $100, and a big promotion for Sony’s Blu-Ray entertainment content still hasn’t ignited the one reason why I would get a PS3, a manufacterer subsidizeded Blu-Ray player.

Even with the price drop, there are still many questions about Sony’s PS3. The console, released in November, was outsold 4-to-1 in May by the Nintendo Wii and almost 2-to-1 by the Xbox 360. The Xbox 360, introduced in fall 2005, has sold about 5.6 million, followed by the $250 Wii with 2.8 million. The PS3 has sold just 1.4 million.

The PS3 has been a complete failure for Sony and that comes as a consequence of them over-reaching on a price point, not catering to developers, and misinterpreting the direction of the larger gaming marketplace.

About that price cut. Just last week Sony was issuing official denials only to come out at E3 (which opens tomorrow) today announcing the price cut they denied last week. Clearly this was less of a denial and more like "we can’t afford to have anyone wait a week to buy a PS3" plea.

What I do find interesting to consider about the price point is that more than a million people shelled out $500-600 for an iPhone (plus $80-100 a month). What does that tell me? Not sure because the Apple reality distortion field makes people do things they would otherwise consider irrational (me included), but perhaps it’s that communication capabilities outweigh all others in terms of the perceived value of a device. Let’s also not forget that the iPhone is fashion, the PS3 simply isn’t.

Sony has earned criticism in the past for not releasing top shelf developer tools, while on the other side of the Pacific Microsoft went all out to build developer tools for the Xbox360 that developers really wanted, and as a consequence the market saw a library of really good titles blossom.

An interesting thing also happened and that was that platform exclusivity disappeared. If you are wholly owned subsidiary of Sony or Microsoft, well clearly you won’t be cross-platform but for the vast majority of game developers that is not the case. Just a few years ago you could play the market being either a PS2 or an Xbox title but today you simply have to be on both, and on the PC as well.

The problem is that developing for the PS3 is difficult and as a consequence they didn’t enjoy the fat library of titles they needed when they launched 6 months ago, and they still don’t have a competitive library of titles. Bottom line: Microsoft outplayed Sony and attracted more developers earlier in the Xbox360 cycle, which itself was a full year ahead of the PS3.

This eliminated Sony’s primary competitive weapon, it’s market penetration as an attractor for new titles. The old axiom "the more market share you have the more you will get" doesn’t seem to apply in gaming.

The gaming market has changed in that women, families, and older segments are primary markets and hardcore gamers are diminishing in importance. The fact that my wife suggested we get a Wii shows not only how effective Nintendo’s marketing has been but also how gaming consoles are now evolving into family entertainment.

Even with a Blu-Ray player and networking, Sony could resist the temptation to market the PS3 to hardcore gamers and that hurt them. Speaking of entertainment, where is the integration with Sony Connect (oh yeah, that sucks too), and integration with the PSP and digital imaging products?

Lastly, Sony’s Home service is something I have written about positively in the past, even though I have not seen the actual service yet, but at this point they need to be more assertive in order to leapfrog everyone else, acquiring Linden Labs would do just that.

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